Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NAVER Corp (XKRX:035420, Financial) reported a significant increase in operating profit, achieving an all-time high of KRW525.3 billion, up 38.2% YoY and 11.1% QoQ.
- The company's search platform experienced double-digit growth for the first time in 10 quarters, driven by enhanced AI capabilities and expanded content offerings.
- Naver Pay's total payment volume (TPV) increased by 22.1% YoY, with non-captive TPV growing by 38% YoY, indicating strong performance in the fintech segment.
- Webtoon revenue grew by 11.6% YoY and 10.7% QoQ, with paid content revenue and advertising revenue both showing significant increases.
- Naver Cloud's B2B business is expanding, with revenue from the digital twin project in Saudi Arabia contributing to growth for the first time.
Negative Points
- Poshmark's growth has slowed due to a sluggish North American C2C market, impacting overall commerce performance.
- Despite improvements, the company's commerce advertisement revenue remains relatively low, indicating room for growth.
- The macroeconomic environment remains uncertain, which could impact future growth projections for the search platform.
- The introduction of Naver Plus Store as a standalone application may pose challenges in migrating users from the search platform.
- There are concerns about the decline in price comparison traffic, which has been a key capability for NAVER Corp (XKRX:035420).
Q & A Highlights
Q: Can you discuss the sustainability of the growth in your search platform and projections for the fourth quarter? Also, how will the Naver Plus Store impact user behavior and your search business?
A: The growth in our search platform is driven by our internal competitiveness and AI technology integration. We believe there's potential for further growth. For the Naver Plus Store, it's too early to provide specific metrics, but initial feedback is positive. We plan to make it a standalone app and will strategize on migrating users from our search platform.
Q: What is the expected impact of your partnership with Netflix on your e-commerce growth and membership program?
A: While we can't disclose specific terms, the arrangement is similar to past partnerships. We expect it to enhance user retention and trigger repeat purchases, positively impacting our commerce business. The margin impact will be similar to previous arrangements.
Q: How has the introduction of home feed and clip affected user engagement and advertisement revenue? When will HyperCLOVA X be fully integrated into Naver search?
A: Home feed and clip have significantly increased user engagement, with a 10% YoY growth in time spent. We plan to introduce AI briefing on mobile next year, focusing on enhancing long-tail queries and foreign language searches. The cost impact will be limited.
Q: What are your strategic priorities for re-triggering growth in your commerce business, and how do you plan to enhance commerce advertisement revenue?
A: We aim to increase repeat purchase rates by strengthening logistics and membership benefits. We plan to expand feed inventory and improve targeting capabilities to attract new advertisers. Our focus is on enhancing user experience and engagement.
Q: What drove the significant improvement in quarterly margins, and what is your margin outlook?
A: The margin improvement is structural, resulting from reallocating budgets to profitable growth areas. We expect to benefit from operating leverage as we generate more revenue from our search ad platform. Reinvestments in commerce will enhance value offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
