Naver Reports Solid Q2 Revenue, but Weak Operating Profit; FVE Cut to KRW 311,000

Naver reported broadly in line second-quarter 2022 revenue with 23% year-on-year growth, but flat operating profit which was below our expectations. Divisional operating profit breakdown was provided for the first time with strong growth in operating profit from the cloud services business offset by increasing losses from the content business and increased research and development expenditure on future technology. Operating profits from search, e-commerce, and fintech were broadly flat. The key search platform business, which underpins Naver’s narrow moat based on intangible assets and network effect, reported revenue growth of 9.3% year on year in the second quarter, which is a slowdown on recent quarters, but still marginally above the mid-single-digit pre-COVID-19 growth levels.