Naver's firing on all cylinders, new businesses included

Naver's headquarters in Bundang, Gyeonggi [NEWS1]

Naver’s performance in the second quarter breezed past expectations, with steady growth across a range of businesses including advertising, commerce and selling of content like webtoons.

Revenue hit an all-time high of 1.66 trillion won, up 30.4 percent on year, while operating profit jumped by 8.9 percent to 335.6 billion won.

Net profit surged 496.1 percent to 540.6 billion won ($470 million) compared to the same period last year, higher than a market consensus of 296 billion won compiled by FnGuide, thanks to an extraordinary gain from the creation of A Holdings, a joint venture with SoftBank that controls Yahoo Japan and Line messenger.

The biggest contributor to sales was advertising from its search engine, its usual cash cow. But newer businesses such as e-commerce, fintech, cloud services and content platforms for webtoons and web novels achieved double digit growth.

Revenue from search-based advertising grew 21.8 percent to 826 billion won on year and Naver touted its improved search function and its effect on advertising.

Its commerce business, built around the shopping platform, grew 42.6 percent to 365.3 billion won in sales between April and June. Live shows on the platform helped boost shopping sales, the company said.

Fintech-related revenues rose 41.2 percent to 232.6 billion won, with more stores for using Naver Pay and a growing user base for payment services. Total transactions on Naver Pay climbed 47 percent in the quarter over a year ago to reach 9.1 trillion won.

The content business that includes webtoon and mobile entertainment apps reported a 28.2 percent increase in sales to 144.8 billion won, driven by growth in the number of paid subscribers to the webtoon service.

The cloud business also flew high with sales rising 48.1 percent to 94.9 billion won.

CEO Han Seong-sook called content and commerce the company’s focus for the rest of the year with an aim of capitalizing on the partnership with Wattpad, a Toronto-based web novel platform acquired by Naver.

Naver plans a 100 billion-won investment fund with Wattpad to adapt works from its webtoon platform into other formats including dramas, movies and publications.

“We will swiftly work on publishing popular webtoons into books and videos through the 100 billion won fund,” Han said during a conference call on Thursday.

As for the commerce businesses, Naver aims to broaden the range of agricultural products sold and expedite delivery services, helped by existing partnership with Emart and CJ Logistics.

“We will open a grocery shopping section in cooperation with Emart by the fourth quarter,” Han said.

Naver and CJ Logistics agreed to expand the size of their joint fulfilment centers to 200,000 pyeong (7.1 million square feet).

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