NHN (181710) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated revenue was KRW 599.4 billion, up 8.7% YoY but down 0.8% QoQ, with operating profit at KRW 28.5 billion, a 36.3% YoY increase and operating profit margin at 4.8%.

• Net profit for Q2 was KRW 4.6 billion, a 70% YoY decrease but a return to profit from Q1 loss, impacted by a KRW 10.2 billion bad debt expense related to TMON.

• H1 2024 revenue reached KRW 1,203.8 billion, up 9.5% YoY, with operating profit at KRW 55.8 billion, a 39.4% YoY increase.

• Main business segments are payment/advertising (48.5% of sales), games (19.4%), and other (32.1%).

• Domestic sales accounted for 77.8% of total revenue, with Japan and other overseas markets contributing 13.8% and 8.4%, respectively.

Financial highlights

• Payment and advertisement revenue was KRW 295.8 billion in Q2, up 14.7% YoY and 2.6% QoQ; commerce revenue was KRW 57.4 billion, up 10.7% YoY but down 9.9% QoQ.

• Tech business revenue was KRW 98 billion in Q2, up 4.7% YoY and 3% QoQ; NHN Cloud revenue increased 33.8% YoY and 5.2% QoQ.

• Content revenue was KRW 53.4 billion in Q2, up 5.8% YoY and 18.7% QoQ.

• Net income attributable to controlling interests for H1 2024 was KRW 2.8 billion, reversing a loss of KRW 8.5 billion in H1 2023.

• Cash and cash equivalents at June 30, 2024, stood at KRW 672.0 billion.

Outlook and guidance

• Public sector cloud business expected to deliver meaningful revenue growth in H2, with government cloud budgets doubling YoY and projects progressing as planned.

• Game launches such as DARKEST DAYS delayed to Q1 next year for simultaneous PC/mobile release; Project G postponed due to publisher-side circumstances.

• The company plans to launch over 30 original webtoon titles in 2024 and continue expanding its global content platform.

• No formal quantitative guidance provided, but ongoing investments in AI, cloud, and fintech are highlighted.

• Ad and marketing expenses expected to rise slightly in Q3, with labor costs managed efficiently and no major increases anticipated.