Naver logs record earnings on e-commerce, content; stocks up

South Korea’s online giant Naver Corp. reported record earnings on strong performances of its e-commerce and content businesses, sending its share price to a near three-week high.

Naver said on Friday its operating profit rose 20.5% to a quarterly record of 405.5 billion won ($306.9 million) in the October-December 2023 period from a year earlier as sales increased 11.7% to 2.5 trillion won, the largest ever for a quarter. Net profit more than doubled to 314.1 billion won during the same period.

For 2023, the company’s operating profit advanced 14.1% to an all-time high of 1.5 trillion won with revenue up 17.6% to a record 9.7 trillion won.

“We achieved healthy sales growth despite difficult internal and external conditions while trying to improve profitability through prudent spending in 2023,” said Naver CEO Choi Soo-yeon. “We aim to focus on enhancing core businesses such as the search platform and commerce based on AI and data this year,” Choi added, referring to artificial intelligence.

After the healthy earnings announcement, Naver’s shares ended up 9.4% at 221,500 won, the highest closing since Jan. 16, in the South Korean stock market, far outperforming a 2.9% gain in the benchmark Kospi.

E-COMMERCE

Sales of Naver's e-commerce unit grew 35.7% to 660.5 billion won in the fourth quarter from a year earlier thanks to strong sales of Poshmark Inc., a US social e-commerce marketplace acquired by Naver in 2022, and a hike in commissions of Kream Corp.’s, Naver’s resale platform.

Poshmark’s earnings before interest, taxes, depreciation, and amortization (EBITDA) turned to the black in October-December with higher sales, transactions and market share, according to the South Korean platform behemoth.

Naver’s total e-commerce transaction value rose 11% on-year to 12.4 trillion won during the three months.

Choi played down concerns over the growing popularity of Chinese e-commerce giants such as AliExpress and Temu in South Korea.

“Their direct impact on Naver shopping is limited,” Choi said during an earnings call. “Those Chinese e-commerce platforms are not only rivals but also strategic partners, which run ads.”

Naver’s content business reported quarterly sales of 466.3 billion won, up 6.6%, thanks to strong revenue from webtoons and intellectual property.

SEARCH PLATFORM, FINTECH, CLOUD

Naver's search platform, its largest business, posted sales of 928.3 billion won, 1.3% higher than a year earlier, on healthy growth in paid search advertising.

The country’s top search engine operator added Cue:, a generative AI search service for use on PCs, in November with a plan to expand the service to mobiles this year.

Sales of Naver’s fintech business increased 11.3% to 356 billion won as boosted by Naver Pay, its online payment service, which saw transactions rise 23.9% to 16.3 trillion won.

Its cloud business revenue grew 13.3% to 125.9 billion won.

B2B BUSINESS ON GENERATIVE AI

Naver aims to bolster its earnings from the business-to-business sectors with its generative AI technology.

The company is set to launch a service recommending products and ads by AI for e-commerce partners, especially sellers on its shopping platform, this year.

“Personalized ads are expected to maximize the efficiency of product recommendation ads,” Choi said.

“We aim to expand the generative AI search service to mobiles in the first half and add multimodal technology, providing users with a new search experience.”

Last month, Naver started CLOVA for AD, an advertising business based on its large language model HyperCLOVA X. Leading global sportswear brand Nike Inc. has already launched an advertising campaign on the platform.

Write to Ju-Hyun Lee at deep@hankyung.com
 

Jongwoo Cheon edited this article.