Naver’s Q1 Surge: AI Powers Over Half of Ad Revenue Growth Amidst Robust Commerce Expansion
Naver reported a robust first quarter, announcing on Thursday a 7.2 percent year-on-year increase in operating profit to 541.8 billion won ($364.7 million). The South Korean tech giant attributed this significant growth to the deep integration of artificial intelligence across its core advertising and commerce sectors, accelerating overall revenue expansion.
Consolidated revenue for the quarter climbed impressively by 16.3 percent, reaching 3.24 trillion won. This figure surpassed analyst expectations, which had projected revenues around 3.14 trillion won. However, the reported operating profit slightly underperformed the consensus forecast of 559.3 billion won.
A notable highlight was the 9.3 percent growth in advertising revenue, with AI technologies contributing more than half of this increase. Naver’s proprietary ADVoost system, through enhanced targeting capabilities, played a crucial role. Furthermore, commerce-driven service revenue experienced a remarkable 35.6 percent surge, largely propelled by the success of the Naver Plus Store app, the company’s popular membership program, and its efficient N-delivery service.
CEO Choi Soo-yeon underscored the strong performance of the Naver Plus Store app, revealing a 28 percent quarter-on-quarter rise in gross merchandise volume (GMV). She also noted that conversion rates on the app were 84 percent higher than on the web, with over 80 percent of app buyers now being Naver Plus members, indicating strong customer loyalty and engagement.
External factors also contributed to Naver’s growth, including a customer data breach at rival Coupang last year, which redirected some shoppers back to Naver. A strategic seller-fee restructuring implemented in June further supported the company’s competitive positioning.
Naver Pay continued its strong trajectory, with transaction volume expanding by 23.4 percent to reach 24.2 trillion won. Payments made on external merchant sites accounted for a substantial 56 percent of the total volume, demonstrating the platform’s widespread adoption.
The company’s newly organized Global Initiatives segment, which encompasses its expanding consumer-to-consumer (C2C) marketplaces, recorded an 18.4 percent revenue increase. C2C sales specifically soared by 57.7 percent, driven by the strategic consolidation of Spanish marketplace Wallapop and sustained growth from platforms like Poshmark and Kream.
These positive earnings come just three days after Naver launched a public beta of AI Tab, its innovative agentic search product, to Naver Plus members. CEO Choi informed analysts that the company plans to commence testing generative AI advertising solutions linked to shopping and local search queries in the second quarter, with full monetization targeted for the third quarter.
“Naver stands alone as the only platform integrating search, commerce, and payment infrastructure into a seamless flow, which is paramount to our competitiveness in the evolving AI agent era,” Choi stated. She emphasized the company’s ambitious goal to establish AI search as a significant new revenue stream by the close of the year.
CFO Kim Hee-cheol provided insights into cost management, noting that GPU usage was approximately 30 percent below internal projections. This efficiency partially mitigated infrastructure cost pressures that have impacted margins. However, Kim also indicated that AI infrastructure spending is projected to rise throughout the year as Naver continues to expand its AI capabilities and capacity.
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