NAVER : Records Sales of KRW 2.28 Trillion and Operating Profits of KRW 330.5 Billion in 2023 Q1

- Major business segments, including Commerce, Fintech, and Content, exhibited robust growth in 1Q, rising 23.6% YoY
- NAVER's new three-year shareholder return policy is set to distribute 15-30% of the average FCF over the past two years in 100% cash dividends
- NAVER plans to retire 3% of its currently held 8% treasury stocks by 1% annually over three years

May 8, 2023

NAVER Corporation (CEO Choi Soo-yeon) announced that the company recorded sales (operating revenue) of KRW 2.28 trillion, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of KRW 488.1 billion, and operating profit of KRW 330.5 billion for the first quarter of 2023 and its new shareholder return policy.

NAVER's quarterly consolidated operating revenue was KRW 2.28 trillion, increasing 23.6% year over year (YoY) and 0.4% quarter over quarter (QoQ). The adjusted EBITDA reached KRW 488.1 billion, up 16.2% YoY and maintaining the same level as the last quarter. Despite a seasonal decline in "Search" revenue, the adjusted EBITDA profit margin was similar to that of the previous quarter following a slowdown in the growth of personnel expenses, improved marketing efficiency, and Poshmark's EBITDA becoming profitable.

Meanwhile, the quarterly consolidated operating profit was recorded at KRW 330.5 billion, up 9.5% YoY and down 1.8% QoQ, which was partly attributable to cost reduction achieved by adjusting the useful lives of depreciating infrastructure assets, such as servers, to align with Korean and global trends, as well as their actual useful lives.

In terms of business segment, NAVER's Q1 operating revenue was KRW 851.8 billion for Search, KRW 605.9 billion for Commerce, KRW 318.2 billion for Fintech, KRW 411.3 billion for Content, and KRW 93.2 billion for Cloud.

Search revenue went up 0.2% YoY and down 7.1% QoQ to KRW 851.8 billion. Display ads declined 13.1% YoY because of a base effect from last year's Olympics and presidential elections. However, search ads saw a 5.3% increase YoY despite a global economic slowdown in the first quarter, continuing NAVER Search's robust growth and exceeding the overall growth trend in the global search market.

On the other hand, commerce revenue rose 45.5% YoY and 24.5% QoQ to KRW 605.9 billion, driven by the entry of Poshmark. NAVER Commerce's quarterly gross merchandise value (GMV) showed strong growth of 19.7% YoY to KRW 11.6 trillion. Despite excluding the effect of Poshmark, the growth recorded 13.2% YoY, surpassing the overall market growth trend.

Moreover, Poshmark saw a rapid enhancement in profitability through the optimization of marketing costs and operational expenses, achieving positive EBITDA in the first quarter earlier than anticipated. The company also continued to demonstrate strong growth in merchandise value and revenue despite the challenging situation in the US pre-owned goods and customer-to-customer (C2C) industry.

Fintech revenue increased 15.8% YoY and decreased 0.5% QoQ to KRW 318.2 billion, with NAVER Pay's total payment value (TPV) reaching KRW 13.4 trillion, up 19.2% YoY and 1.5% QoQ. External payments posted a 31.5% rise YoY to KRW 5.4 trillion, leading the overall growth, and offline payments advanced 68.4% YoY to KRW 810.0 billion, driven by efforts to expand on-site payment affiliates.

Content revenue also recorded KRW 411.3 billion, rising 94.0% YoY but declining 6.0% QoQ. WEBTOON's global revenue reached KRW 412.2 billion, going up 2.2% QoQ despite marketing reductions and operational limits in some regions and increasing 28.9% YoY due to the inclusion of eBookJapan.

The revenue of other business segments, including NAVER Cloud, grew 1.2% YoY but fell 16.1% QoQ to KRW 93.2 billion. The B2B sector also dropped 9.1% QoQ following a decline in the public sector but experienced 6.6% growth YoY.

"Amid the rapid paradigm shift involving artificial intelligence (AI) commercialization cases, NAVER plans to elevate user experience by incorporating HyperCLOVA X into its operations, with a particular focus on global business-to-business (B2B) services. NAVER will introduce a service that implements HyperCLOVA X to productivity tools such as LINE WORKS in Japan by the end of the year," NAVER CEO Choi Soo-yeon said.

NAVER also announced its new shareholder return policy for the upcoming three years (fiscal years 2022-2024). Under this policy, the company plans to distribute 15%-30% of the average annual consolidated free cash flow (FCF) over the past two years in 100% cash dividends for the next three years. In addition, NAVER plans to gradually retire 3% of its current 8% treasury stocks by 1% annually over the same period.

-END-

[Table] 1Q 2023 NAVER Earnings