Naver posts record Q3 sales, profit on e-commerce

South Korea’s web portal giant Naver Corp. on Friday posted record sales and operating profit in the third quarter, driven by robust sales growth in its e-commerce, content and fintech businesses.

The country’s top search engine operator said its operating profit in the July-September period reached an all-time high of 380.2 billion won ($286 million) on a consolidated basis, up 15% from 330.2 billion won a year earlier.

Sales rose 19% year-on-year to a record high of 2.45 trillion won while net profit increased 54% from 231.6 billion won to 356.2 billion won, the company said in a regulatory filing.

With the latest sales figure, Naver has posted record quarterly sales revenue for the sixth straight quarter.

The results came above market expectations. In early Seoul trading, shares of Naver advanced 4.1% to 198,700 won, outperforming the benchmark Kospi’s 1% rise.

The lion’s share of its sales revenue came from its search platform business, which grew 0.3% on-year to 898.5 billion won but fell 1.3% from the previous quarter.

Third-quarter advertising revenue from the search business increased 3.5% from the year-earlier period.

"We are the only one among the world's leading advertising platforms to have continued to grow every quarter despite the COVID-19 pandemic,” said a company official.

Strong sales growth came from its commerce business, which increased 41.3% to 647.4 billion won on-year, and its content business, which saw a 39.5% gain to 434.9 billion won.

AGGRESSIVE OVERSEAS PUSH

Its decent commerce business growth came thanks to brisk sales at Poshmark, the US-based social e-commerce marketplace Naver acquired in January, as well as strong performance at its trading platforms such as Brandstore, Travel and Kream.

Sales from its fintech business rose 15.1% on-year to 340.8 billion won, boosted by Naver Pay, its online payment service, which saw transactions rise 22.5% to 15.2 trillion won in the third quarter.

Sales in its cloud business rose 30.3% on-year to 123.6 billion won, boosted by an increase in the number of paid subscribers to its Line Works, also known as Naver Works, a business cooperative work tool.

Its content business saw year-on-year sales growth of 39.5% to 434.9 billion won, driven by the growth of its global webtoon business; increased revenue from Snow, a popular camera app that offers photographic filters; and Zepeto, its metaverse platform.

“Our long-accumulated tech and related services have been well received in overseas markets, as shown by the recent digital twin deal with Saudi Arabia," said Naver CEO Choi Soo-yeon. "We will actively push our overseas expansion."

Last month, Naver clinched a $100 million deal to develop a digital twin platform for Saudi Arabia's Ministry of Municipal and Rural Affairs.

NAVER’S HYPERCLOVA X, AI-POWERED CUE:

She said Naver’s artificial intelligence (AI) business has been producing better results than expected.

“We plan to introduce key performance indicators related to our AI business by the end of next year,” she said.

The CEO said the company also plans to apply its AI-powered Cue: search engine to mobile platforms next year.

In September, the company launched a beta service of its new generative AI-powered search engine Cue:, which is similar to Microsoft Corp.’s Bing Chat backed by OpenAI’s latest large language model (LLM), GPT-4.

The Korean internet giant said it incorporated its latest LLM HyperCLOVA X in Cue:, which understands complex questions with multiple sentences and comes up with a comprehensive answer with summarized information that even include related subjects and references, in less than 10 seconds.

To better compete with global Big Tech firms’ AI chatbot-equipped search engine services, Naver said in May it is joining hands with Samsung Electronics Co. to jointly develop a generative AI platform for corporate users.

(Updated with Naver’s AI push plans, including HyperCLOVA X and the new search engine Cue: service)

Write to Ji-Eun Jeong at jeong@hankyung.com
In-Soo Nam edited this article.