Naver Q3 operating profit down over 20 pc on AI investments
Seoul, Nov 12
Naver, South Korea's largest online portal operator, said on Thursday its third-quarter operating profit fell 20.9 per cent from a year earlier despite a rise in sales, on increased investments into artificial intelligence.
The tech giant said in a regulatory filing that it posted 451.3 billion won (US$338.5 million) in operating profit for the July-September period.
Sales, however, rose 10.7 percent to 3.47 trillion won. Net profit was down 45.2 percent to 402.5 billion won, reports Yonhap news agency.
"Operating profit was down due to increased investments to secure competitiveness in AI, including those in infrastructure, content and offline data," the company explained in a release.
By business, sales from its platform division rose 7.3 percent on-year, driven by a rise in ad sales and expanded consumer purchases. The company added it plans to establish a logistics affiliate to further accelerate its commerce sector through strengthening of its delivery capabilities.
Meanwhile, sales from its global ventures were up 15.9 percent on-year. This was due to the success of its global commerce platforms, including the second-hand goods market Poshmark, as well as its enterprise business in Saudi Arabia, the company said.
Naver noted that revenues from the AI factory jointly being established with Brookfield and Nvidia Corp. will be reflected in the upcoming quarter.
"Revenues from our AI factory business will gradually be generated, as we have secured customers through a computing service contract of around 2 trillion won," Choi Soo-yeon, chief executive officer of Naver, was quoted as saying in a release.
The portal operator said it plans to advance its AI-based services to seek new revenue streams, while expanding the customer base for its AI factory venture to improve profitability.
Naver plans to establish a new logistics firm in a bid to sustain the growth of its robust commerce business through strengthening of its delivery capabilities.
"We will establish a company dedicated to logistics services to bring our delivery competitiveness up a notch, and gradually strengthen our delivery infrastructure, focusing on leased logistics centres," CEO Choi Soo-yeon said during Naver's third-quarter earnings call.
The new logistics affiliate would require around 1 trillion won in investments by 2030, she said. But Naver plans to finance the proceeds through methods that can minimise its impact on the company's cash flow or revenue structure, Choi added.
— IANS
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