Naver Earnings: Short-Term Weakness in Key Search Revenue, but Retain Positive Long-Term Outlook

Naver reported first-quarter 2023 revenue growth of 26.3% with operating profit up 9.5% year on year, both broadly in line with our expectations. The key search platform business, which underpins Naver’s narrow moat based on intangible assets and network effect, reported revenue growth of only 0.2% year on year in the first quarter, in line with the slowdown in fourth-quarter 2022 in which it grew 2.3% year on year. We retained our forecasts, which call for 18.5% revenue growth and a 7.5% operating income decline. Our fair value estimate for Naver remains KRW 240,000 per share. The stock is down around 56% from its peak in September 2021 and we see it as undervalued at these levels.