NAVER (035420) investor relations material

Executive summary

• Q3 revenue reached KRW 3,472,365 million, up 10.7% YoY; operating income fell 20.9% to KRW 451,306 million amid higher AI infrastructure, content and offline investments.

• Net income declined 45.2% YoY to KRW 402.5 billion, reflecting changes in equity-method results and financial-asset valuations.

• Commerce, payments and C2C expanded as content revenue declined; a KRW 2 trillion AI compute contract supports plans for AI Factory operating profit to turn positive in 2027.

Financial highlights

• Operating expenses rose 17.7% YoY to KRW 3,021,059 million, outpacing revenue growth; partner, infrastructure and marketing costs increased 18.8%, 29.1% and 32.3%.

• Q3 revenue increased to KRW 3,472,365 million from KRW 3,138,055 million; operating income was KRW 451,306 million versus KRW 570,647 million.

• Consolidated net income fell 45.2% YoY to KRW 402.5 billion; non-operating results included a KRW 227.0 billion financial loss and KRW 266.8 billion other profit.

• Nine-month consolidated CapEx was KRW 1,417.3 billion, including KRW 1,242.7 billion for servers and equipment; operating cash flow was KRW 1,882,388 million.

Outlook and guidance

• AI Factory capacity is expected to come online in early 2027; operating profit is targeted to turn positive in 2027, with margins improving over time.

• Q4 platform margins are expected to recover and normalize; maintaining a 25% commerce margin is the focus, while a return to 30% is expected to be challenging.

• Q4 investment plans include GPUs, CPUs and strategic marketing; conventional infrastructure CapEx is expected to peak this year and decline slightly next year.

• A performance-based ad pilot for high-involvement categories is planned for H1 next year; a personal AI agent app is targeted for launch this year.