NAVER Corp 035420

Naver's Strong Search and E-commerce Businesses Underpin Its Cash Flow Generation

For the past 15 years, Naver has led the South Korean internet search market, through which it generates decent revenue growth, high margins, and strong cash flow. While Google has been taking overall search market share, we estimate that Naver retains around two thirds of the overall search market and a higher percentage of the lucrative local South Korean searches, which it monetizes primarily through display advertising and paid search placements. Naver’s strategy has been to use this strong search business to build an integrated internet platform business by adding other services including e-commerce, financial technology, content production, and cloud services. Naver has not yet been able to monetize these other businesses to the same extent as its search business but has strong number one or two positions in most of them in the South Korean market.