Naver, Kakao to report mixed Q1 earnings

Naver, Kakao to report mixed Q1 earnings

최초입력 2025.05.07 10:23:50

South Korea’s leading big tech companies Naver Corp. and Kakao Corp. are expected to report mixed performances for the first quarter of 2025.
Naver is projected to show high growth in advertising, its traditional cash cow business, as well as the commerce sector where it has aggressively adopted artificial intelligence (AI) this year. For its part, Kakao is expected to see negative growth due to underperformance in its core content business and a lack of visible achievements in AI.
According to financial information provider FnGuide Inc. on Tuesday, Naver’s first-quarter 2025 revenue is projected to total 2.8 trillion won ($2 billion), up 10.8 percent from the same period a year ago. This would be the company’s second-highest quarterly revenue in its history following the fourth quarter of 2024. Its operating profit is expected to increase by 16.3 percent to 510.7 billion won during the cited period.
On the other hand, Kakao’s first-quarter revenue is expected to fall by 2.7 percent to 1.9 trillion won and operating profit down by 12.1 percent to 105.7 billion won.
While the performance of their core businesses played a critical role in their financial results, the extent to which both companies have used AI - viewed as a key future growth engine - has also been a major factor.
Naver has been applying AI across its services, particularly integrating its in-house AI model, HyperCLOVA X, into core businesses like commerce and search. This marks a significant step in its expansion into AI-driven operations, and a key example is the launch of the standalone Naver Plus Store app in March 2025. The app delivers personalized shopping experience by recommending products tailored to the preferences of tens of millions of users from among billions of items.
Naver also rolled out AI Briefing, an AI-powered search feature, during the same month.
“Naver is seeing tangible growth in advertising and commerce via its on-service AI strategy,” DS Investment & Securities Co. analyst Choi Seung-ho said. “Its rich data resources give it an edge in hyper-personalized targeting, which translates into increased revenue in related sectors.”
However, Naver’s net profit for the first quarter is projected to fall by 31 percent year-on-year to 424 billion won due to one-time marketing and promotional costs related to new launches.
In contrast, Kakao continues to suffer from sluggish performance in its core content business but has managed to gain momentum in its AI initiatives.
According to Kyobo Securities Co., its key subsidiary Kakao Games Corp. is expected to post a first-quarter 2025 revenue of 124.7 billion won, down 30.1 percent from the same period during the previous year.
Industry observers are watching to see if upcoming AI initiatives, such as the launch of AI agent Kanana, can boost Kakao’s performance.
Kanana is a hyper-personalized AI service that provides users with tailored answers based on past conversations. Since the service is expected to be offered as a paid subscription service, it could also contribute to profitability.
Kakao also plans to enhance its flagship app KakaoTalk in 2025by integrating AI. It also aims to launch a new AI agent developed in collaboration with OpenAI before the end of the year.
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Naver, Kakao to report mixed Q1 earnings

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