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Naver's growth hits double digits in Q1 on AI-based advertising, commerce businesses

Published: 09 May. 2025, 18:37 Updated: 11 May. 2025, 17:26

Naver CEO Choi Soo-yeon speaks at the tech firm's 26th general shareholders' meeting on March 26 at Naver's headquarters in Seongnam, Gyeonggi. [NEWS1]

Naver recorded double-digit growth in the first quarter of this year compared to the same period last year, driven by a sharp increase in revenue from its AI-based advertising and commerce businesses.

Naver said Friday that its revenue for the first quarter of this year reached around 2.79 trillion won ($1.99 billion), while operating profit was 505.3 billion won. These figures represent increases of 10.3 percent and 15 percent, respectively, compared to the same period last year.

Both the search platform, accounting for about 36 percent of total revenue, and commerce, about 28 percent, showed growth rates in the 10-percent range compared to the previous year, driving the overall revenue increase.

“Naver has an irreplaceable ecosystem competitiveness in the AI era, built on proprietary content and data,” said CEO Choi Soo-yeon during a conference call.

Naver has been focusing its full efforts on the commerce sector this year. Last month, it launched its existing shopping feature as a separate app called “Naver Plus Store.” First-quarter commerce revenue reached 787.9 billion won, up 12 percent from the same period last year.

“After launching the app, we confirmed changes in user patterns and the potential for growth,” said Choi. “The app outperformed the web in purchase frequency per visitor, purchase amount, conversion rate and average spending per customer. Membership users showed about 26 percentage points higher activity within the app compared to the web,” she added.

Naver plans to introduce an AI agent that can increase time spent on the shopping app. According to the company, features such as a personalized AI shopping guide may be added. Membership benefits will also continue to expand. “We will strive to achieve double-digit growth in transaction volume this year,” said Choi.

However, it remains uncertain whether this level of commerce growth can be sustained amid weakened consumer sentiment due to high inflation. Another ongoing challenge is that Naver’s differentiated features, such as its AI shopping recommendation function, may fall short of consumer expectations.

Logo of HyperClova X [NAVER]

Among app users, there are criticisms that the new app does not differ significantly from the existing Naver Shopping service. In a report published in April, Morgan Stanley stated that the Naver Plus Store is unlikely to be a game changer.

As global competition in AI intensifies, the rising infrastructure investment costs — including those for purchasing graphics processing units (GPUs) — pose another challenge for Naver. The company said it plans to strengthen its competitiveness by applying AI to key services such as search and commerce.

“We expect the share of capital expenditures on equipment such as GPUs and CPUs, and related infrastructure costs, to increase compared to previous levels,” said CFO Kim Hee-chul. In fact, infrastructure costs rose by 11.4 percent year-on-year in the first quarter. Due to rising labor costs, development and operations expenses also increased by 8.1 percent from a year earlier.

Naver also plans to continue building its ecosystem based on its proprietary AI model, HyperClova X. Last month, the company released “HyperClova X Seed,” a lightweight version of HyperClova X, as a commercial open-source model. The move reflects Naver’s belief that as the domestic AI ecosystem matures and companies accelerate their AI transformation, its B2B services such as Neurocloud and GPUaaS (GPU as a service) will also see increased revenue.

“Supporting the development of the domestic AI ecosystem will ultimately benefit Naver’s own ecosystem as well, so we will continue to strengthen this area,” said Choi.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KWEN YU-JIN [[email protected]]