Naver Reports Operating Profit of 330.5 Billion KRW in Q1, Up 9.5% Year-on-Year (Update)

Q1 Revenue Grows 23.6% to KRW 2.28 Trillion
2-Year Average Consolidated FCF 15-30% Cash Dividend
3% Treasury Shares to Be Cancelled Over 3 Years

Naver recorded an operating profit of 330.5 billion KRW in the first quarter of this year, a 9.5% increase compared to the same period last year. Despite a slowdown in advertising revenue, commerce and content performance helped maintain profitability.

On the 4th, Naver announced that its first-quarter revenue reached 2.2804 trillion KRW, up 23.6% from the same period last year. Operating profit increased by 9.5% to 330.5 billion KRW.

Revenue by business segment was ▲ Search Platform 851.8 billion KRW ▲ Commerce 605.9 billion KRW ▲ Fintech 318.2 billion KRW ▲ Content 411.3 billion KRW ▲ Cloud 93.2 billion KRW.

The Search Platform recorded 851.8 billion KRW, a 0.2% increase compared to the same period last year. Display advertising decreased by 13.1% due to base effects from last year’s Olympics and presidential election. However, search advertising grew by 5.3%, continuing a solid growth trend that outpaced the global search market.

Commerce grew 45.5% year-on-year to 605.9 billion KRW, supported by the inclusion of FOSIMARK. Naver Commerce’s total transaction volume in the first quarter grew 19.7% to 11.6 trillion KRW, maintaining steady growth. Even excluding the effect of FOSIMARK’s inclusion, performance increased by 13.2%. FOSIMARK rapidly improved profitability through efforts such as optimizing marketing costs and streamlining operating expenses. It achieved an early turnaround to positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which was originally targeted for 2024, starting this quarter. In contrast to the shrinking U.S. peer-to-peer (C2C) used goods market, it maintained solid transaction volume and revenue growth.

Naver Q1 2023 Earnings [Source=Naver]

Fintech grew 15.8% year-on-year to 318.2 billion KRW. Naver Pay’s payment volume in the first quarter grew 19.2% to 13.4 trillion KRW. External payment volume led overall growth with a 31.5% increase to 5.4 trillion KRW, while offline payment volume rose 68.4% to 810 billion KRW due to efforts to expand on-site payment merchants.

Content revenue increased 94.0% year-on-year to 411.3 billion KRW. Despite reduced marketing and scaled-back operations in certain regions, the global integrated transaction volume of webtoons grew 28.9% to 412.2 billion KRW, driven by the inclusion of eBook Japan.

Cloud and others increased 1.2% year-on-year to 93.2 billion KRW. Among these, the B2B segment declined 9.1% quarter-on-quarter due to the off-season in the public sector but grew 6.6% year-on-year.

Naver CEO Choi Soo-yeon said, "With the rapid release of commercialized AI cases and a paradigm shift underway, Naver aims to elevate user experience by applying HyperCLOVA X across all Naver services. We also plan to launch global B2B enterprise services, including integrating HyperCLOVA X into productivity tools like LINE WORKS in Japan within this year."

Meanwhile, Naver announced a three-year shareholder return plan (fiscal years 2022?2024) on the same day. Under the new plan, Naver will pay out 15?30% of the average consolidated free cash flow (FCF) over the past two years as full cash dividends over the next three years. Separately, Naver plans to specially retire 3% of its current 8% treasury shares and retire 1% annually over the next three years.

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