Naver and Kakao are expected to post record first-quarter results this year. Naver is seen benefiting from high growth in its commerce segment, while Kakao is expected to see a sharp rise in operating profit as strong KakaoTalk advertising revenue growth combines with efficiency efforts in non-core businesses.

According to securities firm consensus data compiled by FnGuide on April 20, Naver’s first-quarter revenue is forecast at 3.14 trillion won, up 12.8 percent from a year earlier. Operating profit is seen rising 11 percent to 560.9 billion won.

Kakao is expected to post revenue of 2.01 trillion won over the same period, up 7.8 percent from a year earlier, and operating profit of 179.5 billion won, up 70.3 percent.

NAVER, COMMERCE GROWTH LEADS RESULTS

Naver’s first-quarter growth is seen as being driven by its commerce segment. The company is estimated to have seen transaction growth continue as spillover benefits persisted after issues involving Coupang late last year. Brokerage and sales revenue is also believed to have risen sharply as the impact of a Smart Store commission hike carried out in June last year was fully reflected this year. Lee Jun-ho (이준호), an analyst at Hana Securities, said Smart Store and Poshmark showed high growth in the first quarter and estimated brokerage and sales revenue at 647.4 billion won. The U.S. consumer-to-consumer platform Poshmark is also seen delivering solid results, benefiting from a high-inflation environment and spillover effects from U.S. tariff impositions on Chinese products.

Naver has set expanding N Delivery coverage as its top priority this year. It is widening its membership user base by strengthening consumer benefits such as free shipping and free returns. The shopping AI agent introduced in March analyses users’ purchase intent and suggests tailored products, helping improve product discovery and conversion rates.

Growth in the search advertising segment is expected to be limited. Lee Chang-young (이창영), an analyst at Yuanta Securities, said AI Briefing improves advertising efficiency but its ad inventory is much smaller than existing integrated search, and search ad revenue is likely to be hit as overall search queries decline due to increased use of other AI search services. Still, overall ad revenue is estimated to remain at year-ago levels as growth in commerce advertising partially offsets the impact.

Profitability is also expected to face some pressure. Infrastructure costs are expected to rise by around 30 percent from a year earlier due to higher depreciation costs following large-scale GPU purchases in the fourth quarter. Marketing expenses are also expected to increase alongside expanded commerce promotions, with the first-quarter operating margin likely to stay at 17 to 18 percent.

Nam Hyo-ji (남효지), an analyst at SK Securities, said first-quarter results are likely to fall short of consensus as infrastructure costs rose sharply due to increased GPU investment and shopping-related marketing spending expanded. Some brokerages also cited costs for Olympic and LCK broadcast rights as factors behind higher marketing expenses.

KAKAO, TOKBIZ AD GROWTH AND EFFICIENCY DRIVE PROFIT

Kakao’s surge in first-quarter operating profit is seen as the result of KakaoTalk advertising revenue growth combining with efficiency efforts in non-core businesses. After a restructuring of the KakaoTalk tab layout, ad placements increased to 4 from 3, drawing more small and mid-sized advertisers. Growth in business messaging also continued, and the market estimates TokBiz advertising-type revenue rose about 15 to 25 percent from a year earlier.

Shin Eun-jung (신은정), an analyst at DB Investment & Securities, said advertising is expected to have grown about 15 percent from a year earlier as the number of advertisers and message volume increased in brand messages and new supply expanded in the News tab. Lee Hyo-jin (이효진), an analyst at Meritz Securities, also estimated growth in the 20 percent range year on year in the first quarter, reflecting the expansion in TokBiz ad placements to 4 from 3 since the fourth quarter.

Transaction-type revenue is seen as having slowed somewhat, affected by expanded self-purchase promotions. The mobility segment is sustaining double-digit growth on balanced growth in taxi, designated driver and parking services. Kakao Pay is also being assessed as increasing its earnings contribution as securities profit rebounds.

Steps to streamline non-core affiliates such as Kakao Healthcare, AXZ (Daum) and Kakao Games are also supporting the profitability outlook. DS Investment & Securities estimated the combined operating loss of the 3 companies in 2025 at about 75.2 billion won. Still, AXZ’s sale followed the signing of an MOU with Upstage, but a specific timeline has not yet been confirmed. Kakao Games’ stake sale is also on a schedule premised on completion within the second quarter, meaning the effect of removing the results from consolidated earnings is expected to be reflected in earnest from the second quarter rather than this first quarter.

The content segment has yet to show a recovery. Total revenue for the content segment is estimated to have declined from a year earlier due to the absence of new Kakao Games titles, falling revenue from existing games and negative growth at Kakao Entertainment.

EARNINGS DRIVEN BY CORE BUSINESSES, VALUATION BY AI

Both companies are rolling out new AI-based services in stages, but the practical drivers of first-quarter earnings growth are existing core businesses such as commerce and advertising. The securities industry largely shares the view that AI should be viewed separately as a key variable for future share-price revaluation rather than a factor supporting current results.

Naver has signalled it will launch its conversational AI search service, AI Tab, during the second quarter. AI Tab expands existing keyword search into a conversational format and links vertical services such as shopping, local, finance and health with agents in an integrated structure.

Jung Ho-yoon (정호윤), an analyst at Korea Investment & Securities, said if the growth rate of commerce transaction value recovers meaningfully, it is likely to have a positive effect not only on earnings but also on restoring a valuation that had fallen. A merger with Dunamu has been pushed back to September from June due to delays in related legislation and the review schedule.

Kakao officially launched its on-device AI agent, Kanana in KakaoTalk, in March. Olive Young, Musinsa, Hyundai Department Store and Samjjeom Sam have joined Kakao Tools as partners, as work continues to build an ecosystem linking external services.

Lee Chang-young of Yuanta Securities said Kanana in KakaoTalk is not yet functionally complete and is not generating meaningful traffic. Lee Jun-ho of Hana Securities also said the key for the share price will be how much user traffic it secures as marketing is carried out alongside global partners joining in the second quarter.

Naver will announce its first-quarter results on April 30, and Kakao on May 7.