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Naver posts record revenue in Q3

Naver‘s headquarters in Seongnam, Gyeonggi Province (Yonhap)
Naver‘s headquarters in Seongnam, Gyeonggi Province (Yonhap)

Naver posted all-time high quarterly sales in the third quarter this year, the company announced Thursday in its regulatory filing.

The sales of Naver in the third quarter reached 1.36 trillion won ($1.2 billion), up by 24.2 percent on-year. Naver’s operating profit during the July-September period also increased by 1.8 percent on-year to reach at 291 billion won.

The net profit of Naver also marked 235.3 billion won in the third quarter, surging by 176 percent on-year.

The record-high sales during the period did not include those from the company operating messaging application Line. After Japan’s antitrust regulator‘s approval of merger of Yahoo Japan and Line, Naver decided to exclude Line from its regulatory filing. Profits from Line will be accounted in Naver’s regulatory filing as non-operating income based on Naver‘s 32.5 percent share in Z Holdings after the merger between Line and Z Holdings is completed in March.

If Line’s revenue was included, Naver‘s sales in the third quarter would have reached 2.06 trillion won.

While temporarily detaching the revenue records of Line from the company, Naver also reorganized its business portfolio into five different categories: search platform, commerce, fintech, content and cloud.

Naver decided to make changes in business portfolio based on the growth of new businesses in the e-commerce, fintech and cloud sectors, according to the company. Naver added it would ramp up investments in the newly growing businesses.

Naver noted the rapid growths of the company‘s new businesses in the e-commerce, fintech, contents and cloud sectors have contributed to the record-high performance in the third quarter.

The sales of Naver’s commerce unit increased by 40.9 percent on-year to reach 285.4 billion won. The volume of transactions through its online shopping platforms increased by 72 percent on-year, the company added. Naver explained the e-commerce unit grew at a fast rate particularly after the outbreak of the COVID-19 pandemic.

According to industry sources, the recent growth of the company‘s commerce unit might allow Naver to spin it off. The Fair Trade Commission’s sanction on Naver over manipulating its shopping and video services search algorithms could too speed up Naver to separate its commerce business.

The sales of Naver‘s fintech business grew by 67.6 percent on-year at 174 billion won in the third quarter, backed by the increased transactions made through the company’s own e-commerce platforms.

Naver’s cloud business‘ sales too posted 66.2 percent of on-year growth to reach at 76.3 billion won. Demands for cloud services increased as more firms and institutions here began using remote working solutions.

Content sales increased by 31.8 percent on-year to mark 115 billion won, backed by the increasing number of online cartoon service users. The figure now reaches around 67 million around the globe, Naver said.

Naver’s CEO noted the recent share-swap deal worth 600 billion won with CJ Group – including Naver‘s acquisition of shares in entertainment giant CJ ENM -- would help Naver to increase its competitiveness in the global entertainment market.

Meanwhile, the sales from Naver’s search platform -- mainly from advertisements -- increased by 8.2 percent on-year at 710.1 billion won in the third quarter.

By Shim Woo-hyun (