South Korean internet giant Naver announced Thursday its operating profit fell nearly 20 percent in the first quarter from a year earlier, as the company has witnessed worsened profitability following aggressive investment in new business overseas.
In its quarterly earnings report, Naver said its operating profit reached 206.2 billion won ($177 million) in the January-March period. During the same period last year, operating profit was 257 billion won.
The tech company’s reduced operating profit appears to stem from worsened profitability in overseas markets. While its domestic business’s operating profit recorded 308.8 billion won, its affiliate Line and other business posted a deficit of 102.5 billion won.
“Line has expanded employment and investment in strategic business,” Naver’s Chief Financial Officer Park Sang-Jin said during a conference call. “Given growing competition in the fintech industry, we might need more investment.”
Line has expanded its investment in financial technology and other new businesses in Japan. During its earnings report in the fourth quarter of last year, Line said it expected about 620 billion won in deficit.
Meanwhile, revenue from its business platform increased 12.9 percent on-year to 669 billion won in the first quarter. The company said the increase was aided by growth in the advertisement business and platform services.
According to Naver, revenue from its advertisement business rose 6.9 percent on-year to 142.2 billion won in the first quarter. Revenue from its platform business, including messenger Line, surged 17.4 percent on-year to 565 billion won in the same period.
Sales from its IT platform business, which covers Naver Pay and cloud computing services, also jumped 36.9 percent on-year to 99 billion won. Content sales rose 18.5 percent on-year to 35 billion won in the same period.