Good morning. We will now begin NAVER's 2024 Q4 earnings conference call. For the convenience of our investors joining from home and abroad, we will provide simultaneous interpretation for the presentation and switch to consecutive interpretation for the Q&A session. Analysts and investors, good morning. I am Paul Choi from the Capital Markets Office. First and foremost, we sincerely appreciate your interest in NAVER over the past year. As this is our first opportunity in the new year to address our investors, we thank you for joining NAVER's fourth quarter of 2024 earnings call. We have CEO Soo-yeon Choi and CFO Nam-Sun Kim joining us on our call today to provide an overview of our business status, strategy, and financial performance, after which we will entertain your questions.
Please note that the earnings results are K-IFRS-based, provided for timely communications, and have not yet been audited by an independent auditor, and hence are subject to change after such review. With that, I will turn it over to our CEO to present on the business highlights.
Good morning. I am Soo-yeon Choi, the CEO. In 2024, NAVER has been making multifaceted efforts to strengthen the fundamentals of its core business and enhance platform capabilities. To lay the groundwork, over the past year, we have unified company-wide services and user behavior data, establishing an integrated data analysis environment. We are incorporating AI technology into the analyzed data to use it for various space and page layouts within the NAVER app to personalize the entire user journey. In particular, in Q4, we improved the shopping search UI in conjunction with the launch of NAVER Plus Store. As a result, we observed enhanced efficiency in commerce ads. The year 2025 will be a crucial period for NAVER to fully implement its on-service AI strategy.
We will enhance AI technology to effectively apply it across various products, including search, main page, commerce, and contents, and focus on creating new value and business opportunities based on this foundation. In commerce, we will introduce the new NAVER Plus Store.
검색 중심의 스트로픽.
In the first half of the year, this will expand the search-centric shopping experience into a more personalized, discovery-driven experience, delivering a more intuitive and powerful shopping journey. In 2025, NAVER, by incorporating generative AI into innovation-driven AI services, content ecosystem expansion, and online-to-offline experiences such as Place, Maps, and Digital Twin, aims to offer products with higher user satisfaction. Let's now take a look at our search platform performance. NAVER's search platform, driven by the ongoing reinforcement of platform competitiveness and ad efficiency optimization, recorded double-digit growth in Q4, continuing from the previous year. To strengthen the competitiveness of the search platform, we focused on addressing queries that require a high degree of reliability. We have continuously expanded the indexing of documents from public institutions and other authoritative sources while developing technology to increase exposure to credible content.
As a result, Q4 saw a significant increase in both impressions and clicks for public institution websites. In addition, we have established company-wide data governance to enhance the efficiency of our data management system, standardizing service data, and creating an integrated analytics environment. This framework is expected to reduce future data management and analysis costs while enabling better utilization of data for service improvements. Furthermore, NAVER continues to strengthen its unique competitive edge by integrating AI-based search optimization technologies and UI improvements, providing users with an innovative discovery and consumption experience.
하고 있습니다.
We have leveraged AI and data to optimize diverse space and content layouts within the NAVER app. To enhance personalized discovery experience, we are preparing a revamp of Search Home and content placement, improving content accessibility and readability. In Q4, we enhanced personalized recommendations in the Home Feed and introduced a new feed-based layout to encourage tailored content consumption across various categories. In addition, we converted the Sports and Entertainment page into a feed format and introduced feeds into some parts of the vertical such as Café and Blog. This improves content discovery with a more intuitive browsing experience. In 2024 and 2025, we will further refine AI-driven content analysis and recommendation technologies, enabling users to naturally discover and explore content based on their individual preferences and interests, and our focus will be on increasing user engagement while fostering high-quality content production.
For this, we are strengthening AI-powered content creation tools for NAVER's diverse creators, including bloggers, clip creators, and feed makers. Currently, 68% of NAVER bloggers are in the 10 to 30 age group, and blogs are evolving beyond simple record-keeping to active community spaces, enhancing creator connections and communication. Moving forward, we plan to strengthen technical support to improve NAVER and group recommendation algorithms, effectively connecting users and creators with similar interests to share and create content. Interest in clip content has surged, leading to a more than twofold increase in applications for the fourth round of the Clip Creator P rogram, which is set to begin in February. NAVER will enhance AI-driven content analysis and curation, as well as connect diverse ecosystems to ensure user-generated content, or UGC, gains optimal exposure across NAVER's platforms.
To maximize synergy, we will introduce an affiliate model in which Clip creators can collaborate with brands and Smart Store sellers. We will also strengthen the reward structure, encouraging creators to experiment with diverse and innovative content. In Q4, the average daily engagement time on NAVER's mobile main page grew 10% YOY for three consecutive quarters, demonstrating the platform's strong competitiveness. Specifically, the number of daily visitors to the Home Feed continues to grow from the previous quarter. Notably, users who revisit the platform one day after their first visit reached approximately 60% in Q4, indicating consistently increasing user engagement each quarter. For Clip, the monthly average daily play count increased tenfold YOY, and we aim to achieve two times the current view count by 2025. Beyond mere content consumption, Clip has demonstrated high conversion potential in areas like Place and Shopping.
40% of all Clip content includes place tagging, reinforcing our expectation that Clip will become a key service that generates strong synergies with NAVER's major offerings. To enhance the connectivity between search and discovery, we have introduced Search Feed, which recommends feed-style content related to the entered search keyword, and Search Trends, which suggests popular keywords and content by topic. Through these services, we are creating a virtuous cycle where the discovery and exploration experiences that begin with a search lead to new searches. This has contributed to an increase in not only app time spent but also the number of search sessions compared to the previous year. Meanwhile, we are continuously working to expand the scope of our ads.
