Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NAVER Corp (XKRX:035420, Financial) reported a 13.7% year-over-year increase in Q4 revenue, driven by growth in core businesses such as search platform and commerce.
- The company's operating profit increased by 33.7% year-over-year, with an improved operating margin of 18.8%.
- NAVER's commerce segment saw a significant rebound, with on-platform GMV growing 11% year-over-year, exceeding market growth rates.
- The introduction of NAVER Plus Store has led to increased user engagement and positive feedback, with no significant traffic churn.
- NAVER's fintech business showed strong performance, with NAVER Pay TPV increasing by 18.3% year-over-year, driven by the addition of new merchants.
Negative Points
- The e-commerce market faced challenges due to political instability, economic uncertainty, and major social issues, leading to a period of low growth.
- Despite positive growth, the overall outlook for the ads and commerce markets has been revised downward due to dampened consumer sentiment.
- NAVER's content revenue showed minimal growth, with a 0.2% year-over-year increase, partly impacted by the deconsolidation of NAVER Z.
- The Cloud segment, despite growth, continues to face challenges with narrowing losses year-over-year and quarter-over-quarter.
- NAVER anticipates a more challenging year ahead compared to the previous year, with potential impacts on margins due to increased marketing and promotion activities.
Q & A Highlights
Q: What is NAVER's priority regarding AI strategy, particularly with HyperCLOVA X, and how does it compare to other big techs?
A: Su Yeon Choi, CEO, explained that NAVER focuses on enhancing HyperCLOVA X to optimize speed and capabilities specific to NAVER. The company continuously trains its models using data to improve efficiency. NAVER's model is highly competitive in Korean language capabilities and STEM. They plan to update their flagship model and enhance multimodality across voice, image, and video. While open to collaborations, NAVER has not yet partnered with external LLM providers.
Q: How has the introduction of NAVER Plus Store been received by users, and what are the implications of DeepSeek's launch on AI adoption and NAVER's margins?
A: Su Yeon Choi noted positive user feedback for NAVER Plus Store, with increased usage and engagement. The launch did not negatively impact traffic, indicating stable user behavior. Regarding DeepSeek, NAVER sees it as an opportunity to accelerate AI adoption without significant strategic changes. The company aims to maintain competitiveness and believes AI advancements will enhance cost efficiency and business speed.
Q: What impact did the LY Corp. settlement have on NAVER's operating profit, and how has the Netflix partnership affected membership revenue and user behavior?
A: Su Yeon Choi stated that the LY Corp. settlement had a 1 percentage point impact on margins. The Netflix partnership led to a significant increase in new subscribers and spending, with low churn rates, indicating long-term user retention. NAVER plans to pursue more strategic partnerships to grow its membership base and spending.
Q: How does NAVER plan to manage costs and margins with the introduction of the NAVER Plus Store app and other e-commerce strategies?
A: Nam-Sun Kim, CFO, mentioned that marketing and promotions for the NAVER Plus Store app will be controlled to minimize margin impact. Despite increased promotions, NAVER's commerce margin recovered due to enhanced shopping search ads and higher ad revenue. The company aims to balance investment and margin defense while exploring upselling opportunities.
Q: What are NAVER's expectations for Smart Store GMV growth, and how will the company leverage personalization and delivery improvements?
A: Su Yeon Choi highlighted that NAVER aims for double-digit GMV growth for Smart Store, outperforming market growth. The company will leverage personalization strengths and improve delivery and membership benefits to drive robust growth. NAVER plans to focus on strategic partnerships and user engagement to achieve these objectives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
