Naver to rev up generative AI services

Naver headquarters in Seongnam, Gyeonggi Province (Naver)

After logging all-time high earnings last year, Naver CEO Choi Soo-yeon expressed her determination to strengthen the tech giant's core search platform and commerce services using generative artificial intelligence technology this year.

"Based on AI and data, Naver will focus on enhancing competitiveness in key businesses, including search engines and commerce platforms," Choi said during the company’s earnings conference held on Friday.

Choi expected that Cue, a generative AI search service that debuted last September, would start to yield tangible outcomes from this year as it will be available on users' smartphones within the first half of 2024. The service has previously been limited to PC-integrated search.

"The service is expected to make profits by providing hyper-personalized content tailored to each user based on generative AI technology," she said.

The company will also add multimodal technologies that can accept image and textual input to produce text output and provide new search experiences for users. The expanded user experience will eventually lead to greater profits, the CEO added.

Prior to Friday's earnings call, the IT giant released reports on its full-year earnings for 2023 and the fourth quarter together before the Korea Exchange opened. It logged all-time high annual numbers for both profit and sales.

Naver said it logged 1.49 trillion won ($1.13 billion) in operating profit in 2023, up 14.1 percent from a year earlier. Annual net profit and sales surged 46.8 percent on-year and 17.6 percent on-year, respectively, to 988.4 billion won and 9.67 trillion won.

"2023 was a year in which efforts were made to generate solid sales growth and increase our profitability through prudent cost execution despite difficult internal and external environments," Choi said.

The company announced that its adjusted earnings before interest, tax, depreciation and amortization -- a financial metric to reflect a company's operating cash flow -- came to an all-time high of 2.13 trillion won in 2023, an 18.4 percent on-year increase.

For the fourth quarter alone, Naver said its major businesses collectively delivered a strong overall performance, but it was largely driven by the robust growth of its commerce and fintech businesses.

The IT firm posted 405.5 billion won in operating profit for the October-December period, up 20.5 percent on-year, while net profit and sales came to 301.8 billion won and 2.53 trillion won, respectively, up 129 percent and 11.7 percent from a year ago.

By business segment, the company's flagship search platform business saw a 1.3 percent on-year rise in sales to 928.3 billion won in the three months ending in December, due to high demand for search advertisements.

Sales of its commerce and fintech businesses, respectively, posted 660.5 billion won and 356 billion won over the cited period, while content and cloud businesses generated 466.3 billion won and 125.9 billion won, respectively.

During Friday's earnings conference, Naver Chief Financial Officer Kim Nam-sun said the company plans to hand out a total of 118.9 billion won in cash dividends to shareholders.

Meanwhile, market watchers have forecast Naver to hit another record high in earnings this year. According to a consensus projected by local analysts and provided by the market intelligence firm FnGuide, Naver is expected to log 1.72 trillion won in operating profit, with 1.41 trillion won in net income and 10.83 trillion won in sales in 2024.

By Jie Ye-eun(yeeun@heraldcorp.com)