In search ads, we have introduced Expanded Search, which automatically generates and displays ads based on keywords that are highly relevant to the advertiser's website content, thereby increasing monetization of long-tail keywords. In display, we have expanded feed ad inventory and enhanced targeting, which has led to improved efficiency. As a result, feed ads recorded a fourfold higher CTR compared to general banner ads, and advertiser spending on feed ads has increased. We are also working on expanding beyond the NAVER platform. NAVER's Power Link and Display ads have demonstrated high efficiency and are now being exposed on various external platforms. And as we saw Place Ads make its way down in Q4, we plan to actively respond to advertisers' demand for broader coverage in the future as well. Lastly, allow me to elaborate on where we are headed with AI technology and services.
In the first half of the year, we intend to apply AI technology to users' queries and introduce a generative AI feature that precisely understands user intent and provides summarized, optimized information named AI Briefing. We will start with queries that require definitive or specific answers, offering credible and concise information while recommending contextually relevant content to enhance search accuracy. Over time, we will expand this feature across informational search and the entire discovery process. Through this, we will further strengthen the virtuous cycle of search to discovery, then back to search, allowing users to stay longer on our platform to search more things linked to content recommended by AI Briefing during their discovery process. Also, we will continuously refine AI precision to enable users to engage in this process with greater ease and speed.
NAVER aims to go beyond simply providing search results and will continue to invest in technology that ensures users quickly and accurately obtain broad-ranging information through AI-driven discovery. In the ad segment, we plan to introduce automation for the entire ad execution process, including bidding, creative production, and keyword selection, while also implementing budget optimization and features within our advertising technology platform, AdBoost. This implementation will enable advertisers to run the most effective ad campaigns on and beyond NAVER's platform, maximizing ad efficiency. Furthermore, we will continue improving existing ad products, optimizing ad placements, and strengthening sales efforts for advertisers to enhance our competitiveness as an advertising platform. Our goal for 2025 is to achieve results that exceed the market growth rate. Moving to our commerce business.
In the fourth quarter, due to the combination of political instability, economic uncertainty, and major social issues, the e-commerce market entered an unprecedented period of low growth. Despite the evolving environment, NAVER has continued to improve user and seller experience through the launch of NAVER Plus Store and enhanced membership benefits, driving Smart Store growth. As a result, NAVER's on-platform GMV grew 11% YOY, and total commerce GMV, including outlink marketplaces, increased 6.5%, exceeding the market growth rate. Launched at the end of October, NAVER Plus Store strengthened the value of shopping centered on discovery and exploration. And by expanding personalized search features based on Smart Store and enhancing user benefits, we successfully achieved a rebound in GMV for two consecutive quarters. Since its launch, NAVER Plus Store has been recognized by users as a dedicated space for Smart Store, where they can easily discover high-quality products.
The platform is increasingly being utilized by a loyal customer base, confirming that user behavior is aligning with our intended direction. Moreover, our enhancements to UI/UX for the discovery experience have led to an increase in user engagement. As users become more familiar with the interface and discovery-focused pages within Plus Store, and as membership benefits and delivery quality improvements create additional synergies, we expect this to positively impact the overall NAVER shopping ecosystem. In November, we expanded our membership ecosystem by partnering with global entertainment service Netflix to offer differentiated benefits beyond our platform. Although the partnership has been in place for a short period, it has already resulted in a 1.5-fold increase in the average number of daily new subscribers, and also, the shopping expenditure of these newly acquired members within NAVER shopping has increased by over 30% compared to before they joined, demonstrating positive effects.
Notably, among the new subscribers, those in their 30s and 40s, who typically show high spending and order frequency across most shopping indicators, accounted for over 60% of new signups, and we anticipate that they will become a highly loyal customer segment in the future. In terms of delivery, we are working to enhance user convenience. The free shipping promotion for the guaranteed delivery membership, introduced in Q2 last year, has been confirmed to contribute to GMV growth and will be added as a standard benefit. Also, the introduction of same-day delivery has helped improve overall delivery quality. With the expansion of services such as seller guaranteed delivery and preferred guaranteed delivery, the growth rate of guaranteed delivery GMV accelerated in Q4, and we expect continued coverage expansion in the foreseeable future. With the launch of Plus Store, we have also made changes to commerce ads.
In the shopping search section, we have redesigned the UI towards higher efficiency and refined personalized recommendations to help users discover the most relevant products. In addition, we have improved ad efficiency by using AI technology to optimize ad creatives and expand keyword matches, enabling advertisers to access a larger database while ensuring users receive more accurate and tailored ads. In Q4, these initiatives generated strong synergies, leading to significant double-digit growth in commerce ads for the first time in nine quarters. Going forward, we will explore new growth opportunities with the launch of a standalone NAVER Plus Store app. In the case of Poshmark, despite a slowdown in growth due to rising advertising costs from the U.S. presidential election in the holiday season, as well as intensifying e-commerce competition, it has still maintained a solid trajectory.
Also, due to ongoing cost optimization efforts and growth in the advertising business since last year, the business achieved positive operating profit. Going forward, the focus will be on improving conversion rates for both sellers and users by utilizing AI for automated product registration, personalized recommendations, and integrating the NAVER search engine. Next, allow me to provide an update on our fintech business. In fourth quarter, NAVER-based TPV reached KRW 19.3 trillion, representing an increase of 18.3% YOY and 3.7% QOQ. Among this, non-captive TPV grew 27% YOY to KRW 9.8 trillion, driven by the addition of new merchants. And for the full year of 2024, it is up 38% year-over-year or YOY. Meanwhile, the proportion of non-captive TPV expanded from 44% in 2023 to 50% in 2024, continuing the expansion of NAVER's ecosystem across both online and offline channels.
