NAVER Corp. Reports Strong Growth Amid Challenges

NAVER Corp. ((NHNCF)) has held its Q3 earnings call. Read on for the main highlights of the call.

NAVER Corp.’s recent earnings call painted a picture of robust growth across several key segments, including advertising, commerce, fintech, and strategic partnerships. Despite challenges such as increased marketing expenses and infrastructure costs, the overall sentiment was positive, with the company’s strategic initiatives and positive metrics outweighing the financial hurdles.

Advertising Revenue Growth

NAVER’s advertising revenue saw a significant 10.5% year-over-year increase, driven by enhanced AI-based advertising efficiency and an expanded advertiser base. This growth underscores NAVER’s successful efforts in leveraging technology to boost its advertising segment.

Commerce Segment Growth

The commerce segment experienced impressive growth, with Smart Store GMV increasing by 12.3% year-over-year. The NAVER Plus Store app also achieved a milestone by surpassing 10 million downloads, and page views rose by 19.4% quarter-over-quarter, highlighting the platform’s growing popularity.

Fintech Revenue Increase

NAVER Pay’s total payment volume reached KRW 22.7 trillion, marking a 21.7% year-over-year increase. Notably, non-captive payments grew by 31% year-over-year, reflecting the expanding reach and adoption of NAVER’s fintech solutions.

Strong Webtoon Partnership

A notable highlight was Webtoon Entertainment’s global content partnership with Disney, which is expected to significantly broaden Webtoon’s reach and serve as a catalyst for global growth in the content segment.

Revenue and Profit Growth

NAVER reported a 15.6% year-over-year increase in Q3 revenue, totaling KRW 3.1381 trillion, with operating profit rising by 8.6% to KRW 570.6 billion. These figures reflect the company’s strong financial performance across its core businesses.

Enterprise Expansion

The B2B segment showed promising growth with new revenue generation through GPU as a service contracts. NAVER is also expanding its global footprint with LINE WORKS, indicating a strategic push into international markets.

Increased Marketing Expenses

Marketing expenses rose by 20.3% year-over-year, primarily due to promotional activities in the commerce, fintech, and Webtoon segments. This increase in expenses poses a challenge to profitability.

Commerce Marketing Expense Impact

The commerce segment accounted for a significant portion of the overall rise in marketing expenses, impacting the company’s profitability. However, these investments are crucial for sustaining growth in this competitive sector.

Infrastructure Cost Rise

Infrastructure costs increased by 22.7% year-over-year, driven by higher depreciation expenses from acquiring new assets like GPUs. This rise reflects NAVER’s commitment to enhancing its technological capabilities.

Content Operating Losses

Operating losses in the content segment widened due to increased production costs associated with Webtoon IP business development. Despite these losses, the strategic partnership with Disney is expected to mitigate some of these challenges.

Forward-Looking Guidance

Looking ahead, NAVER expects continued revenue growth, driven by solid performances across its core businesses. The company anticipates AI-driven enhancements to further improve advertising efficiency and monetization strategies. Additionally, NAVER plans substantial investments in AI infrastructure, with GPU-related capital expenditures expected to reach KRW 1 trillion annually from 2026.

In conclusion, NAVER Corp.’s earnings call highlighted a positive outlook with strong growth across multiple segments. While challenges such as increased marketing and infrastructure costs remain, the company’s strategic initiatives and partnerships, particularly in advertising and content, position it well for future success.