Good morning. My name is Choi Myung-Hwan from NAVER. We will now begin NAVER's 2025 Q1 earnings conference call. For the benefit of our investors joining from whom it is, we will provide simultaneous interpretation. On this call, we're joined by CEO Soo-yeon Choi and the newly appointed CFO, Hee-Choi Kim, and they will walk you through NAVER's business highlights and strategies and financial results, after which we will entertain your questions. Please note that the earnings results are K-IFRS-based and 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'm Soo-yeon Choi, the CEO. In 2025, despite an uncertain environment, NAVER achieved solid results by strengthening its core business of competitiveness and advancing its platforms. In the changing era of AI, NAVER has demonstrated its unique platform competitiveness with exclusive content and data, not only for search but also for content discovery, and even extending to services like shopping and local places, creating an ecosystem that AI cannot replace. Furthermore, through the launch of AI Briefing, NAVER is progressively adapting to changing user patterns. Recently, through advanced personalization, NAVER has further strengthened its business ties, especially in shopping and local places. This is evident in the YOY growth of 11.9% in search platform and YOY growth of 8.2% in search advertising recorded in Q1.
In the advertising segment, NAVER's ads began to evolve as we enabled more efficient ad delivery within the advertisers' budgets through the phased rollout of the ad tech platform named AdBoost, which began testing in January. Through the optimization of ad placements, particularly in the mobile home feed and main page, we expanded the visibility of shopping search ads, provided diverse advertising experiences, and saw significant growth in commerce advertising as a result. To further enhance content discovery, we plan to revamp the NAVER App and our main search engine within this year, focusing on advanced content recommendations and personalized search experiences. These progressive advancements in service and ad technologies will help blur the lines between search, display, and commerce advertising across and beyond the platform, driving overall ad efficiency.
In commerce, following the launch of the NAVER+ Store standalone app in March, we have observed changes in user patterns and growth opportunities. Moving forward, we will introduce differentiated UX and services exclusive to the standalone app, beginning with features designed to enhance retention in the form of a commerce-specialized AI agent while continuing to expand membership exclusive benefits to further invigorate NAVER's shopping ecosystem. Moving on to our segment results, starting with Search Platform. Search Platform recorded steady growth in Q1, driven by continued enhancements in platform competitiveness and advertising efficiency. To strengthen the competitiveness of NAVER's search platform, we are leveraging our company-wide analytics platform to assess the quality of search results by topic and identify areas for improvement, thereby enhancing overall search quality.
In parallel, we plan to further improve the quality of search and related services by securing additional reliable public data and information to reinforce our data assets, an essential component of search competitiveness. At the same time, discovery features are being further refined to increase user time spent on the platform. In Q1, we enhanced our personalized recommendation algorithms, allowing content to better reflect the individual interests of users. Additionally, we expanded the feed space within vertical spaces like café, creating more opportunities to deliver tailored content. Moving forward, we will introduce dedicated feeds for specific topics such as fashion, beauty, lifestyle food, and travel restaurants, while enhancing the accessibility and visibility of recommended content. We are also preparing a revamp of the NAVER App and our main search engine to ensure content is consumed more organically.
Furthermore, by actively utilizing AI in the layout and structure of the NAVER app, we aim to personalize user navigation and lock in users to spend more time within the NAVER ecosystem. Furthermore, we plan to apply personalization to our main search engine as well. Unlike the past, where the same results were shown to all users, search results and its UI/UX will now be tailored to each individual's context by leveraging customization technology and unified data. We expect that this revamp, along with efforts to improve search quality and secure data, will provide users with an optimal search experience. NAVER is also focusing on UGC production to ensure that high-quality content tailored to the interests of users is generated across various services and is exposed based on accurate targeting.
Users ranging from teens to their 30s who feel fatigued by fast-consumed content are migrating to blogs where they consistently create unique posts with images and videos in their personal space. Meanwhile, Clip continues to attract high-quality creators, providing meaningful synergy with local places and shopping services. In the first half of this year, the number of creators active under the Clip Creator Program has grown more than twofold compared to the end of last year, with rapid content expansion across diverse categories including local places, entertainment, sports, and fashion and beauty. This has led to healthy content consumption reflected in increased daily click views and time spent. Since its launch, Clip's average daily time spent has increased by 1.8 times with expanded creator rewards and growing synergy with other NAVER services. Some top-tier creators are now earning up to KRW 20 million per month.