NAVER's platform business saw continued service upgrades, including the revamp of the real estate marketplace in October and the main page of our insurance service in November. As a result of the user interest-driven improvements, time spent for our real estate marketplace grew 44%, and the annual average number of monthly active users exceeded 10 million, showing positive results. This year, we plan to further strengthen our position as an integrated financial platform by providing AI-driven, more personalized recommendations and discovery experience across loans, insurance, real estate, and securities. Moving on to Webtoon's fourth quarter results. Webtoon's Q4 revenue recorded KRW 427.9 billion, increasing 6.8% YOY and 0.9% QOQ. For reference, Webtoon Entertainment is scheduled to announce its earnings on February 25th. As such, we are unable to provide detailed performance figures at this time.
However, based on the preliminary estimated results disclosed today, revenue on a constant currency basis, excluding deconsolidated and transferred operations, increased approximately 10% year-over-year. For more detailed information, please refer to Webtoon Entertainment's earnings release. Lastly, I would like to elaborate on the business performance of NAVER Cloud. NAVER Cloud's B2B business is growing centered on the continued delivery of Neurocloud and LINE WORKS. In particular, the delivery of Neurocloud equipped with HyperCLOVA X continued to progress smoothly in Q4, and in December, we concluded the deployment contract with Korea Hydro & Nuclear Power, which is expected to generate revenue starting in the first half of this year. For LINE WORKS, the number of paid IDs grew 14% year-over-year, leading to a 27.7% increase in revenue.
Moving forward, we will expand our product lineup, including AI Note and AI Voice Response System, to attract more users and increase paid subscriber growth. NAVER Labs has been researching and developing digital twin technology for future growth, and we are now exploring ways to expand this technology into the super app sector in the Middle East. As part of this effort, we recently completed the approval process for the establishment of NAVER Arabia, NAVER's regional headquarters in the Middle East. NAVER Arabia will serve as a hub for exporting NAVER's technology not only in Saudi Arabia but also across the Middle East and global markets. We will share further details as developments progress. In November, we hosted DAN 24, where we showcased our AI expertise in advertising and shopping while unveiling the NAVER TwinXR platform.
Technological capabilities supporting innovative service development in areas such as AR, VR, MR, robotics, autonomous driving, and smart city innovations were portrayed as the occasion. Going forward, NAVER will continue not only to enhance its services and platform through AI integration but also invest in future growth areas such as advancing its map app, which serves as the foundation for local services and spatial intelligence, as well as AR navigation, digital twins, and robotics. Since last year-end, various social issues have further dampened consumer sentiment, and as a result, the overall outlook for the ads and commerce markets has been revised downward, and we anticipate a more challenging year compared to the previous year. Nevertheless, over the past two years, NAVER has strengthened its platform's core competitiveness by integrating AI into the tools provided to creators, businesses, and advertisers, while also creating new monetization opportunities.
Moving forward, we will continue to enhance our technology-driven services and platform capabilities, striving for mutual growth with various stakeholders. Now, CFO Nam-Sun Kim will provide an overview of our financial performance.
안녕하세요.
Good morning. I am Nam-Sun Kim, the CFO. Allow me to present the financial results for Q4. In Q4, NAVER's revenue driven by accelerated growth of its core businesses, including search platform and commerce, was up 13.7% YOY and 6.3% QOQ to KRW 2,885.6 billion. On an annual basis, revenue increased by 11% compared to the previous year, reaching KRW 10,737.7 billion. Despite social issues and a decline in consumer sentiment in Q4, NAVER's efforts to strengthen its own service competitiveness accelerated the growth of ads and commerce revenue. In addition, structural improvements in business operations contributed to an increase in operating profit by 33.7% YOY and 3.2% QOQ to KRW 542 billion.
The operating margin improved by 2.8 percentage points YOY to 18.8%. For the full year of 2024, operating profit rose 32.9% YOY to KRW 1,979 billion, with the operating margin improving by 3 percentage points to 18.4%. Adjusted EBITDA, which excludes variables such as stock-based compensation and depreciation and amortization expenses, continued to benefit from the recovery of core businesses such as search platform and the effects of cost-efficiency efforts focused on productivity. As a result, Q4 adjusted EBITDA increased by 28.6% YOY and 6.7% QOQ, reaching KRW 745.9 billion. Adjusted EBITDA margin improved by 3 percentage points YOY to 25.8%. 2024 annual adjusted EBITDA grew 24.9% YOY to KRW 2,664.4 billion, with the margin improving by 2.7 percentage points to 24.8%, reflecting acceleration in growth.
This quarter, a portion of the one-time settlement payment related to the completion of past service contracts with LY Corp in 2024 was reflected in the other revenue of both the search platform and cloud segments. Excluding this effect, Q4 revenue increased by 11.4% YOY and 4.1% QOQ, while the operating margin recorded 17.5%. Next is revenue by each business area. In Q4, search platform grew 14.7% YOY and 6.7% QOQ to 1,064.7 billion KRW. Despite the domestic advertising market not yet fully recovering, both search and display ads recorded double-digit growth, marking the first time in history that quarterly revenue from this segment surpassed 1 trillion KRW. Search ads driven by continued improvements in bidding performance for Powerlink and Place ads, as well as additional expansion into external platforms, grew 11% YOY and 2% QOQ.
Display benefited from the expansion of feed-based ads in verticals such as sports, entertainment, blog, and café, and enhanced targeting led to improved conversion metrics, creating a virtuous cycle where advertisers increased their spending. And as a result, display grew 9.7% YOY and 9.8% QOQ. For your information, this quarter's other revenue reflects both settlement from LY Corporation, as already mentioned, but when that impact is excluded, search platform grew 11.5% YOY and 3.8% QOQ. 2024 annual search platform continued to expand NAVER's competitive ad products and placements while enhancing targeting capabilities, resulting in a 9.9% YOY revenue increase to KRW 3,946.2 billion. Commerce revenue was up 17.4% YOY and 6.9% QOQ to KRW 775.1 billion. On a full-year basis, it increased by 14.8% YOY to KRW 2,923 billion.
