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Naver marks record operating earning in Q2, net profit jumps 80%

Naver to launch hyperscale AI service HyperClova X on Aug. 24

By Jo He-rim

Published : Aug. 4, 2023 - 15:48

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Naver's headquarters in Seongnam, Gyeonggi Province. (Naver) Naver's headquarters in Seongnam, Gyeonggi Province. (Naver)

Naver, South Korea’s largest online portal, logged a record quarterly operating profit in the April-June period, backed by its strong performance in commerce, financial technology and content, the company said Friday.

In a regulatory filing, the internet giant reported its sales posted 2.4 trillion won ($1.83 billion) in the second quarter this year, increasing 17.7 percent on-year and 5.6 percent compared to the previous quarter. The company’s operating profit stood at 372.7 billion won, rising 10.9 percent on-year.

The net profit also grew 80.9 percent to log 286.7 billion won.

By business, the company’s commerce sector witnessed the biggest growth of 44 percent on-year to record 632.9 billion won in the second quarter, while the search platform sector recorded a revenue of 910.4 billion won, up 0.5 percent on-year.

"Global search engines are seen recovering after experiencing negative growth in the second half of last year. But Naver has managed to maintain growth of 5 percent from then to the first quarter of this year," Naver CEO Choi Soo-yeon said during the company's earnings call for the second quarter.

"We will keep up our efforts to maintain earnings growth and roll out new advertisement programs in line with the Naver app renewal in the later half of this year."

The fintech business witnessed revenue of 339.7 billion won, as the content and cloud businesses achieved 420.4 billion won and 104.5 billion won, respectively.

The revenue of Naver's content business, which include its webtoon service, also grew 40.1 percent on-year, showing strong performance in the global market. According to Naver, its global webtoon service logged 444.8 billion won in sales, up 86 percent when compared to the year earlier.

The number of paying users in Japan increased by 20 percent, and average revenue per paying user in the US also rose by over 20 percent, the company explained.

The portal giant also said web cartoon service Naver Webtoon plans to go public on the US stock market next year.

Set to launch its hyperscale AI platform HyperClova X on Aug. 24, the tech giant said it will be expanding its AI services for both individual users and corporate clients. Naver has said the AI platform is a comparable match to Open AI's GPT-4, and has the third-largest Korean language training volume in the world.

"AI is becoming the competitive factor of the era. While there are companies and governments concerned they may lose their competitive edge, I believe we will be able to form cooperative relations with them," the CEO said.

"We will utilize our AI technology which we have established investing more than trillions of won over the years in the way that will support each of our business sectors to further grow, and ultimately so our business partners and clients can also yield more profit."

The CEO also said the company is preparing to introduce its next-generation, AI-based search engine system it calls "Cue:" to offer a connected user experience that integrates shopping, local information and advertisements.

“Naver is unique in that it allows online shoppers to explore their items by using the search engine, and make purchases all on the same platform, and we also have accumulated quality data that others do not have,” Choi said.

“Having various vertical services in the one platform means that Naver is able to fulfill the needs of the advertisers.”

Choi added it plans to launch the PC version of the new search engine service in September.

Following the quarterly earnings release, Naver's share price closed the day flat on Friday at 223,000 won.