NAVER, Kakao Expected to Post Solid Q3 Results... AI Performance in Focus

Kakao to Report Third-Quarter Results on Nov. 5, NAVER on Nov. 12

As NAVER and Kakao, the country's two major platform companies, prepare to report solid results for the third quarter of this year, proving the growth potential of their artificial intelligence (AI) businesses has emerged as a key factor in their performance.

According to financial information provider FnGuide on Nov. 3, consensus forecasts for NAVER's consolidated revenue and operating profit in the third quarter of this year stand at KRW 3.5143 trillion and KRW 497.6 billion, respectively. Revenue is expected to reach a quarterly record, up 12% from the same period last year, while operating profit is forecast to decline 12.8%. The consensus figures are based on the average of earnings forecasts issued by securities firms' research centers over the past three months.

Analysts expect AdBoost and commerce advertising to drive NAVER's revenue growth, but say costs associated with business investments, including AI infrastructure such as graphics processing units (GPUs) and sports broadcasting rights for CHZZK, will weigh on profitability.

Kakao's consensus forecasts for the third quarter are KRW 2.042 trillion in revenue and KRW 248.3 billion in operating profit. Compared with the same period last year, revenue is expected to decline 2.1%, while operating profit is forecast to increase 19.4%. In the second quarter, Kakao posted record-high quarterly revenue and operating profit as its platform business grew. The base effect from the restructuring of non-core subsidiaries is likely to contribute significantly to the increase in third-quarter operating profit.

AI business performance is seen as a key factor that will determine the future earnings trajectories of NAVER and Kakao. NAVER offers services such as AI Tab and AI Briefing, which integrate AI into search, shopping, and maps (Place). To secure AI computing infrastructure, it attracted an investment of $9 billion from Brookfield and also received a strategic equity investment from Nvidia. "The materialization of events such as AI Factory customer contracts and approval of the merger with Dunamu after the fourth quarter could trigger a rebound in the share price," said Jeong Euihoon, a researcher at Eugene Investment & Securities.

Kakao, which is set to split off part of its business by the end of this year to strengthen its platform and AI competitiveness, also needs to demonstrate results from its AI business, analysts say. At its annual event "if kakao 26" last month, Kakao unveiled its AI agent "Kanana Space" and plans to launch a beta service in December. "If there is clear evidence that AI services are translating into actual traffic and monetization, the potential upside will be reflected more significantly," said Kim Sohye, a researcher at Hanwha Investment & Securities.

Kakao is scheduled to report its third-quarter results on Nov. 5, followed by NAVER on Nov. 12.

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