Commerce ads saw improvements in shopping search UI in alignment with the launch of the Plus Store, as well as the expansion of personalized ads. In addition, AI-based creative optimization and expanded keyword matching capabilities helped advertisers efficiently expose more relevant ads to users, leading to increased ad efficiency and profitability. As a result, commerce ads revenue rebounded strongly, rising 10% YOY and 10.2% QOQ, contributing significantly to overall commerce revenue growth. Despite the deconsolidation of the news, supported by stable growth in Smart Store, including brands and service transactions, as well as increased adoption of the Brand Solution Package and Guaranteed Delivery service, commission and sales revenue grew 23.7% YOY and 3.4% QOQ. In December, the consumer sentiment index recorded its steepest decline since the COVID-19 pandemic in 2020.
Following the Muan Airport incident, the travel reservation segment showed weakness, indicating continued challenges in the market environment. Nevertheless, following the launch of the Plus Store in Q4, NAVER closely monitored user and seller responses, proactively enhancing the shopping experience and responding to year-end shopping demand. These efforts resulted in meaningful growth. Looking ahead with the launch of a standalone Plus Store app next year, NAVER plans to accelerate commerce revenue growth through various product enhancements and expanded solutions. Membership revenue, as the average daily number of new subscribers increased rapidly following the partnership with Netflix in November, grew 15.9% YOY and 16% QOQ. FinTech revenue was up 12.6% YOY and 4.1% QOQ to KRW 400.9 billion. TPV, driven by organic growth from Smart Store payments and the continuous expansion into external ecosystems, grew 18.3% YOY and 3.7% QOQ, reaching KRW 19.3 trillion.
The proportion of non-captive TPV remained at and above 50%, leading overall growth. 2024 annual FinTech revenue, supported by the growth in shopping transaction volume and increased payment revenue from third-party ecosystem expansion, increased 11.3% compared to previous year to KRW 1,508.4 billion. Contents revenue was up 0.2% YOY and 1.0% QOQ to KRW 467.3 billion on an annual basis. Despite the impact of NAVER's deconsolidation, contents revenue grew 3.7% YOY to KRW 1,796.4 billion. In Q4, Webtoon revenue, based on NAVER's consolidated financials in Korean Won, grew 6.8% YOY and 0.9% QOQ. Further details will be provided in Webtoon Entertainment's earnings release scheduled for February 25, local time. Please note that NAVER's consolidated financial results and Webtoon Entertainment's reported figures may differ.
Snow, continuously impacted by NAVER's deconsolidation and the high base effect from the global success of AI products such as EPIK AI Yearbook in Q4 2023, saw its revenue decrease by 47.8% YOY, but the camera segment continues to see a steady increase in paying subscribers of AI features. Cloud revenue was up 41.1% YOY and 22.8% QOQ to KRW 177.6 billion. B2B, driven by the recognition of Neurocloud revenue and solid growth in paying accounts for LINE WORKS, grew 11.2% YOY. Other revenue included revenue from Saudi Arabia's Ministry of Municipal Rural Affairs and Housing's digital twin project and a portion of the LY Corporation settlement. Excluding these effects, Q4 cloud revenue grew 17% YOY and 1.9% QOQ. In 2024, annual cloud revenue reached KRW 563.7 billion due to the full-fledged recognition of Neurocloud revenue and global revenue from Saudi Arabia's Ministry of Housing's project.
Revenue was up 26.1% YOY, and when excluding the impact of the LY Corporation settlement, revenue grew 19.3% YOY. Next is on expense items. Development and operation expenses, despite the recognition of year-end performance bonuses and expanded stock-based compensation costs, remained stable, up 4.2% YOY as efficient workforce management continued to support cost stability. Partner expenses, due to increased commission expenses linked to revenue and the recognition of project costs, including labor expenses following the conclusion of past service contracts with LY Corporation, increased 7.6% YOY and 8.9% QOQ. Infrastructure costs increased due to higher depreciation costs from the acquisition of new server assets, up 13.1% YOY and 3.9% QOQ. Marketing expenses were up 25.6% YOY and 7.3% QOQ, reflecting various promotions aimed at strengthening the competitiveness of commerce, fintech, and content businesses, including promotions for the launch of Plus Store and year-end season campaigns.
In the first half of the year, we plan to implement marketing activities in a flexible and strategic manner to coincide with the launch of the standalone Plus Store app. Next, let me discuss the P&L by business. Search and combined search platform and commerce, despite increased shopping promotions and due to revenue mix changes from strong growth in search ads and commerce ads, recorded improved profitability YOY and a similar margin QOQ. As for the fintech segment, despite continued growth in payment service revenue and due to the high base effect from Q3 seasonal peak and increased strategic marketing expenditures for year-end promotions, profit margin declined QOQ. The content segment recorded a slight increase in losses despite the continued impact of NAVER's deconsolidation. The cloud segment continues to see its losses narrow YOY and QOQ, and even after excluding the impact of the LY Corporation settlement, losses narrowed YOY.
Q4 consolidated net profit was KRW 444.1 billion, up 48.8% YOY. However, due to the FX effects on foreign currency translation of bonds, consolidated net profit declined by 16.2% QOQ. On an annual basis, net profit was up 89% YOY to KRW 1,862.1 billion. Let me now move on to cash flow and shareholder return plans. Free cash flow in Q4, driven by more stable balance sheet management, increased by KRW 55.4 billion YOY and KRW 50.8 billion QOQ, reaching KRW 437.9 billion. Lastly, as part of the special shareholder return program announced last September, we completed the cancellation of treasury shares equivalent to 1.5% of outstanding shares as of November 13, 2024.
