Naver and Kakao Soar in Q2 with AI; Monetization Remains a Challenge for the Second Half

Synergy Expected from the Peak Season in Search and Advertising
Full-Scale Integration of AI Services Accelerates Growth

Naver and Kakao, two major platforms, are expected to report strong results for the second quarter as their artificial intelligence (AI)-integrated services continue to perform well. With both the advertising and platform businesses maintaining robust results, both companies are progressively expanding their AI services and focusing on strengthening their AI ecosystems.

According to financial information provider FnGuide on July 14, Naver’s consolidated sales for the second quarter are projected to reach 3.3669 trillion won, with operating profit at 568.3 billion won, marking increases of 15.5% and 8.9% year-on-year, respectively. It is assessed that the full-scale application of AI to search, advertising, and commerce is generating synergies with Naver’s existing services.

The seasonal peak for the commerce and advertising markets, along with economic recovery, are expected to have played a key role in driving advertising and service sales, firmly establishing these as the company’s cash cows. In particular, Naver Plus Store continues to grow, and the increasing number of membership subscribers is anticipated to further support performance. Updates to the shopping commission structure and special sales events such as the Samsung Electronics Appreciation Festival have also had a positive impact on commerce growth.

For the second half of the year, Naver plans to integrate AI with key areas such as search and commerce to increase user dwell time. The ‘AI Tab’, launched in the second quarter, will begin integration with real estate services next month, and will be further expanded to include a health agent and a Whale browser-specialized agent. Additionally, from the third quarter, advertisements will be introduced at the top of the ‘AI Briefing’ section to boost revenue.

Kakao is also expected to achieve its best-ever second-quarter results. Kakao's projected sales and operating profit for the second quarter this year are 2.0468 trillion won and 223.6 billion won, respectively. Compared to the same period a year ago, sales are expected to show a slight increase of 1.4%, while operating profit is projected to rise by 20.1%.

Kakao’s anticipated strong quarterly results are primarily attributed to robust advertising business revenue, including revenue from Talk Biz. The financial investment industry forecasts that Kakao’s Talk Biz advertising sales will see a year-on-year growth rate in the mid-10% range. Kakao’s efforts to slim down operations are also believed to have had a positive effect on its second-quarter results. During the first quarter, Kakao sold off Kakao Games and AXZ, the operator of the portal ‘Daum’. Through these divestitures of non-core businesses, Kakao achieved operating profits exceeding market expectations in the first quarter.

Kakao also aims to evolve its main platform, KakaoTalk, into an “agentic AI platform.” Through its collaboration with OpenAI, Kakao is offering the ‘ChatGPT for Kakao’ service on KakaoTalk, where, via the built-in KakaoTools, certain limited AI agent services are available. Users can interact with ChatGPT for Kakao to access not only Kakao's own services such as Kakao T and Kakao Pay, but also external services. The company's goal is to transform KakaoTalk into a type of AI agent operating system (OS).

However, there are concerns that the execution of this strategy has been slow and that tangible results still need to be seen. Kim So-Hye, a researcher at Hanwha Investment & Securities, stated, "It will be necessary to see some progress with AI services even in the second half of the year," and pointed out, "Although the buzz around already launched services and the pace of user expansion are somewhat slower than the market expected, the company appears to be focusing more on user retention and experience completeness than on short-term traffic."

This content was produced with the assistance of AI translation services.