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Naver Reports 15% Profit Growth Driven by AI and Shopping Innovations in Q1
Naver’s Q1 operating profit rose 15% to 505.3 billion won, driven by AI advancements and strong sales in search and commerce. CEO Choi confirmed generative AI hasn’t hurt demand for Naver’s search services.
Naver's Strong Q1 Performance Driven by AI and Shopping
Naver reported a 15% increase in operating profit for the first quarter, with sales hitting 2.7 trillion won. This growth is credited to advancements in artificial intelligence (AI) and improved shopping applications. CEO Choi Soo-yeon confirmed that generative AI tools like ChatGPT have not negatively impacted demand for Naver’s search services.
The company achieved record sales in advertising and commerce, fueled by AI-enhanced search and shopping platforms. Naver's first quarter sales rose 10.3% year-over-year to 2.7868 trillion won, with operating profit increasing 15% to 505.3 billion won.
Sales Breakdown by Division
- Search Platforms: 1.127 trillion won
- Commerce: 787.9 billion won
- Fintech: 392.7 billion won
- Content: 459.3 billion won
- Enterprise: 134.2 billion won
Search platforms, including integrated homepage search and shopping ads, grew 11.9% to 1.127 trillion won. This boost came from product improvements and more precise ad targeting powered by AI. Naver plans to expand advertising across all its platforms starting in the second quarter.
Commerce sales jumped 12%, thanks to the launch of the Naver Plus store app and enhanced recommended ads. Fintech revenue increased by 11%, with Naver Pay transactions growing 17.4% to 19.6 trillion won. Content and enterprise divisions grew 2.9% and 14.7%, respectively, with the cloud sector rebranded as Enterprise to better reflect its services.
CEO Choi's Take on Generative AI Impact
During the earnings call, CEO Choi emphasized that generative AI has not harmed Naver’s core business. Unlike competitors facing traffic drops due to non-commercial queries, Naver continues to see growth in search traffic related to business, shopping, and local services.
Generative AI is increasingly influencing shopping behavior. For example, OpenAI added shopping features to ChatGPT, allowing users to receive product recommendations and purchase via external links. Purple Lexy enables U.S. customers to see shopping suggestions within AI search results and order without visiting other e-commerce sites.
Choi highlighted the need to adapt to evolving consumer behavior by delivering content aligned with user interests. Naver is upgrading its app experience using its extensive user data to improve personalization.
In March, Naver introduced “AI Briefing,” a service summarizing search results using AI. Currently covering 1% of services, Naver aims to expand this to double digits by year-end. The new shopping app launched in March is performing well, and loyal users have not shifted away from existing Naver services, easing fears of internal competition.
Looking Ahead: Partnerships and AI Ecosystem Growth
Despite challenging external conditions, Naver plans to strengthen membership benefits by reorganizing shopping apps and expanding alliance ecosystems. The company will focus on enhancing competitiveness in fresh food and increasing customer activity through a partnership with Curly in the latter half of the year.
Naver also released a lightweight version of its self-developed Large Language Model, Hyperclova X, as an open-source commercial product to support growth in the domestic AI ecosystem. Partnerships with Korea Hydro & Nuclear Power and the Bank of Korea demonstrate successful B2B applications. Choi expects that as more domestic companies adopt AI, Naver’s monetization model will solidify.
For sales professionals interested in how AI tools are reshaping commerce and search, understanding Naver’s approach offers valuable insight into integrating AI to boost customer engagement and advertising efficiency. For further learning on AI’s role in sales and marketing, explore AI courses tailored for sales roles.