NHN's third quarter operating profit rose 113%... Payment and cloud drive (comprehensive)
Quick Look
- NHN announced that it recorded operating profit of KRW 58.8 billion, sales of KRW 758.3 billion, and net profit of KRW 38.9 billion in the third quarter on a consolidated basis, up 112.7%, 21.2%, and 115.8%, respectively, from the previous year.
- Technology sector sales increased 53.6%, showing the steepest increase, and AI data center expansion and shareholder return policies were also announced.
AI-generated summary
Why It Matters
NHN is a Korean IT company with a diversified business portfolio including payments, technology, and games, and announced significant growth compared to the previous year through its third quarter earnings announcement.
NHN [181710] announced on the 10th that its operating profit in the third quarter of this year on a consolidated basis was provisionally calculated to be 58.8 billion won, an increase of 112.7% from the same period last year.
Sales amounted to 758.3 billion won, an increase of 21.2% compared to the same period last year. Net profit increased 115.8% to 38.9 billion won.
Sales by sector were 397.6 billion won in the payment sector, including NHN KCP and Payco, an increase of 21.5% compared to the same period last year.
NHN KCP's total transaction value in the third quarter was KRW 17.3 trillion, an increase of 30.5% over the same period, of which the proportion of overseas affiliate transactions was 25.3%, the highest ever.
NHN Payco also contributed to strong performance by launching Baedal Minjok online payment at the end of August and increasing corporate welfare and coupon sales.
Technology sector sales showed the steepest increase, reaching KRW 171.7 billion, up 53.6% compared to the same period last year.
NHN Cloud's consolidated sales in the third quarter increased by 75.5% compared to the third quarter of last year.
It is interpreted that private business sales, including sales of ‘Factory
Game sales increased by 10.7% over the same period to 131 billion won.
In particular, PC online game sales increased by 20.3% to KRW 50.1 billion due to the relaxation of regulations on payment limits for web board games.
In the case of mobile games, there was a 5.5% increase over the same period due to the ‘Hangame Royal Hold’em’ offline tournament and the Chuseok holiday.
Sales in other areas decreased by 12.4% to 78.5 billion won.
Total operating expenses in the third quarter were 699.5 billion won, an increase of 17% compared to the same period last year.
Commissions, which account for the largest proportion, increased by 19% (KRW 509 billion), while labor costs (KRW 113.1 billion) and advertising costs (KRW 24.8 billion) also increased by 4.9% and 4.6%, respectively.
NHN announced that it plans to operate an AI data center with a total capacity of 100 megawatts (MW) by the end of 2027, including the amount already secured.
In particular, the Gasan Digital Complex in Seoul and the Gajwa-dong data center in Incheon will be operational in the first half of next year, and the construction of two new data centers in Jangseong, Gwangju, Jeollanam-do and one in Pohang, Gyeongbuk will be promoted.
In addition, a three-year shareholder return policy will be pursued from 2026 to 2028, and 15% of the consolidated operating profit before amortization (EBITDA) of the previous fiscal year will be used as financial resources for cash dividends and purchase and cancellation of treasury stocks.
What to Watch
AI outlook — possibilities, not facts
NHN plans to operate an AI data center with a total capacity of 100 megawatts by the end of 2027.
Very likely · Within years
Gasan Digital Complex in Seoul and Gajwa-dong Data Center in Incheon are scheduled to start operation in the first half of next year.
Very likely · Within months
A three-year shareholder return policy will be implemented from 2026 to 2028, and cash dividends and share buybacks and cancellations will be implemented using 15% of EBITDA.
Very likely · Within years
Open Questions
- What is the specific investment amount needed to build an AI data center?
- What is the detailed implementation schedule and dividend size of the shareholder return policy?
