South Korean search giant Naver released its Q1 financial report and announced that it will launch an AI product this summer

Naver to launch AI product this summer, according to Q1 financial report

The financial report shows that Naver’s search platform revenue reached 851.8 billion Korean won in the first quarter, a slight increase of 0.2% year-on-year, but a 7.1% decrease from the previous quarter. Search advertising increased by 5.3% year-on-year, outpacing the global search market.

Naver is the most commonly used search engine in South Korea. According to Statista, Naver has a monthly active user rate of 61.2% in the country, occupying a large market share. In contrast, Google’s search market share in South Korea is only 28.55%.

After acquiring Poshmark earlier this year, Naver’s e-commerce sales revenue also grew significantly in the first quarter, with a year-on-year increase of 45.5% to reach 458.5 million US dollars. E-commerce GMV increased by 19.7% year-on-year to 11.6 trillion Korean won (8.77 billion US dollars), which is 13.2% higher than the market’s year-on-year growth rate.

Financial technology revenue increased by 15.8% year-on-year to 318.2 billion Korean won (240.6 million US dollars), and NaverPay’s payment volume reached 13.4 trillion Korean won (1.014 billion US dollars), a year-on-year increase of 19.2%.

This growth was significantly contributed by external and offline payments, which amounted to 5.4 trillion Korean won (408 million US dollars) and 810 billion Korean won (61.26 million US dollars), respectively.

Driven by the global GMV growth of Webtoon, content revenue reached 411.3 billion Korean won, a significant year-on-year increase of 94.0%. B2B cloud business increased by 6.6% year-on-year.

Although Naver’s operating profit increased by 9.5%, the company’s operating profit margin fell to 14.5%, a decrease of 1.9 percentage points from the same period last year. The annual operating profit margin has been declining since reaching 26.5% in 2019.

Due to the impact of AI on the search market, Naver also plans to develop AI products. During the financial report conference, the company revealed that it will launch a “super AI” product called HyperCLOVAX this summer, which will provide users with AI-based search and have stronger Korean language capability than its American competitor OpenAI’s ChatGPT, making it more suitable for the South Korean domestic market.

Naver CEO Choi said: “Based on having the world’s third largest Korean language training volume and Korea’s number one HyperClova, we will launch HyperClovaX service that can compete with GPT-4 (successor to ChatGPT).”

When asked about using HyperCLOVAX for search, Naver CEO shared: “In terms of search, we plan to conduct internal beta testing of general AI search services in the first half of this year, and launch an upgrade-as-a-service model to users in the second half of the year.”

Meanwhile, Naver will also launch AI services for business-to-business (B2B) use. The tool will introduce customized inbound B2B services to address data protection issues. In Japan, Naver will launch B2B services this year, integrating HyperCLOVAX into production tools such as LineWorks and NaverWorks.

Editor ✎ Ashley/BusinessDialogue

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