Naver and Kakao are expected to report improved earnings for the second quarter as they prepare for their upcoming announcements at the end of the month. Analysts predict that both companies will continue their positive performance, supported by stable advertising and platform businesses. A key factor will be how successfully they can integrate artificial intelligence (AI) into their existing services to create new revenue streams.
According to financial information provider FnGuide, Naver's consolidated revenue for the second quarter is projected to reach 3.3481 trillion won, with an operating profit of 572.7 billion won, marking increases of 14.8% and 9.8%, respectively, compared to the same period last year.
Kakao is also expected to report strong results, with a consensus revenue estimate of 2.056 trillion won and an operating profit of 223.4 billion won, reflecting year-on-year increases of 1.4% and 20.1%.
Both companies' earnings are driven by their advertising and platform businesses, but their growth strategies for the second half of the year differ somewhat.
Naver plans to enhance user engagement and boost advertising and shopping revenue by integrating AI into its search and commerce services. In the first quarter, the number of performance-based advertisers more than doubled compared to the previous year, thanks to advancements in AI-driven advertising.
In the second half, Naver aims to strengthen this trend. The recently launched AI search feature, 'AI Tab,' will begin integrating real estate services in August, followed by health agents and specialized agents for the Whale browser, expanding its usability. Instead of operating the AI Tab as a paid service, Naver intends to increase search usage to enhance advertising and commerce engagement.
Starting in the third quarter, advertisements are expected to be introduced at the top of the 'AI Briefing,' which summarizes search results, potentially increasing revenue through new advertising space.
Strengthening commerce competitiveness is also a major task for Naver. The company is reportedly considering a direct delivery business model to enhance its logistics capabilities. This strategy aims to improve the shopping experience and increase the use of Naver Plus Store and membership, ultimately driving transaction growth.
Kakao, on the other hand, is focusing on integrating AI into its platform ecosystem centered around KakaoTalk. Currently, TalkBiz advertising and commerce are key revenue sources, supported by its content business, which includes webtoons and music. In the first quarter, TalkBiz advertising revenue grew by 16% year-on-year, indicating robust growth in advertising and commerce.
In the second half, increasing the utilization of AI within KakaoTalk will be a top priority. The company plans to gradually expand AI services such as 'ChatGPT for Kakao,' 'Kanana in KakaoTalk,' and AI Mate, incorporating various functions like conversation, search, recommendations, and schedule management into KakaoTalk. The goal is to increase user engagement and connect existing revenue models, including advertising, commerce, and subscriptions, with AI.
However, Kakao faces challenges due to ongoing labor disputes related to its AI business expansion. Concerns have been raised that unresolved conflicts over organizational restructuring and business realignment could impact service launch schedules and the pace of business development.
* This article has been translated by AI.
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