NAVER Reports Strong First Quarter 2023 Results and Announces New Shareholder Return Policy
NAVER today announced that the company recorded sales (operating revenue) of KRW 2.28 trillion (USD 1.92 billion), adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of KRW 488.1 billion (USD 410.2 million), and operating profit of KRW 330.5 billion (USD 280.3 million) for the first quarter of 2023.
The company also announced a new three-year (fiscal years 2022-2024) shareholder return policy, under which it 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 retire 3% of its current 8% treasury stocks by 1% annually for the next three years.
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.
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 by optimizing marketing costs and increasing the efficiency of operational expenses. Poshmark achieved positive EBITDA in the first quarter, earlier than expected, and continued exhibiting robust 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.
Under its new shareholder return policy, NAVER 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 retire 3% of its current 8% treasury stocks by 1% annually for the next three years.
“Amid the rapid paradigm shift involving artificial intelligence (AI) commercialization cases, NAVER plans to elevate user experience by incorporating HyperCLOVA X across our operations, extending to global business-to-business (B2B) services. NAVER will introduce a service that implements HyperCLOVA X to productivity tools such as LINE WORKS in Japan within the year,” said NAVER CEO Choi Soo-yeon.
“We are also committed to returning value to our shareholders through our new shareholder return policy. We will continue to grow our business and create shareholder value through our innovative technologies and services.”
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