NAVER Corporation Q4 FY2025 earnings call

• AI Initiatives: In 2026, NAVER will focus on integrating GenAI across core services. AI Briefing coverage aims to expand to ~2x current level by end 2026, initially in informational queries then expanding to shopping and local services. AI Tab to be launched in first half of 2026, offering a conversational AI search connected to broader ecosystem services.
• Advertising: Aiming to strengthen advertising competitiveness, expand inventory within NAVER ecosystem, and pursue new opportunities in external media, off-site channels, and out-of-home advertising. AI's contribution to advertising revenue is expected to expand further in 2026.
• Commerce: 2026 goal is double-digit growth in Smart Store GMV. Will strengthen delivery competitiveness, with end delivery coverage targeted to expand to 25% in 2026, over 35% in 2027, and at least 50% mid-to-long term. Aim to increase active membership users by over 20% YOY. C2C segment (Wallapop, Poshmark, etc.) showing strong growth.
• B2B: Continues to focus on strengthening AI technology competitiveness and identifying sovereign AI business opportunities globally. DX projects underway in regions like Saudi Arabia, Thailand, and Japan.

Advertising:

• 2025 total platform advertising revenue grew 8.8%, with AI contributing 55%.
• Q4 growth moderated slightly due to extended Chuseok holidays, but AI-driven optimization and ADVoost continued to drive revenue growth. The number of performance advertisers increased by more than 2x YOY, and advertisers using ADVoost Shopping are growing rapidly.

Commerce:

• 2025 Smart Store GMV accelerated to 10% YOY growth. Q4 commerce revenue was KRW 1.05 trillion, up 36% YOY, and full year commerce revenue was KRW 3.67 trillion, up 26.2% YOY. Cumulative downloads of NAVER Plus Store app surpassed 12.9 million. New membership sign-ups increased 71% MoM in December. Commission and sales revenue grew 45.2% YOY in Q4. Poshmark showed strong growth in Q4 with GMV and revenue up over 20% YOY.

B2B:

• Q4 enterprise revenue grew 16.6% YOY ex-base effect from LY-related settlement adjustments. Software and AI projects are progressing, with customized projects across sectors like finance, economy, defense, and public sector. Collaborations include with Korea Hydro & Nuclear Power, Seoul National University Hospital, Bank of Korea, and Saudi Arabia for digital twin and super app initiatives.

Fintech:

• Q4 fintech revenue was KRW 453.1 billion, up 13% YOY, and full year fintech revenue was KRW 1.61 trillion, up 12.1% YOY. Total payment volume in Q4 was KRW 23 trillion, up 19% YOY, with off-platform payment volume at a record high of 56%.

Content:

• Q4 content revenue was KRW 456.7 billion, down 2.3% YOY, but full year content revenue was KRW 1.9 trillion, up 5.7% YOY. WEBTOON revenue declined 2.6% YOY in Q4, but partnership with Disney was strengthened. SNOW revenue was up 8.5% YOY in Q4.

• AI Briefing coverage aims to expand to approximately 2x current level by end of 2026, initially focusing on informational queries and then extending to shopping and local services.
• Aim for double-digit year-on-year growth in Smart Store GMV in 2026.
• End delivery coverage targeted to expand to 25% in 2026, over 35% in 2027, and at least 50% mid-to-long term.
• Goal to increase active membership users by more than 20% year-on-year in 2026.

• Potential cannibalization of search and advertising due to contextual deployment of AI.
• Impact of external factors like extended holidays on advertising revenue growth.
• Outcome of government-led sovereign AI projects could impact B2B business endeavors.

Q: Relating to the shopping agent, when will it be rolled out and how will it impact revenue?

A: Shopping agent development is at closed beta level, starting in-house closed beta test next week, product to be showcased to customers by end of February. AI agent will first be applied to shopping then expanded to other verticals, with expectation of positive impact on advertisement and commerce revenue growth.

Q: Concerns about AI Briefing expansion cannibalizing current advertising model and unit price increase?

A: In second half of 2026, AI Briefing features will be tested in shopping and place domains. Will consider different aspects including advertisement, and metrics like dwell time on response page have increased, expecting effective advertisement solution despite potential unit cost increases.

Q: Impact of membership partnerships on search and commerce margin?

A: Membership partnerships do not have meaningful impact on NAVER's advertisement margin. Recent margin decline is due to portfolio mix changes, but margin level for search and commerce is maintained above 30% and will be closely managed.

Q: How will legislative efforts on early morning deliveries impact NAVER?

A: Already, large offline grocers competitive in the market are NAVER's partners. 3PL and advertisement models will benefit as ecosystem expands with more competitive players, though specific impact of new regulation is yet to be fully assessed.