Such UGC creation linked with NAVER's diverse services is driving a virtual cycle that strengthens platform competitiveness. Content produced on Clip is being showcased through Clip reviews on NAVER Place, building a collection of valuable video assets. In addition, Shopping Connect, which started testing in April, effectively links brands, Smart Store sellers, and various creators on the NAVER app and is set to evolve into a powerful marketing tool that will also drive branding effect within NAVER+ Store. These accumulated unique and diverse NAVER content assets will be leveraged to enhance differentiated AI search and commerce experiences and will serve as the foundation for developing our own AI agent. Next, let me also provide a brief update on the progress of on-service AI.
To meet the growing demand for AI-driven search, we released AI Briefing in March, starting with 1% of factual queries to provide users with concise summaries of the information they seek. Although the service has been live for only a short period, we've seen positive indicators such as higher CTR and user time spent with AI Briefing results compared to pre-implementation. Going forward, we plan to expand our current coverage and enhance service quality through model improvements and usability analysis. Some features of AdBoost, our AI-based platform designed to automate ad campaign execution and optimize budgets for advertisers, have also been released. Currently, keyword generation and automated bidding features are in use, and by year-end, we plan to launch additional features such as creative generation and automated targeting to enhance ad performance and optimize budget utilization.
To elaborate further on our Q1 advertising performance, within search advertising, we continued efforts to improve our product while also expanding the application of Extended Searc h, or extended search, which automatically matches ads to search queries that are closely related to content on the advertiser's site and exposes those ads accordingly. In display advertising, we drove revenue growth by delivering high-performing ads and expanded feed inventory through more advanced targeting capabilities. In addition, to meet the growing demand for advertisers seeking broader search or broader reach, we continue to expand beyond the NAVER platform. As a result, a variety of NAVER's ad products are now being served across multiple external platforms and websites. As mentioned earlier in Q1, the optimization of ad placements led to commerce ads being served within existing display inventory, which resulted in a different growth distribution than in the past.
As inventory optimization and automation for ad delivery and budget optimization designed for advertisers advance, we expect the lines between search, display, and commerce ads to blur even further. Accordingly, we plan to communicate in total NAVER platform advertising metrics, which will encompass search, display, commerce, financial, and webtoon ads. For reference, in Q1, total NAVER platform ad revenue achieved a steady growth of 9.6% YOY despite challenging conditions, demonstrating the resilience of the NAVER platform. Next, I will provide an update on our commerce business. In Q1, the overall shopping market environment was challenging due to factors such as weakened consumer sentiment driven by political and social issues, persistent high inflation and interest rates stemming from uncertainties in the U.S., and fewer business days compared to the previous year due to the designation of temporary public holidays.
Despite such challenging environment, we reinforced our platform competitiveness with the launch of a NAVER+ Store and achieved a solid 10.1% YOY growth in on-platform GMV driven by strategic efforts in delivery and membership. The NAVER+ Store app launched in March enhanced shopping value by strengthening personalized features through the Smart Store database, focusing on exploration and discovery. It also expanded benefits for membership users, significantly increasing member activity. The outcome of these efforts was evident in the positive trends seen in customer activity and user behavior metrics. In terms of customer activity, the app showed higher levels than the web in metrics such as purchase frequency, purchase amount, conversion rate, and the average GMV. Notably, the activity of membership users within the app was approximately 26 percentage points higher compared to the web.
Similarly, in terms of user behavior, we observed a significant increase in GMV in the discovery domains within the app, such as the shopping home, verticals, and curated events, indicating changes in user patterns and growth potential as intended. The launch of the NAVER+ Store standalone app is part of a two-track strategy to enhance user accessibility and convenience. It aims to retain general users who access through the NAVER app and mobile web while expanding the overall user acquisition channel by adding the app as a new channel to provide a more sophisticated shopping experience. The app will also be positioned to gradually attract users according to their needs, focusing especially on loyal customers who visit frequently and show higher purchase conversion rates. Going forward, we plan to progressively enhance differentiated UX and services exclusive to the app, including features like the AI shopping guide to improve retention.
