The combined annual revenue of Naver and Kakao, the two leading platform companies in South Korea, is expected to surpass 20 trillion won for the first time last year. This marks a record high for both companies. With growth in search, advertising, and commerce sectors-driven by the integration of artificial intelligence (AI)-leading to these record results, experts are predicting that the degree of monetization of AI services will be the key determinant of performance this year.
Naver and Kakao Surpass 20 Trillion Won in Revenue Last Year... 'Record-Breaking Results'
According to financial information provider FnGuide on January 21, Naver's consolidated revenue and operating profit estimates (consensus) for last year were tallied at 12.1022 trillion won and 2.2019 trillion won, respectively. If these market forecasts are realized, this will be the first time Naver's annual operating profit exceeds 2 trillion won. Previously, Naver recorded 10.7377 trillion won in revenue in 2024, becoming the first in the platform industry to surpass 10 trillion won in annual revenue.
Naver's strong performance last year is attributed to continued growth in its commerce division and improved advertising efficiency through AI. In particular, the commerce division was expected to see significant growth, with the early success of the standalone Naver Plus Store app playing a key role. The effects of a commission restructuring implemented in the second half of last year are also ongoing. Naver also benefited from the fallout of a large-scale personal information leak at Coupang. In the fourth quarter of last year, when the Coupang leak occurred, Naver's revenue was projected at 3.2623 trillion won and operating profit at 604.4 billion won-both record highs for a single quarter.
In advertising, AI-powered ad exposure optimization and personalized content recommendations proved effective. The introduction of 'AI Briefing,' which summarizes search results for specific queries, is also credited with increasing user engagement. Since its introduction in March last year, AI Briefing now accounts for about 20% of total searches.
Soo-Yeon Choi, CEO of Naver, is giving a presentation at the DAN25 Conference held on the 6th at the COEX Grand Ballroom in Gangnam-gu, Seoul. Photo by Yonhap News
Kakao's annual revenue and operating profit for last year are estimated at 8.089 trillion won and 684.7 billion won, respectively. Kakao is also expected to set new records for both annual revenue and operating profit, with operating profit projected to increase by approximately 50% compared to 2024 (460.2 billion won), reflecting a clear trend of improved profitability.
Kakao's improved operating profit was driven by the restructuring of non-core subsidiaries and increased ad exposure. The number of Kakao affiliates once reached 147, but through the streamlining of non-core businesses, this was reduced to 94 by the end of last year. The major overhaul of KakaoTalk last year, which increased advertising inventory and user engagement, is also seen as contributing to improved profitability.
Monetizing AI Is the Core of Naver and Kakao's Performance This Year
Sam Altman, CEO and founder of OpenAI, the developer of ChatGPT, and Jeongshin A, CEO of Kakao, are attending the "Kakao Media Day" held on the 4th at the Plaza Hotel in Jung-gu, Seoul, posing for a photo. Photo by Kang Jinhyung
Industry experts point to 'monetizing AI,' based on agentic AI, as the key performance theme for both companies this year. Agentic AI refers to artificial intelligence that independently makes decisions and predictions and takes action without user instructions.
To this end, Naver is pursuing an 'on-service AI' strategy, applying AI across all services, and plans to introduce the AI agent platform 'AgentN' to its shopping and AI tabs in the first half of this year. The shopping agent is expected to recommend products tailored to users by analyzing their information. In the new AI tab, users will be able to search for information through natural conversations with generative AI.
An Jaemin, an analyst at NH Investment & Securities, commented, "Naver's AI-integrated services are gradually contributing to increased user traffic and business growth. The launch of the shopping AI agent in the first half of the year is highly anticipated, and by integrating Naver's diverse commerce and local data, the company will enhance its AI competitiveness."
Kakao is also expected to see its performance this year determined by the enhanced KakaoTalk AI, which is set for upgrades in the first half. The company plans to officially launch its proprietary AI service, 'Kanana in KakaoTalk,' in the first half. Currently in beta testing, this service analyzes users' conversations and provides customized information, operating on an 'on-device' model where all AI processing is handled locally on the device. Last year, Kakao became the first in Korea to form a strategic partnership with OpenAI and launched 'ChatGPT for Kakao,' which integrates ChatGPT into KakaoTalk.
Nam Hyoji, an analyst at SK Securities, stated, "If Kakao sequentially launches AI services such as Kanana in KakaoTalk and Kanana Search this year, successfully implements AI agents within KakaoTalk, and establishes a robust AI revenue model, renewed expectations for AI could be reflected in the company's valuation."
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