SEOUL, August 07 (AJP) - Naver's second-quarter operating profit fell short of market expectations despite stronger-than-expected revenue, as spending on artificial intelligence, marketing, sports broadcasting and payment infrastructure squeezed margins.
Operating profit for the April-June period came to 520.3 billion won ($346 million), down 0.2 percent from a year earlier and 4 percent from the previous quarter. It was 8.1 percent below the FnGuide consensus of 566.2 billion won.
The operating margin narrowed to 15.4 percent from 17.9 percent a year earlier and 16.7 percent in the first quarter.
Operating expenses jumped 19.8 percent to 2.868 trillion won, outpacing revenue growth.
Partner expenses rose 22 percent, reflecting World Cup broadcasting rights and spending on Npay Connect terminals, marketing costs climbed 25.4 percent, and infrastructure spending rose 11.2 percent as Naver built out AI capacity.
Revenue grew 16.2 percent on year to 3.389 trillion won, 0.7 percent above the market estimate of 3.366 trillion won, on growth in Naver's main platform operations and consumer-to-consumer businesses. Excluding the consolidation of Spanish secondhand marketplace Wallapop, which Naver acquired earlier this year, revenue rose 14.5 percent.
Core platform revenue increased 12.3 percent to 1.902 trillion won, with advertising up 7.5 percent and services up 31.3 percent. Monthly active users of Naver's AI tab reached 10 million, while Smart Store transaction volume rose 15.5 percent.
The segment's margin, however, fell to 28.5 percent from 32.7 percent a year earlier.
Financial platform revenue rose 16 percent to 470.7 billion won as total payment volume increased 21 percent to 25.2 trillion won. Its margin dropped to 3 percent from 7.9 percent amid heavier spending on payment infrastructure.
Revenue from Naver's C2C, content and enterprise businesses climbed 24.4 percent to 1.016 trillion won. C2C revenue surged 74.9 percent, helped by Wallapop's consolidation, changes to Poshmark's service and brisk trading-card transactions on Soda. Excluding Wallapop, C2C revenue still grew 52.1 percent.
The three businesses posted a combined operating loss of 35.6 billion won, widening from 14.8 billion won in the first quarter but narrowing from 65 billion won a year earlier.
Net income rose 41.6 percent on year to 704.3 billion won, nearly 47 percent above the FnGuide consensus of 479.2 billion won. The beat came mainly from equity-method gains and valuation gains on financial assets rather than stronger operating profit.
Hanwha Investment & Securities said Naver's push to monetize generative AI from the third quarter may take at least two more quarters to show whether the services generate additional advertising revenue or merely shift spending from existing products.
The brokerage maintained a "buy" rating and a 300,000 won target price but expects the shares to remain range-bound in the near term.
Naver shares were down 2.21 percent at 220,500 won as of 9:45 a.m. Friday.
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