At the same time, we will continue to expand exclusive benefits for membership users to further energize the Smart Store ecosystem. In terms of delivery, we rebranded the guaranteed delivery service as N Delivery in line with the app launch, while also enhancing the service by providing more detailed delivery dates as well as offering free shipping and returns benefits for membership users. We also expanded same-day and Sunday delivery, reducing lead times and increasing user satisfaction. Also, N Delivery coverage grew by 90% compared to the same period last year. Furthermore, to enhance our competitiveness in the fresh fruit sector, where fast delivery is crucial, we plan to launch a service in partnership with Kurly in the second half of the year, expanding our selection of high-quality products and improving price competitiveness.
With this partnership, we expect to accelerate customer acquisition and purchase frequency in the rapidly growing fresh fruit category, which holds a significant share of the commerce market while also strengthening the overall competitiveness of our commerce platform. The Plus membership is strengthening the ecosystem by expanding benefits both within and outside the NAVER platform. Following the Netflix partnership, the trend of increased daily new sign-ups and higher shopping expenditure compared to pre-membership has continued. Active and paying user growth has also accelerated, further contributing to the vitality of NAVER's commerce ecosystem. The core value of Plus membership lies in offering a differentiated, enjoyable experience unique to NAVER beyond simple discounts and rewards. We will continue to expand user benefits and evolve the service to deliver consistent delight in users' daily lives. Lastly, let me highlight the remarkable growth achieved in our commerce advertising business.
With the app launch, we expanded our content inventory and optimized ad placements across the board while enhancing personalization features to help users discover more relevant products. We also improved ad visibility within integrated search results and enhanced recommendation ads in non-search areas to boost efficiency. AI-powered creative optimization and expanded matching technology were applied to help advertisers more effectively expose their ads. These combined efforts generated strong synergy, driving commerce ad revenue to an all-time high and marking robust growth. Next is an update on our fintech business. In Q1, NAVER Pay's TPV reached KRW 19.6 trillion, representing a 17.4% increase YOY and a 1.4% increase QOQ. Of this, non-captive payments grew 24% YOY, surpassing KRW 10 trillion, driven by enhanced payment usage and an expanded network of merchants. This now accounts for 52% of total NAVER Pay payments, highlighting the continued expansion of our payment ecosystem.
For our platform business, NAVER Pay's loan comparison service is now available on the K-Bank app through our partnership with K-Bank . This enables K-Bank users to easily compare loan products from 70 financial institutions already partnered with NAVER Pay, and we expect this to attract a broader range of users to the NAVER Pay platform. The launch of our securities web trading system has increased convenience, allowing users to access investment information and trade stocks through their securities accounts directly within the NAVER Pay app. We will continue our efforts to strengthen competitiveness across various financial services. Now moving on to Webtoon. In Q1, Webtoon revenue was KRW 422.7 billion, up 7.1% YOY but down 1.2% QOQ. For reference, Webtoon Entertainment will release its earnings report on May 13th in US time. Please refer to Webtoon Entertainment's earnings call for more detailed information.
Finally, I would like to provide an update on the performance of the Enterprise division. Starting from this quarter, we plan to rename the Cloud division to the Enterprise division, taking into account the characteristics of the business segment. Please note that the detailed composition of the division remains the same as before. The B2B business in the Enterprise division is steadily growing, supported by LINE WORKS' ongoing efforts to acquire paid users. Through campaigns targeting the conversion of free users to paid ones, the number of paid LINE WORKS IDs has consistently increased by over 10% for four consecutive quarters, ensuring stable growth. The number of paid clients is also steadily increasing, laying the foundation for future customer acquisition. Moreover, by utilizing the AI capabilities seen through the integration of LINE AI in 2023, we plan to launch various services in conjunction with LINE WORKS.