In addition, we plan to distribute KRW 168.4 billion in cash dividends equivalent to 20% of the average consolidated free cash flow of the past two years, pending approval at the annual shareholders meeting in March 2024. For your reference, this year's cash dividend amount is 42% higher than last year's dividend for the 2023 fiscal year. To allow investors to review the cash dividend amount before making investment decisions, the dividend record date has been set for February 28. With this dividend payout and the cancellation of an additional 1% of existing treasury shares, our three-year shareholder return plan will come to a close, and accordingly, we plan to establish a new shareholder return plan. The new shareholder return plan will be disclosed to the market within the year.
Our goal is to improve predictability for shareholder returns while taking into account NAVER's liquidity, debt ratio, and future investment plans. This concludes the overview of NAVER's Q4 financial performance, and we will now receive questions.
지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 5번을 눌러주시기 바랍니다. 질문을 취소하시려면 동일하게 별표와 5번을 눌러주시면 됩니다. 원활한 회의 진행을 위하여 질문은 한 분당 두 가지 이내로 부탁드립니다.
We will now begin the Q&A session. If you would like to ask a question, press star and number five on your telephone keypad. If you would like to cancel your question, press star and number five once again. Out of respect for others on the call, we kindly request participants to ask up to two questions.
처음으로 질문하실 분은 키움증권의 김진구 님입니다.
The first question comes from Kiwoom Securities, Jin-gu Kim. Your line is open. Thank you.
My question relates to the company's overview of your AI strategy. Between your LLM of HyperCLOVA X and the LLM of other big techs, what is your priority? The intent of this question is to understand what the possibility and probability is in terms of the strategic collaboration and cooperation with other big techs, in terms of technology cooperation and strategic cooperation on the data side as well. Aside from this, I would like to understand as to the level of advancement that you are seeing with regards to your own proprietary model, coupling that with your data. I would like to know as to what the advancement is in terms of reinforced training of these AI models.
경쟁사들이 무제한적으로 AI 성능을 확장하며 새로운 시장을 개척하는 전략을 취하는 반면에, 저희의 HyperCLOVA X는 네이버 서비스의 최적화된 모델 능력과 속도를 효율적으로 구축하는 것이 목표입니다. 이를 위해 그동안 데이터와 학습 방법론을 지속적으로 고도화해 왔으며, 저희의 학습 트윗 비용 대비 최고의 효율성을 자랑하는 한국어 능력과 경쟁력이 있는 영어 및 STEM 역량을 보유하고 있다고 생각하고 있습니다.
While our peers are really investing into expanding their capabilities in the LLM on a limitless basis, we are focused with our HyperCLOVA X that is to optimally enhance and accelerate the speed and the capabilities that is most befitting NAVER. We have hence been able to continuously train and use the data and continue on with the training of the algorithms and the model. We've been scaling up those efforts over the years, and hence we were able to enhance the efficiency compared to the cost that we put in. I can tell you, therefore, the model that NAVER has really wields the highest competitiveness in terms of its Korean language capabilities as well as STEM.
이번 주에는 플래그십 모델의 업데이트를 실시할 예정인데요. 연내에 보이스, 이미지, 비디오 등 다양한 멀티 모달리티에 대해서도 성과를 보여줄 계획입니다. 참고로 파라미터 규모는 전략적으로 공개하지는 않고 있으며, 별도의 필요성이 생기기 전까지는 이 기조를 유지할 계획입니다. 참고로 최근 시장에 큰 반향을 일으킨 DeepSeek에 있어서도 이런 출연은 후발 주자가 선도 업체를 상대적으로 적은 규모의 투자라도 추격할 수 있는 것이 가능하다는 사례를 보여줬다는 점에서 매우 혁신적이며 저희에게도 의미가 있다고 생각하고 있습니다. 그런 만큼 저희 역시 선도 업체와의 기술 격차가 벌어지지 않도록 멀티 모달이나 추론 능력 등의 강화에 전념하고 있으며, 이와 함께 다양한 비용 효율화 방안도 지속해서 모색해 나갈 계획이며 현재 또 저희도 역시 효율적이라는 점을 발견하고 있습니다.
And during February, we are planning on updating our flagship model, and before the end of the year, we will be able to drive some performance with respect to multi-modality, cutting across voice, image, and videos. It is our strategy not to disclose the size of the parameters, but I can tell you that unless there are other necessities that actually emerge, we will be sticking to the current position that we have. Recently, quite a bit of ripple has been sent across the market with the launch of DeepSeek, and this is an opportunity for later entrants to really catch up with the forerunners of this industry. We are hence really focusing on strengthening and reinforcing our multi-modal and reasoning capabilities of our AI models, and we will continue to seek ways for us to further enhance cost efficiency.
사용 빈도가 높은 네이버 서비스의 경우에는 계속해서 다양한 사이즈의 모델을 접목해서 발전시켜 나갈 계획이지만, 아직 서비스 제공에 직접적으로 활용한 사례는 없지만 글로벌 빅테크 LLM이라든지 외부의 다양한 LLM에 대해서도 협업의 가능성은 당연히 열려 있고, 이 가능성도 저희가 열어두고 계속해서 대화를 진행 중에 있습니다.
In regards to certain services where we see high level of usage frequency, we are planning to incorporate various different sizes of AI-based algorithm models to it. We do not yet have a use case where we have directly collaborated and cooperated with an external LLM provider like the global big techs, but we are open to any collaborations going forward, so we will keep to that stance.
다음으로 질문하실 분은 골드만삭스의 차민우 님입니다.
The next question comes from Goldman Sachs, Eric Cha. Please ask your question.
