Naver, Kakao are expected to report mixed results for second quarter

Naver Corp. and Kakao Corp. are poised to unveil contrasting performances in their financial results for the second quarter of this year. While both companies are expected to witness revenue growth versus a year ago, their operating profits are projected to move in opposing directions.

Based on the consensus of securities firms polled by Yonhap Infomax on Monday, Naver’s operating profit for the April-June period is estimated to reach 365.7 billion won ($278.3 million), representing a notable 8.8 percent increase compared to the same period last year. Furthermore, revenue is predicted to experience a significant upswing of 24.3 percent, reaching 2.43 trillion won.

The various sectors are expected to contribute differently to the revenue growth of Naver. While the display ad revenue may decline, search ad revenue, including search platform sales, is projected to increase. The company’s commerce sector is expected to see a significant increase in revenue from its acquisition of U.S. fashion marketplace Poshmark and market share expansion.

The company’s fintech segment is predicted to continue its revenue growth through an expansion of online franchise businesses, while the content sector is expected to witness increased revenue as paid users expand.

Despite facing a high base effect from the second quarter of last year, Naver’s cloud segment is anticipated to achieve a slight increase in revenue.

Earlier, Naver announced plans to unveil its service lineup based on its internally developed artificial intelligence language model, ‘Hyper Clova X,’ within this year, hoping for momentum in the second half of the year.

On the other hand, Kakao’s consolidated operating profit for the second quarter is expected to be down 28.3 percent on-year to 122.6 billion won. But Kakao’s operating profit on a consolidated basis for the second quarter is estimated to be 122.6 billion won, down 28.3 percent from a year earlier.

However, this was an increase from the previous quarter’s operating profit of 71.1 billion won, and an improvement in the second quarter compared to the 55.2 percent decline in operating profit in the first quarter.

Kakao’s revenue for the second quarter is also forecast to increase 13.7 percent on-year to 2.07 trillion won.

As a result, Kakao is currently undergoing an intense restructuring centered on entertainment and enterprise business.

Some analysts believe that Kakao can create synergy with the commerce sector through ad recommendations by incorporating KakaoTalk’s recently unveiled AI image generation model, Karlo 2.0, and AI interactive chatbots like CoChat GPT which will be released later this year.

The second-quarter financial announcements for Naver and Kakao are slated for Aug. 3 and 4, respectively.