Naver Corp.

Overview Key strengths Key risks Strong position in Korea's online advertising and e-commerce markets. High geographic and business concentration, with most of the profit generated from marketing of search engine in Korea. Good operating performance, with double-digit EBITDA margins. Smaller operating scale than global peers'. Large user base in Korea, with strong customer engagement. Expansion into new businesses such as fintech, content, and cloud services that have low margins or are loss-making. Robust free cash flows despite large capital investments. Intense competition in the online advertising and e-commerce markets. This is given the company will likely remain the largest internet search engine in Korea, with a strong online advertising business. Naver suite of services, including online content, community, and digital

...We expect Naver Corp. to generate strong operating cash flow of Korean won (KRW) 1.5 trillion-KRW1.7 trillion in 2023-2024. This is given the company will likely remain the largest internet search engine in Korea, with a strong online advertising business. Naver suite of services, including online content, community, and digital payments, help to enhance user engagement and monetize internet traffic. Competition in the online services industry is rising, especially in the mobile based internet market. Yet, global competitors have had difficulty penetrating the Korean market. Google LLC made some headway in Korea with its video platform YouTube, but the company's market share for search is still low. Naver should remain one of the two largest e-commerce platforms in Korea. Naver's strong market position in search engines will support its good position in Korea's highly fragmented e-commerce market. Naver has merchant friendly policies that enable it to build a long-tail of both individual...

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