Thank you. I would like to ask two questions. First is on your shopping. After the introduction of NAVER Plus Store, what was the user feedback like? What were some of the positive feedback that you got and some negative where you would need to improve on? It seems that with the realignment and reshuffling that you've made this time around, compared to price comparison, Smart Store has really come forward. Would like to understand as to what user feedback is like with respect to the selection aspect. Second question is on AI. You did provide quite an elaborate answer before, but would also like to understand what NAVER's thought is in terms of the implication that you see from the launch of DeepSeek. What I mean is, with this change of thought on the speed of AI adoption going forward, do you think that the adoption speed is going to accelerate in the future? If so, what impact and implication does this have for NAVER's margin?
네, 첫 번째 질문부터 먼저 답변드리면, 플러스 스토어 출시 이후에 그 로열티가 높은 고객층의 이용률이 더 높아지고, 또 저희 발견 탐색형 UI, UX 강화가 또 페이지뷰나 체류 시간 증가로 나타나고 있는 추세를 저희가 보고 있기 때문에 저희의 개편 의도에 맞는 긍정적인 이용자 행동 변화가 관찰되고 있다고 판단하고 있습니다.
Responding to your first question on NAVER Plus Store, with the launch of NAVER Plus Store, we've seen an increase in the usage rate by a highly loyal customer base, and also, as we really reinforce the discovery and exploration-based UI, UX, we are seeing increases in page view as well as dwell time, the time spent, and so, in line with the intention that we had at the very beginning, we are seeing positive user behavior.
좀 더 부연해서 말씀드리면, 네이버와 같이 많은 사용자들이 매일 사용하는 서비스의 경우에는 사용성을 변경하면 단기적으로는 트래픽 이탈이 있는 경우가 많은데요. 저희 플러스 스토어의 경우에는 출시 이후에도 그런 트래픽의 변동 없이 오히려 안정적으로 유지되고 있다는 점이 긍정적이라고 생각하고 있습니다.
To give a bit more color, typically a platform like NAVER, where many, many people use the platform on a daily basis, if a certain aspect of usage undergoes certain change, from a short-term perspective, there's quite a bit of instances where there's going to be a churn out from the traffic. But with the launch of Plus Store, we have not had that experience. Our traffic has stayed the same and quite stable, and we consider that to be quite positive.
저희가 또한 목표로 했었던 플러스 스토어 페이지 내의 다양한 발견 탐색의 피드에 대한 클릭 수도 확대되고 있고, 또 그동안 제대로 잘 노출해 주지 못했던 그 혜택과 프로모션이라든지 오늘 행사 등에 긍정적으로 반응하는 모습을 관찰을 하고 있습니다. 다만 아직은 출시된 지 얼마 되지 않아서 좀 제한적인 데이터만 확보된 상황이기 때문에 향후 이용자들이 특히 플러스 스토어 앱과 같은 좀 더 간편한 UI, UX를 제공할 수 있는 환경에서는 그 유저들의 동선이나 발견형 지면들을 보다 익숙하게 사용할 수 있도록 유도해 나갈 것이고요. 물론 서비스를 또 계속해서 제공을 하면서 더 많은 피드백이나 데이터를 수집해 나가면서 개편해 나갈 계획이 있습니다.
And also, in line with the objective that we had had with the launch of the NAVER Plus Store, where we wanted people to really be able to see the changes and the click-related behavior of the users, with the core focus on discovery and exploration. And we are seeing that they do move, and they are responding to different types of benefits and promotions and today's deals. These are some of the things that we are offering to our user base, and we are seeing a positive move towards the objective that we had initially set. Now, having said that, we have only launched this recently, and so we only have a limited amount of data.
Going forward, we will try to attract and induce these user flow into the so-called discovery scene and discovery layout, and so that they could familiarize themselves with the overall Smart Store journey as well. And by offering these different services and really leading them on, we are going to be able to attract and, excuse me, collect and collate more feedback and data.
그리고 말씀해 주셨던 그 통합 검색 내에서 컬렉션의 경우에는 저희가 의도적으로 어느 컬렉션을 더 앞서 보여준다든지 하고 있지는 않고 있고요. 오히려 그 이용자들의 피드백이라든지 선택의 관점에서 더 많은 검색 만족도를 줄 수 있는 컬렉션이 상위에 오는 경우가 오게 되어 있는 알고리즘으로 되어 있는데, 그런 면에서 이제 플러스 스토어 컬렉션이 이용자들에게 많은 선택을 받고 있고 긍정적이기 때문에 또 그런 검색 결과가 나오는 것으로 보고 있습니다.
And within the search results, we don't arbitrarily load a certain collection or selection ahead of others. It is all based off of the user feedback and user choice, depending on the high level of search-related satisfaction that the users have shown if you look at their profile. So the top loaded results are going to be based upon the preference and the selection of the users. So the algorithm is designed in a way that will enable that. And so the result is that the Plus Store collections typically actually are featured ahead of others because that is what the users are choosing and preferring.
다음으로 DeepSeek나 AI adoption에 대한 그 질문에 대해서 답변드리면, 아까도 말씀드렸듯이 저희는 이런 DeepSeek 출시 자체가 그 사실 저희가 HCX를 개발하면서 전제했던 그 후발 주자 역시 선도 업체를 좀 상대적으로 적은 규모의 투자로도 추격 가능하다는 그 점을 재확인했다는 점에서 굉장히 긍정적으로 보고 있습니다,
So the launch of DeepSeek, we view that from a very positive aspect because that is actually in line with our initial thoughts when we were developing HCX on our side, And the thought that went into it is that as a later entrant into the space, based upon relatively smaller amounts of cost investment, this will be an avenue for a company like us to actually catch up with the front runners, And I think DeepSeek actually is a testament to that thought as well,
따라서 저희의 전략적으로 저희에게 유의미한 변화를 가져오기보다는 오히려 그 변화의 속도가 좀 더 앞당겨졌다고 저희는 판단을 하고 있는데요. 특히 저희와 같은 경우에는 이제 선도 업체와 기술 격차가 벌어지지 않으면서 HCX는 네이버 서비스에 최적화된 모델 능력과 속도를 구축하는 것을 목표로 계속해서 개발해 나갈 것이고요. 또 자체적인 모델을 가지고 있기 때문에 상대적으로 유연성을 가지고 다른 LLM의 도입이라든지 이런 부분도 검토할 수 있을 것으로 생각하고 있습니다.
