Upstage is accelerating plans for an initial public offering in the second half, using its acquisition of Daum as a springboard. Key variables include its AI portal strategy, meeting KOSPI listing requirements and whether it can realise overseas revenue.

Upstage recently acquired 100 percent of AXZ, the operator of Daum, from Kakao. It used a share swap rather than cash. Kakao will acquire a corresponding stake in Upstage. The industry sees it at 15 to 25 percent.

Daum will be reorganised into an AI portal. Upstage will combine its in-house large language model, Solar, with Daum services. Adding AI on top of the search engine is discussed first. Google is running AI search through "AI Overviews" and Naver through "Cue". The specific service format has not been decided.

An Upstage official said the core of the Daum acquisition is to upgrade Solar using about 30 years of accumulated search and content data, and added that Upstage will maintain its identity as a deep-tech company even after the acquisition. Daum will be operated as a separate corporation, and will form a partnership relationship with Upstage to supply AI models, the official said.

Solar is currently supplied to the financial sector, including Shinhan Investment Corp and K Bank, as well as to the legal and public sectors. Solar's open model was also used in the Ministry of Science and ICT's "specialised AI build for R&D budget deliberation" project.

The effect of expanding scale is immediate. Upstage revenue rose about 320 percent in four years, to 24.8 billion won in 2025 from 5.9 billion won in 2022. AXZ is known to post annual revenue in the 300 billion won range. Once the acquisition is completed, consolidated revenue will jump at once to the several-hundred-billion-won level.

It also becomes favourable for a KOSPI listing. Among KOSPI general listing requirements, it needs to meet the 30 billion won shareholders' equity threshold. Issuing new shares in a share swap is treated in accounting as an increase in capital surplus. The structure increases shareholders' equity by the size of the acquisition price.

The basis for valuing the company also widens. Converting the pre-IPO valuation of 1.36 trillion won, based on combined revenue of 300 billion won, into a price-to-sales ratio comes to about 4.5 times. Based on a target valuation of up to 5 trillion won, it rises to as much as 17 times. The price-to-sales ratio of domestic listed AI firm Saltlux is around 7 times.

Some see that a global multiple could be applied if it leads to overseas revenue. Upstage drew investment last year from Amazon and AMD and secured a sales channel for Solar on the AWS cloud marketplace. Whether this cooperation translates into actual revenue is key. The company plans to use its Series C funds to enter overseas markets such as the United States and Japan.

KB Securities and Mirae Asset Securities are the IPO underwriters. It plans to file for a preliminary listing review soon. An Upstage official said it is keeping both KOSPI and KOSDAQ options open while reviewing timing and strategy.