Naver’s Q2 operating profit falls 12.1% on expanded tech investment

South Korean internet giant Naver said Thursday that its operating profit in the second quarter fell 12.1 percent on-year to 250.6 billion won ($224 million) due to a slowdown in the growth of its mobile and online business and increased investment in new technology innovation.

Meanwhile, revenue in the April-June period reached 1.36 trillion won, up 20.7 percent from the same period in the previous year. Net profit also grew 83.1 percent on-year to 314 billion won, the company said.

Despite the relatively large jump in revenue, Naver’s second-quarter operating profit fell due to an overall slowdown in the growth of the internet business and stiffer global competition.

“With sluggish growth of the mobile market and the maturation of the online business market, the growth rate of Naver’s existing businesses has slowed. At the same time, the global competition has intensified,” Naver CEO Han Seong-sook said in a statement.

Looking ahead, Naver will continue investing in new technologies like artificial intelligence, robotics and cloud -- deemed necessary to remain competitive in the business, Han said.

By category, advertisement revenue came in at 148.7 billion won, up 11.1 percent on-year. Revenue from the business platform segment increased 17.2 percent on-year to 611.6 billion due to increased profitability from mobile search ads and shopping search ads.

IT platform revenue jumped 73.4 percent on-year to 85.7 billion won, on the back of robust growth from the mobile payment platform Naver Pay. Revenue from Naver’s content services rose 27 percent on-year to 31.7 billion won, riding on the growth of the Naver Webtoon platform and livestreaming app V.

Meanwhile, revenue from Naver’s Japan-based mobile messaging unit Line came in at 485.9 billion won, up 21.6 percent on-year, according to the company’s earnings report.

Naver on Thursday also announced a stock split plan in which the price of one common share will be lowered from 500 won to 100 won. The split, aimed at enhancing corporate value, will increase the total number of Naver’s shares from 32.96 million to 164.8 million.

By Sohn Ji-young (jys@heraldcorp.com)