First Quarter Revenue Reaches 2.7868 Trillion Won, Up 10.3% Year-on-Year
Commerce Advertising Revenue Hits All-Time High
Naver has reported strong results for the first quarter of this year, driven by growth in key business segments such as advertising and commerce. The application of artificial intelligence (AI) to major services including search and shopping has led to increased advertising revenue.
On May 9, Naver announced in a regulatory filing that its consolidated operating profit for the first quarter of this year was provisionally tallied at 505.3 billion won, a 15% increase compared to the same period last year. Revenue for the same period grew by 10.3% to reach 2.7868 trillion won. Naver's first-quarter performance was in line with market expectations.
Revenue from the search platform (search) segment rose by 11.9% year-on-year to 1.0127 trillion won, driven by improvements in advertising products and more advanced targeting. Naver attributed the increase in advertising revenue to the use of AI. The company explained that AI-powered optimization of ad placements boosted advertising efficiency, resulting in revenue growth.
Starting from the second quarter's earnings announcement, Naver will disclose advertising revenue based on total Naver advertising rather than by business segment. The company cited the breakdown of product boundaries due to AI-driven optimization of ad placements as the reason for this change.
Naver also plans to revamp its integrated search function using AI. During a conference call held in the morning, CEO Choi Soo-yeon stated, "We are preparing to update the Naver app and integrated search," and added, "We will improve the accessibility and visibility of recommended content and make content consumption more natural." Specifically, the company plans to use AI technology to personalize user journeys and increase users' time spent on the platform.
In the commerce (shopping) segment, revenue increased by 12% year-on-year to 787.9 billion won. The company benefited from the launch of Naver Plus Store, the revamp of the fast delivery service 'N Delivery,' and enhanced benefits for Naver Plus Membership. The total transaction volume in the commerce segment for the first quarter of this year increased by 10.1% year-on-year to 12.8 trillion won, thanks to growth in Smart Store and service transaction volumes.
In particular, advertising revenue in the commerce segment reached an all-time high, driven by the launch of Naver Plus Store, optimization of ad placements, and advanced recommendation advertising.
Naver aims to achieve double-digit growth in shopping service transaction volume this year through the revamp of its shopping app and partnerships with partner companies. CEO Choi stated, "The shopping app (Naver Plus Store) has so far quickly established itself in the market and is making a positive contribution to expanding the overall user base."
The company also presented follow-up plans to the partnership signed with Kurly last month. CEO Choi said, "To strengthen our competitiveness in the fresh food sector, we will launch a service in partnership with Kurly in the second half of this year." Last month, Naver entered into a strategic partnership with Kurly to seek ways to strengthen their businesses. Specifically, Kurly's food and daily necessities will be introduced on Naver Plus Store, and the companies plan to collaborate in product and service areas in the future.
The fintech segment posted revenue of 392.7 billion won, up 11% year-on-year. In the first quarter, Naver Pay's payment volume increased by 17.4% year-on-year to 19.6 trillion won, driven by the growth of Smart Store and expansion of the external ecosystem.
The content segment, which includes Webtoon and Snow, recorded first-quarter revenue of 459.3 billion won, up 2.9% from the same period last year. The enterprise segment (formerly the cloud segment) saw revenue grow by 14.7% year-on-year to 134.2 billion won, thanks to the expansion of paid IDs for the business collaboration tool 'Line Works.'
CEO Choi Soo-yeon said, "Naver is securing unrivaled platform competitiveness based on an ecosystem that AI cannot replace, connecting Naver's unique content and data not only to search but also to discovery, exploration, shopping, and places." She added, "We will continue to strengthen our capabilities through the enhancement of user experience and gradual changes in service and advertising technology."
Meanwhile, regarding concerns that the growth of generative AI services could negatively impact search services, CEO Choi stated, "According to our internal data, we have not observed any negative impact on search trends from generative AI services so far." She continued, "I believe generative AI services are affecting those with a high proportion of non-commercial, informational searches. Naver's search service is focused on increasing search satisfaction by providing a wealth of information on various exploratory topics, such as shopping or finding restaurants."
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