In Q1, we launched Roger, a real-time voice communication service. In April, we also introduced the paid version of AI Note, which has been well received by a variety of corporate clients. Looking ahead, LINE WORKS plans to expand its product offerings beyond messaging, with a focus on evolving into an AI-powered platform. In the B2B AI sector, we successfully secured contracts for Neurocloud powered by HyperCLOVA X , including a contract with the Bank of Korea in the first quarter, following our successful partnership with KHNP at the end of last year. This marks an important step towards expanding our specialized AI services for the financial sector. Through this contract, we plan to implement AI-powered solutions to enhance the productivity of employees at the Bank of Korea, including basic functions such as document search, summarization, as well as developing specialized tools for research and analysis of various economic issues.
We expect revenue to start generating from both KHNP and BOK contracts beginning in Q2. As businesses continue to advance AI technology and its applications, the demand for GPU as a service is expected to grow, allowing companies to utilize GPUs within cloud environments without the need to establish separate infrastructure. Given NAVER Cloud's experience in building Korea's largest data center, supercomputer infrastructure, and expertise in operating LLMs and AI services, we expect to offer highly competitive services. In Q2, we will secure the first case of GPU as a service and obtain a meaningful reference. Moving forward, we plan to build more references not only in Korea but also internationally. Although the overall advertising and commerce market is expected to remain weak due to recent economic downturns, NAVER will focus on enhancing its AI-powered service platform and business capabilities, working with various stakeholders to outperform market growth.
Next, CFO Hee-Choi Kim will walk you through Q1 financial results.
Good morning. I'm the new CFO, Hee-Choi Kim. This earnings call is my first opportunity to address investors and analysts. In the future, I will work to ensure more opportunities to connect with you beyond these calls. I kindly ask for your continued support and encouragement for NAVER. Now, let me present the financial results for the first quarter. NAVER's Q1 revenue totaled KRW 2.7868 trillion, up 10.3% YOY, driven by strong double-digit growth in core businesses such as search platform, commerce, and fintech, but down 3.4% from the previous quarter. Despite the challenging macroeconomic environment with a weakened economic outlook and consumer sentiment, along with uncertainty in the advertising and commerce markets, NAVER has continued to drive strong growth in its core competitiveness by strengthening its service offerings and exploring diverse monetization strategies.
Costs were carefully executed with a focus on each business unit's strategy and the company's mid-to-long-term direction. As a result, operating profit increased by 15% YOY but decreased by 6.8% QOQ, reaching KRW 505.3 billion. The operating profit margin was 18.1%, up 0.7 percentage points YOY. Adjusted EBITDA, which excludes the volatility of stock-based compensation expenses and depreciation, increased by 20.7% YOY and decreased by 6% QOQ, reaching KRW 701 billion. Adjusted EBITDA margin was 25.2%, up 2.2 percentage points YOY. Next, I will explain the revenue by business segment. In Q1, the search platform revenue increased by 11.9% YOY but decreased by 4.9% QOQ, totaling KRW 1.0127 trillion due to the seasonal off-peak period. Search ad revenue totaled KRW 753.7 billion, up 8.2% YOY but down 1.9% QOQ, driven by the expansion of expanded search, improvements to place ads, and the added effect of expanding to external media.
Display ads experienced a slight slowdown in YOY growth due to the downturn in the advertising market, the impact of seasonality, and the exposure of commerce ads within the feed pages due to placement optimization. However, thanks to efforts such as expanding new feed placements, increasing high-efficiency feed coverage, and strengthening targeting, revenue recorded KRW 217.2 billion, up 7.3% YOY and down 13.8% QOQ. As mentioned earlier, the demand from advertisers for the most efficient ad placements, regardless of page or product lineup, is increasing, and the boundaries between the various ad products displayed across NAVER ad placements are gradually being blurred. Accordingly, starting from the Q2 earnings call , the revenue classification within the search platform will be adjusted. Going forward, please note that communication will focus on the total advertising revenue growth of NAVER's platforms, as explained earlier.
Commerce revenue recorded KRW 787.9 billion, up 12% YOY and 1.6% QOQ. Commerce advertising saw an accelerated growth rate of 16.4% YOY and increased by 0.2% QOQ, contributing to overall revenue growth. With the optimization of ad placements and the advancement of recommendation ads, we applied AI-based creative optimizations and expanded matching technology to help advertisers more effectively expose their databases. Going forward, we expect ads to be more efficiently displayed on shopping placements with high growth potential, contributing to growth. Despite the deconsolidation of Z, our commission and sales revenue was up 8.6% YOY and 2.5% QOQ, backed by GMV growth from smart stores, including brand stores and services, greater adoption of brand solution packages, and enhanced delivery competitiveness. Adjusting for the deconsolidation of Z in Q3 last year, revenue rose 12.3% YOY.
