Record earnings loom for Naver, Kakao — but AI monetization is the real test

Naver and Kakao are on track to post record earnings for the second quarter of this year, with core businesses — advertising, commerce and platform services — expected to underpin the results. Market attention is already shifting to the second half, however, as the key question becomes whether the two companies can convert their recently launched AI services into actual revenue from advertising, shopping and payments. Naver is expected to lead its AI monetization push through search and commerce, while Kakao plans to do the same through KakaoTalk.

According to FnGuide, a financial data provider, Naver's consensus second-quarter sales stand at 3.35 trillion won ($2.19 billion), with operating profit forecast at 572.7 billion won — up 14.8 percent and 9.8 percent, respectively, from the same period last year. If realized, both figures would set new records for any second quarter in the company's history.

Kakao is also expected to post its best-ever second-quarter results, with consensus sales of 2.06 trillion won and operating profit of 223.4 billion won — projected increases of 1.4 percent and 20.1 percent year-on-year, respectively.

For Naver, growth in search and commerce advertising, along with higher transaction volumes at Naver Plus Store, is seen as the main driver. Analysts point to a revamp of shopping commission fees, an influx of membership users and a Samsung Electronics appreciation sale as factors boosting commerce performance.

"Naver's platform advertising is expected to grow, led by commerce advertising," said Kim Hye-young, an analyst at Daol Investment & Securities. "Naver's platform services are forecast to grow significantly year-on-year as the effect of shopping fee increases through April and May feeds through."

At Kakao, TalkBiz advertising and platform businesses including Kakao Pay and Kakao Mobility are expected to drive the earnings improvement. Cost efficiencies are also seen contributing to the rise in operating profit.

The bigger challenge lies in the second half. While core businesses such as advertising and commerce are expected to support second-quarter results, both companies need to develop AI into a new revenue stream to sustain medium- to long-term growth.

To that end, Naver is pursuing what it calls an "action AI" strategy — embedding AI into search, advertising and commerce to improve ad efficiency and purchase conversion rates. AI already accounted for more than 50 percent of advertising revenue growth in the first quarter. Starting with generative AI ads tied to shopping and local services, the company plans to expand monetization from the third quarter and introduce an advertising model for its "AI Tab" feature in the fourth quarter.

At Naver's first-quarter earnings conference call, CEO Choi Su-yeon identified "conversion contribution — where agent-based recommendations lead to actual purchases and reservations" as a key performance metric.

Kakao, meanwhile, is transforming KakaoTalk into what it describes as an "agentic AI platform" — one that guides users from conversation through to recommendations, reservations and payments. The company plans to connect "Kanana in KakaoTalk" and "Kanana Search" with existing services such as gifting, reservations and payments, and to expand integration with external commerce partners.

Kakao CEO Jeong Shin-a said at the company's first-quarter conference call that the medium- to long-term goal is for "all 50 million KakaoTalk users to have their own personalized agent."

"If Kanana-based agentic commerce takes firm hold as a structure that resolves transactions entirely within the chat room, commerce could become more than a simple commission business — it could serve as a touchpoint for AI advertising, payment and recommendation revenue," said Lee Jong-won, an analyst at BNK Investment & Securities. "As transaction completeness within KakaoTalk improves, the platform's profit margins could rise to another level."