Naver revenue, profit beat estimates on search engine surge

In 2024, Naver reported record annual revenue of 10.7 trillion won, benefiting from growth in its search, commerce, fintech, and cloud businesses. Founder Lee Hae-jin was proposed as a director.

Naver's headquarters in Seongnam, Gyeonggi, pictured on Feb. 7. [NEWS1]

Naver reported slightly better-than-expected profit and revenue in 2024 and became the first Korean platform operator to bring in more than 10 trillion won ($6.9 billion), boosted by the explosion of its search engine business.

Annual revenue at Korea’s leading portal operator climbed 11 percent from the year prior to a record-high 10.7 trillion won in 2024, slightly above the 10.65 trillion won estimated by market tracker FnGuide. Operating profit also slightly exceeded estimates, soaring 32.9 percent to 1.98 trillion won.

The company saw growth across its major businesses in advertising-driven search, commerce, fintech and cloud. The company launched its Naver Plus Store, an AI-driven shopping service that offers personalized recommendations and a free Netflix subscription for members, which it plans to release as a stand-alone app this year. It also commenced its Digital Twin Platform Construction Project with Saudi Arabia last summer, a five-year deal valued at $100 million that it signed in 2023, which has received significant attention across the Middle East.

The company's search engine business rose 9.9 percent from the previous year to 3.95 trillion won while the commerce sector climbed 14.8 percent to 2.92 trillion won. Fintech rose 11.3 percent while cloud surged 26.1 percent.

The company surprised the market by proposing its founder, Lee Hae-jin, as an inside director in an electronic disclosure filed the same day. The appointment, which is subject to voter approval at next month’s shareholder meeting, would mark the somewhat-reclusive entrepreneur’s first return to the company’s domestic operations seven years after stepping down as board chair in 2017.

Lee's leadership could be a crucial part of Naver's planned ventures into the AI race this upcoming year as Chinese startup DeepSeek takes the world by storm with its latest low-cost AI model. Naver CEO Choi Soo-yeon expressed confidence that the company's proprietary HyperClova X, even as a latecomer, could catch up to such competitors at relatively low cost.

“While global competitors are pursuing a strategy of infinitely expanding AI capabilities to pioneer new markets, HyperClova X aims to build optimized models to speedily integrate into Naver’s services,” Choi said of the large language model (LLM). “We plan to roll out an update for our flagship model this month and showcase achievements in various multimodal capabilities, including voice, image and video, within the year.”

The CEO commented that the Korean company is “open for review” to collaborations with external LLMs from global Big Tech firms.

Operating profit for the three months ending in December surged 33.7 percent from the previous year to 542 billion won at the portal operator, beating the market expectation of 529.4 billion won.

Fourth quarter revenue jumped 13.7 percent on year to 2.88 trillion won, surpassing the market forecast of 2.8 trillion won.

Net profit during the same period totaled 444 billion won, up 48.8 percent on year and exceeding analyst forecast of 418.7 billion won.

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