'The Power of Untact'... AfreecaTV Earnings Surprise

Donation Economy Gift Sales Increase to 32.7 Billion KRW in Q1, 37.1 Billion KRW in Q2, and 39.5 Billion KRW in Q3

[Asia Economy Reporter Kum Bo-ryeong] AfreecaTV recorded an earnings surprise in the third quarter, demonstrating its status as a beneficiary of the non-face-to-face (untact) trend.

According to AfreecaTV on the 2nd, the consolidated operating profit for the third quarter was 13.9 billion KRW, a 29.2% increase compared to the previous year. Revenue was recorded at 50.2 billion KRW, growing 12.1%.

In the third quarter, platform revenue increased due to the overall reduction in external activities. In particular, growth was driven by the simultaneous rise in paying users (PU) and average revenue per user (ARPU). AfreecaTV's donation economy gift revenue has been steadily increasing, with 32.7 billion KRW in the first quarter, 37.1 billion KRW in the second quarter, and 39.5 billion KRW in the third quarter. The year-over-year growth rates were 18% in Q1, 20% in Q2, and 24% in Q3.

Changyoung Lee, a researcher at Yuanta Securities, explained, "AfreecaTV is a video platform where 6 million loyal viewers with long usage times connect monthly, which is about 16.13% of Naver and Kakao's levels. Its business model is primarily based on donation economy revenue, which accounts for 79% of the total, where viewers voluntarily pay BJs."

Advertising revenue in the third quarter increased by 63.5% from the previous quarter to 7 billion KRW. The fourth quarter is the peak season for advertising, so revenue growth is expected to continue. Advertisers are diversifying, including not only gaming but also public institutions and sports. AfreecaTV is currently developing its own advertising solution that allows participation from advertisers and BJs. This will enable customized ads targeted to desired users and content, which is expected to increase ad rates and expand the advertiser base.

The stock price rose 6.27% over three trading days from 57,400 KRW on the 26th to 61,100 KRW on the 29th, ahead of expectations for third-quarter earnings. On the 30th, the stock briefly declined following the earnings announcement but recorded 61,200 KRW at 9:45 a.m., up 2.34% (1,400 KRW) from the previous close.

Donghee Kim, a researcher at Meritz Securities, analyzed, "Consumption of video content is likely to continue growing due to popular BJs' content production, the return of users amid COVID-19, and the widespread BJ sponsorship culture. Ultimately, since stock prices follow earnings, the current price presents an attractive buying opportunity."

This content was produced with the assistance of AI translation services.