Naver sees 88% profit increase in 3rd quarter

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Naver sees 88% profit increase in 3rd quarter

Published: 30 Oct. 2014, 23:49

The nation’s leading web portal company Naver enjoyed a favorable third-quarter performance as its operating profit surged 88 percent year-on-year.

The positive result was largely due to its mobile messenger app Line. In the past 12 months, messenger services have become a crucial strategy for many IT companies including Facebook, which has led to fierce competition to acquire promising messenger app companies.

Naver’s overseas performance with Line improved, and the portal company said yesterday it posted 700 billion won ($662 million) in revenue, up 22 percent over a year ago, and 189 billion won of operating profit, up 88 percent year-on-year.

By sector, the portal company’s advertising business grew the most, up 16.5 percent from a year earlier to post 497.8 billion won.

The content business that runs Line soared 62.8 percent from a year earlier to post 191.2 billion won, accounting for the second-biggest increase.

In the third quarter, Naver’s overseas business accounted for 33 percent of its operating profit, while its domestic business shrank 6 percentage points from a year earlier to account for 67 percent.

This was mostly fueled by the stable growth of Line. According to Naver, the mobile messenger has more than 500 million users in 12 countries.

In line with other mobile messenger apps that have started offering mobile payment services, Line is also preparing to launch its own system called Line Pay.

Naver said it is also working on a call taxi service called Line Taxi and a food-ordering service dubbed Line Wow as ways to expand its sales and diversify the uses of the platform.

However, experts say Naver will face challenges to its growth. The biggest problem is that its monthly active users (MAU) are lacking behind What’s App and WeChat. In the market, the MAU of What’s App and WeChat are estimated to be about 400 million to 500 million, while Line has about 170 million.

In addition, the company will eventually have to turn its concentration away from Japan, which accounts for 75 to 80 percent of its total sales. In order to become a global service, Line must show its strength in other countries, industry observers say.

But Naver claims that it is already being received positively in other countries, despite the slight decline in its Japanese business.

“Growth of Japan sales have been stalled but the overseas revenues are continuously increasing,” said Kim Sang-hun, CEO of Naver.

BY KIM JUNG-YOON [[email protected]]