Naver Strengthens Image and AI-Centered Services... Records Highest Ever Q2 Earnings

Record Quarterly Performance
Sales Increased by 8.4% to 2.6105 Trillion KRW

Naver will introduce a new image-centric search feature in the second half of the year. Having driven its second-quarter performance to an all-time high through increased search revenue, Naver aims to secure more users by enhancing its functionalities. Regarding the issue of controlling shares in Japan's Line Yahoo, which escalated due to diplomatic tensions between Korea and Japan in the first half of this year, the company stated it is not considering reducing its stake and plans to explore ways to strengthen synergy through business cooperation.

At the Q2 earnings briefing held on the 9th, Naver CEO Choi Soo-yeon outlined these management plans. CEO Choi explained, "In the second half, we plan to expand incoming traffic by conducting user interface (UI) improvement tests aimed at attracting new users," adding, "We also plan to establish a new search feed that enables quick image-centric exploration and trend checking."

Naver currently offers an image search function. However, it judged that search results being primarily text-based diminished user interest. The company said, "We intend to display search results focusing on videos and images favored by younger users, such as short-form videos."

Regarding SoftBank, the major shareholder of Line Yahoo, temporarily refraining from reviewing capital relations, CEO Choi provided an explanation about future moves. She said, "We are not strategically considering changes to Naver's status as the largest shareholder or reducing control over Line," adding, "Since the Japanese Ministry of Internal Affairs and Communications has clarified guidelines on security governance, we will continue to explore ways to enhance synergy while complying with these guidelines."

On the recent Tmon and Wemakeprice (Timep) incident, she stated, "While striving for swift consumer protection measures, we will also further consider ways to coexist with sellers, such as faster settlements," and added, "We will take the lead in coexistence with franchisees and user protection."

CEO Choi also revealed operational plans for Cue:, an AI search service linked with Naver's large language model (LLM) 'HyperCLOVA X.' She said, "We are reviewing how to apply Cue: to mobile within this year." Cue: was launched in September last year and is currently available only on the PC version. She continued, "We are strategically reviewing services using LLM for conversational agents and shopping recommendations, but for now, we plan to focus on enhancing existing revenue models by combining our core businesses of search and advertising commerce," adding, "We are not currently considering monetization through separate subscription fees."

CEO Choi also reported that AI-related collaboration with Intel is progressing smoothly. Project-based revenue from AI chip verification work was generated for the first time in Q2, and additional revenue is expected if target tasks proceed. Earlier in April, Naver announced a joint development of a software (SW) platform used in AI semiconductors with Intel.

Efforts to improve advertising efficiency through AI are also underway. CEO Choi said, "We are enhancing advertising efficiency through AI-based targeting sophistication," and added, "From the second half, we plan to further advance advertiser tools centered on AI-driven optimization and automation, developing a more convenient advertising platform."

Naver recorded its highest-ever quarterly performance driven by balanced growth across platforms, commerce, and fintech (finance + technology). Consolidated revenue rose 8.4% year-on-year to KRW 2.6105 trillion, while operating profit increased 26.8% to KRW 472.7 billion.

Search platform segment revenue reached KRW 978.4 billion, up 7.5% year-on-year, due to product improvements and enhanced targeting effects in place advertising and search advertising.

The commerce segment grew 13.6% year-on-year to KRW 719 billion, supported by increased usage of delivery guarantees and brand solutions, as well as continued growth of the limited-edition trading platform KREAM. Naver Pay's payment volume led fintech segment growth of 8.5%, with external payment volume exceeding 50% of total payments for the first time.

The cloud segment rose 19.2% year-on-year to KRW 124.6 billion, driven by AI-related revenue generation. Naver has also commenced a digital twin platform construction project in Saudi Arabia.

However, the content segment recorded KRW 420 billion, a slight decrease of 0.1% year-on-year. On a constant currency basis excluding effects of exchange rate fluctuations, global webtoon revenue grew 11.1% year-on-year. Notably, the Japan region continues steady growth, achieving its highest-ever monthly paying user (MPU) count.