(LEAD) Naver Q3 operating profit down over 20 pct on AI investments

Naver Corp., the leading online portal in South Korea, announced on Thursday that its operating profit for the third quarter dropped by 20.9% compared to the same period last year, despite a 10.7% increase in sales. The reason behind the decline was the company's increased investments aimed at staying competitive in the field of artificial intelligence (AI).

Naver reported an operating profit of 451.3 billion won ($338.5 million) for the July-September period, with sales growing to 3.47 trillion won. The net profit, however, fell by 45.2% to 402.5 billion won.

The primary reason for the decrease in operating profit was the additional investments made by Naver to solidify its position in AI, covering infrastructure, content, and offline data. By segment, sales from the platform division rose 7.3% year-on-year, primarily due to higher ad sales and increased consumer purchases. The company revealed its plans to establish a logistics affiliate to enhance its commerce sector through improved delivery capabilities.

Meanwhile, sales from global ventures increased by 15.9% year-on-year. This growth was attributed to the success of Naver's global commerce platforms, such as the second-hand goods market Poshmark, and its enterprise business in Saudi Arabia. The AI factory that the company is building in partnership with Brookfield and Nvidia Corp. will start generating revenues in the next quarter, according to Naver.

CEO Choi Soo-yeon commented on the company's strategy, stating that they plan to advance AI-based services to open new revenue streams, while simultaneously expanding the customer base for its AI factory venture to boost profitability.