So from a strategic perspective, we don't believe that this is going to have any significant impact on our side. It will just be that it is going to accelerate the adoption of AI going forward. From our perspective, it's important that we do not let the gap between the later entrants and the front runners, the gap to widen going forward. And once again, HCX is being continuously developed so that it could be optimized for the capabilities and features that are required under NAVER. Since we also have our own proprietary model, we will be able to retain flexibility when it comes to usage or the adoption of a third-party LLM.
특히 성능의 차이가 없는 여러 모델들을 선택적으로 저희가 선택할 수 있고, 이런 점에서 오히려 네이버와 같은 AI를 활용한 서비스들의 경쟁이 오히려 더 본격화될 것이고, 그 속도가 더 빨라질 것으로 예상합니다. 네이버의 경우에는 양질의 데이터나 AI와 접목하여 제공할 수 있는 서비스, 그리고 버티컬 플랫폼을 가장 많이 소유하고 있는 그 인터넷 플랫폼 중 하나이기 때문에 이러한 환경 변화가 저희의 사업 전개 속도를 더욱 가속화시킬 것이고, 또 비용 효율적인 면에서도 이점을 누릴 것으로 저희는 예상하고 있습니다.
We will be able to have the choice and option of selecting various different models that have different levels of performances and capabilities. At the end of the day, because NAVER is a company that is providing various different services that are powered by AI and high-quality data that NAVER actually owns, we believe that this will be an opportunity for us to actually speed up the businesses that we have in line with the changes in the environment. I believe that this also will have a positive impact in terms of cost efficiency gains.
마지막에 대한 질문에 대한 답변을 좀 드리겠습니다. 그 AI 도입은 뭐 당연히 그 관찰하시는 것처럼 전 세계적으로 확대되고 있고요. 저희한테 좀 고무적인 것은 그 벌써 AI 오버뷰를 1년 이상 본격적으로 확대해 나간 구글의 사례를 보면 AI 오버뷰가 노출이 많아짐에도 불구하고 지금 그 광고 수익화 정도는 기존의 검색 광고랑 유사한 수준으로 좀 끌어올린 것으로 확인하고 있습니다.
On the margin question, I would like to answer that question. This is the CFO. As you have also observed, the adoption of AI on a global basis is going to expand as we go forward. Some encouraging signals that we have seen is AI Overview by Google has expanded, and with the increase in the impression or the loading, if you look at their monetization from the advertisement, they've been able to actually drive that up to the level of the established search app.
따라서 네이버도 최근에 딥시크가 보여줬듯 인프라 엔지니어링을 통해 그 인퍼런스의 효율 향상에 계속 집중을 하고, 또한 그 AI 브리핑을 본격적으로 출시한 이후에도 그 광고 수익화 또한 기존의 파워링크와 유사한 수준으로 끌어올리도록 노력을 한다면 그 마진에는 특별히 부정적인 영향을 주지는 않을 수 있다라고 말씀드리고 싶습니다.
So just as with the emergence of DeepSeek, there's more efforts putting into infra engineering and more efforts putting in to actually enhance the efficiency of inference models in terms of AI Briefing features as well as advertisement monetization. We believe that we will be able to elevate that monetization impact to the level of the Powerlink ads, and hence we do not think that this will have a negative impact or the trend will have a negative impact on our margin.
다음으로 질문하실 분은 J.P. Morgan의 양성욱 님입니다.
The next question comes from J.P. Morgan. Stanley Yang, please ask your question.
Thank you for taking my question. First question relates to the LY Corp-related one-off settlement, which amounts to KRW 60 billion. Does that impact your operating profit? Second question is on your e-commerce. After the Netflix partnership in December, I think all the metrics are quite positive, and so would like to know as to what impact it had on your Q4 membership revenue. And is the membership revenue trend an upward trend? And what is the spending behavior that you are seeing from these subscribers who come through the NAVER, excuse me, through the Netflix partnership arrangement?
Another question is that if we take a look at the third-party data source that gives us December and January, the overall e-commerce GMV for the NAVER app has actually shown a year-over-year growth. I think that goes to show that your NAVER commerce is much more stronger compared to the past. Does your internal data speak to the same outcome? Third question is with regards to this year, I would assume that there's going to be additional e-commerce-related strategy that will be deployed, and that would obviously entail some cost. What is the margin impact of this?
LY 정산금은 뭐 계산하신 숫자가 그게 전부 다 이익을 그 1대 1로 영향을 주는 건 아니고요. 거기도 일부 비용이 있어서 저희가 별도로 또 설명을 좀 주석에도 표현하려고 노력을 했는데, 뭐 마진에는 한 1% 포인트 내외 정도로 그 계산해 보실 수 있을 것 같습니다.
Regarding the settlement related to LY Corporation, not the entirety of that amount is going to go to the profit. It's not one-to-one match. There is some cost-related element as well. We tried to incorporate that in the opening presentation. On the margin side, it will have an impact of about 1 percentage point.
두 번째로 커머스 관련 질문 주셨는데요. 4분기에는 말씀주신 대로 저희 이커머스 거래 반등이 굉장히 긍정적으로 작용을 하고 있고, 당분간 그 추이는 저희는 더 가속화시키려고 노력을 하려고 합니다. 좀 더 그 영향을 줬던 그 드라이버들을 좀 더 말씀을 드리면, 그 4분기에는 저희 플러스 스토어 출시, 그리고 멤버십을 비롯한 배송이나 또 이용자 혜택 강화 등이 영향을 미쳤다고 생각을 하고 있습니다.
