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Naver posts record profit as Webtoon nears U.S market listing

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Naver headquarters in Seongnam, Gyeonggi [NEWS1]
Naver headquarters in Seongnam, Gyeonggi [NEWS1]

Naver posted a record-high operating profit in the April-June period due to strong profitability across commerce, fintech and content.

With the announcement of preliminary earnings, Naver Webtoon also announced that it plans to be listed in the U.S. market next year.

Operating profit jumped 10.9 percent on year to 372.7 billion won ($286 million) in the second quarter. The figure exceeded the market estimate of 368.4 billion won compiled by FnGuide.

“Naver’s primary divisions showed even growth in the second quarter and will continue to do so by providing our consumers with our very own generative artificial intelligence, created over years from accumulated AI-related technology and platform competitiveness,” Naver CEO Choi Soo-yeon said at an online conference call Friday.

Naver is set to release large-scale AI service HyperClova X and a beta version of its chatbot service Clova X on Aug. 24.

Quarterly revenue rose 17.7 percent to 2.4 trillion won, in line with the market consensus of 2.43 trillion won.

Thirty-seven percent of the revenue, or 910.4 billion won, came from its search engine, which was up by 0.5 percent on year. It was followed by the commerce division at 632.9 billion won, up 44 percent on year; fintech at 339.7 billion won, up 14.9 percent on year; and content at 420.4 billion won, up 40.1 percent on year.

Net profit skyrocketed 80.9 percent to 286.7 trillion won, surpassing the analysts’ expectations of 233.8 billion won.

Choi anticipates various experimental AI solutions to be made possible by interlinking its upcoming AI models with its services for creators, business operators, and sellers in the business-to-business (B2B) space.

In the business-to-consumer (B2C) realm, the beta service of another generative AI, Cue:, will be released in September. Cue: is a search-specific model that is able to comprehend users’ search intentions and provide tailored answers for them.

Choi expects improved advertisement revenue after implementing its AI models.

“In the B2C realm, Naver will be able to enhance the consumer experience for users which will then translate into a positive impact on our advertisement revenue as well as service satisfaction as the model better interprets the search queries and suggests adequate answers after perceiving users’ search records, reviews, purchases, interests and lifestyle,” Choi said. “In terms of the B2B realm, we think that we will be able to make revenue gains and see its impact much earlier than expected. We are planning various collaborations with a wide array of businesses.”

Naver Webtoon aims to go public in the U.S. market next year, Chief Financial Officer Kim Nam-sun said.

“Naver Webtoon’s plan to become listed is being carried on accordingly and we will complete the preparation so that it can go public next year,” Kim said. “Yes, our gross merchandise volume [GMV] is important, but we see considerable monetization opportunities in our advertisement revenue as well.”

GMV is the total amount of web content sold. Naver Webtoon global GMV reached 444.8 billion won this quarter.

Naver is also planning to revamp its app.

“The core strategy behind the revamp is to strengthen consumer engagement,” Choi said. “The updated app will interpret user patterns and offer more personalized content and feeds to increase Naver’s content consumption.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]

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