Naver Reports Solid Q1 2022 Result With Aggressive Revenue Target; FVE Cut to KRW 347,000

Naver reported a broadly in-line first-quarter 2022 result, with revenue up 23% year on year and operating profit up 4.5% year on year. The key search platform business, which underpins Naver’s narrow moat based on intangible assets and network effect, reported revenue growth of 12% year on year in the first quarter. Despite a healthy consolidated operating profit margin of 16.5% in the first quarter driven mainly by the search business, management reiterated its key focus is on driving revenue growth and scale through its emerging businesses in commerce, fintech, content and cloud, reiterating a target mentioned in the press last week of increasing consolidated revenue to KRW 15 billion by 2026. We see this target as a stretch given annual revenue growth in the five years to 2021 averaged 11% and this would need to increase to 17% to hit the 2026 target, despite having to grow from a higher base.