Naver's net skyrockets as subsidiaries are integrated

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Naver's net skyrockets as subsidiaries are integrated

Published: 29 Apr. 2021, 19:18

Naver's net profit surged in the first three months thanks to a huge extraordinary accounting gain that resulted from the integration of its Japanese subsidiaries.

Naver's net profit jumped 11,252.5 percent on-year in the first quarter to reach 15.31 trillion won ($13.8 billion), following the creation of a joint holdings unit called Z Holdings with SoftBank to control Yahoo and Line.

Operating profit of Korea’s largest internet portal, however, declined by 1 percent to 288.8 billion won on year as increasing costs of employee benefits offset rising sales in business segments across the board.

Sales stood at 1.5 trillion won, up 29.8 percent year on year.

Naver enjoyed robust growth in its old cash cow – advertising from its search engine platform – and newer businesses such as e-commerce, fintech, cloud services and content platforms for webtoons and web novels.

Revenues from search engine-based advertising grew 16.8 percent to 752.7 billion won on year as the site saw an influx of new advertising clients.

Its commerce business, built around the portal’s shopping platform, grew 40.3 percent to report 324.4 billion won in sales between January and March.

CEO Han Seong-sook emphasized increased sales from live streaming on the shopping platform, adding that the transactions made on the live shopping service doubled compared to six month ago.

Its fintech-related revenues rose 52.2 percent to 209.5 billion won, backed by a solid user base for payment service Naver Pay. Total transactions on Naver Pay climbed 56 percent in the quarter compared to the fourth quarter of 2020 to reach 8.4 trillion won.

The content business that includes webtoon and mobile apps reported a 40 percent increase in sales to 130.8 billion won, driven by growth in the number of paid subscription to the webtoon service.

Naver is trying to bring its webtoon platform to a wider user base globally and plans to take its webtoon unit public in the United States.

The company last year relocated the headquarters of its publishing platform, Naver Webtoon, to Los Angeles in an effort to reach more readers outside of Korea.

Naver Webtoon’s valuation has been estimated in a range between 6 trillion won and 8 trillion won.

The CEO said during a conference call that Naver will invest 204 billion won in the webtoon business.

Han mentioned that the portal will jointly produce content with Wattpad, a Toronto-based self-publishing platform acquired by Naver, starting in May.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]