On commerce question, in Q4 there was a quite positive and meaningful rebound in our e-commerce GMV, and we will continue to endeavor to speed up that trend. And also with regards to the Q4 and answering your question about the membership side, in Q4 some of the drivers were the release of or the launch of NAVER Plus Store as well as, you know, membership arrangement plus different membership-related benefits that we offer to our users as well as delivery-related benefits.
특히 질문 주셨던 넷플릭스와 멤버십 번들링의 경우에는 아까 그 컨콜 때도 설명을 드렸지만, 멤버십 신규 가입자 수가 큰 폭으로 증가한 것을 확인할 수 있었고, 이러한 신규 가입자의 경우에는 그 가입 전 대비 쇼핑 지출이 30% 이상으로 늘어나는 등 실질적으로 소비 패턴의 변화까지 이끌어냈다는 것을 확인할 수 있었습니다. 또한 이러한 번들링 전략의 경우에는 신규 가입자들의 이탈률이 현저히 적은 편이기 때문에 일시적인 유입이 아니고 장기적인 쇼핑의 생태계 내에 정착 가능성이 크다는 것을 의미하고 있어서 향후에도 저희는 전략적인 제휴를 통해서 멤버십 가입자를 증대시키고 쇼핑 객단가를 상승시키는 시너지 효과를 목표로 하고 있습니다.
Regarding the question about Netflix partnership, as you know, we've bundled the Netflix as well as, on top of that, our NAVER membership, and the result of that was that new sign-up subscribers actually rose quite significantly. Also, if you look at their spending compared to before the sign-up, the spending has gone up quite significantly as well by a margin of about 30%, more than 30%. Another characteristic is that all these subscribers who came through the bundled product, their churn rate is also very low, which goes to show that the impact is not short-lived. It's not temporary. These are people who are willing to stay within this ecosystem over a longer period of time.
It is because of this experience going forward. We're also going to try to focus on more such strategic partnerships so that we can grow the base of our members and also have a positive impact on their spending.
올해의 경우 저희가 가지고 있는 다양한 상품 DB를 탐색 발견할 수 있도록 개인화를 강화하는 저희의 강점은 극대화하면서 상대적으로 약한 배송이나 멤버십 등은 더욱 보완하고 견고한 성장을 이루는 한 해가 될 것으로 저희는 예상하고 있습니다. 이를 통해 Smart Store 거래액은 시장 성장률을 상회하는 두 자릿수 달성을 목표로 하고 있습니다.
So our approach for this year is we are going to really leverage the personalization strength that we have against the product database and also make improvements on some of the weaknesses that we have, especially focusing on the delivery aspect and the membership-related benefits so that we may be able to drive robust growth into the future. So based upon all these efforts, the GMV objective and target that we have for our Smart Store is going to be double-digit growth, which will be outperforming the general market growth.
플러스 스토어 앱과 관련한 마케팅이나 프로모션이 진행될 예정이고, 또한 이용자 혜택 측면에서도 저희가 공격적인 투자들을 예정을 하고 있지만, 그 저희가 발표하고 있는 커머스 마진에 있어서 유의미하게 큰 변화는 없을 것으로 좀 통제하는 가운데 성장을 지속시키려고 계획입니다.
And with the introduction of NAVER Plus Store app, there's going to be quite a bit of marketing and promotion activities as well as more investment into the user benefit offerings as well. But this is not going to mean a big impact on the margin of our commerce business. It will be done within a well-controlled manner.
마진 좀 부연 설명 드리면, 아마 지난 분기까지 프로모션 등의 혜택 증가로 커머스 마진이 조금 소폭 내려간 것을 확인을 아마 하셨을 텐데요. 이번 분기 같은 경우에는 많이 회복을 했고요. 그것은 오히려 프로모션 혜택이 더 들어갔음에도 불구하고, 앞서 최수연 대표님께서 설명하신 것처럼 저희 쇼핑 검색 광고가 프로덕트 개선, 그리고 지면 노출이 더 많이 되면서 그쪽 매출 믹스가 올라갔기 때문에 이게 또 하이 마진 광고 매출도 하이 마진 매출이지 않습니까? 그래서 이걸 다 합산을 하면 이번 분기 같은 경우에는 저희가 예년 수준으로 지금 마진율이 회복이 되었고요. 앞으로는 방금 전에 대표님께서 말씀하신 것처럼 얼마만큼 이거를 우리가 성장을 위한 투자와 또 마진 지키는 또 아시겠지만 여러 가지 업셀링 기회들도 있어서 그러한 방향으로 앞으로 유지해 나갈 계획입니다.
Just to add on the margin-related question, up to last quarter, because of more extended promotion and a higher level of benefits that we gave to the users, you would have also been able to check that our commerce margin would have dipped quite slightly. But come this quarter, we were able to recover, regain our footing despite there being more promotions. This is because, as CEO has previously mentioned, if you look at our Shopping Search ad, there's been quite a bit of enhancement to the product itself and much more higher level of the loading of the advertisement. That's really had an impact because the ad business, of course, yields higher margin, and the revenue mix actually runs up from this type of product, and that helped us to drive the margin recovery.
Going forward, we will continue to look and study how much to invest versus the amount of margin that we need to defend against. But as you know, because there is quite a bit of upselling opportunities that will present itself as well, we will make a strike a good balance between the two. That is our plan.
네, 그 질문이 더 있을 수 있는데요. 지금 시간이 한 시간이 지났기 때문에 여기에서 좀 마무리를 하는 방향으로 하겠습니다.
As we spent about an hour, we would like to close our earnings release today.
네, 오늘 4분기 실적 발표에 참여해 주신 여러분 감사하고요. 다음 분기 실적 발표에서.