Membership revenue rose 15.4% YOY and 3.5% QOQ, driven by sustained growth and average daily new sign-ups following the partnership with Netflix in November. Fintech revenue grew by 11% YOY but declined 2% QOQ, totaling KRW 392.7 billion. TPV reached KRW 19.6 trillion, up 17.4% YOY and 1.4% QOQ, backed by increased payments on Smart Store and the continued expansion of NAVER's third-party ecosystem. Non-captive payments now account for 52% and is leading the growth. Content revenue increased by 2.9% YOY but decreased by 1.7% QOQ, totaling KRW 459.3 billion. Considering the deconsolidation of NAVER Z in March 2024, this represents a 6.7% increase YOY. In Q1, Webtoon revenue increased by 7.1% YOY based on NAVER's consolidated results in Korean won but decreased by 1.2% QOQ. For more details, please refer to the Webtoon Entertainment earnings call scheduled for May 13th in US local time.
Webtoon Entertainment's earnings and also NAVER's results may vary because of the different accounting regulations. SNOW revenue dropped by 33.9% YOY and 8.9% QOQ due to the continued deconsolidation effect of NAVER Z. However, excluding this effect, the increase in paid subscribers for the camera app driven by AI content integration resulted in an 18.4% increase YOY. Enterprise revenue totaled KRW 134.2 billion, up 14.7% YOY but down 24.4% QOQ. B2B revenue increased by 7.5% YOY, driven by steady growth of LINE WORKS in Japan and revenue recognition from Neurocloud. Other revenue grew by 156.2% YOY, supported by revenue recognition from the Saudi Ministry of Housing's digital twin project. For reference, excluding the one-time revenue impact of approximately KRW 30 billion from the Line Yahoo settlement recognized in Q4 last year, total enterprise revenue decreased by 8.2% QOQ. Next, let me walk you through the breakdown of expenses.
Development and operation expenses increased by 8.1% YOY due to essential hiring to support growth in areas such as shopping, but remained stable QOQ, declining slightly by 0.2% due to a reduction in stock-based compensation. Partner expenses rose 6.7% YOY but declined 4.7% QOQ due to lower revenue-linked commissions and a base effect from the recognition of costs related to the end-of-service contract with Line Yahoo in Q4. Infrastructure expenses increased by 11.4% YOY and 2.3% QOQ, driven by higher depreciation costs from the acquisition of new server assets, including GPUs. Marketing expenses rose by 17.1% YOY due to strategic commerce promotions, aligned with the launch of the NAVER+ Store app, as well as increased promotions in the fintech and webtoon segments. However, they declined by 3.9% QOQ due to a base effect from year-end promotions.
Looking ahead, we plan to drive sustained growth in core businesses such as search, commerce, and content by executing strategic and proactive marketing as needed, while closely evaluating its effectiveness through internal validation. Next, let me discuss the P&L by business. First, in the integrated search platform and commerce segment, margin improved YOY despite increased hiring in the shopping business and expanded promotions. This was driven by steady ad growth and a favorable shift in the revenue mix, led by strong growth in high-margin commerce ad sales. The fintech segment saw improved profitability YOY, driven by continued growth in payment revenue and the execution of strategic marketing. While the losses in the content and enterprise segments slightly widened YOY, we are committed to identifying new business opportunities, enhancing competitiveness, and improving profitability to contribute to NAVER's overall profitability in the mid to long term.
In Q1, consolidated net income was KRW 423.7 billion, down by 23.8% YOY, primarily due to a base effect from the gain of the disposal of subsidiaries, including NAVER Z in Q1 2024. Next, I will discuss cash flow and shareholder returns. In Q1, free cash flow totaled KRW 471.9 billion, down by KRW 21.5 billion YOY but up by KRW 34.2 billion QOQ. This was due to increased CAPEX driven by expanded investments in facilities to secure AI competitiveness, despite stable growth in operating cash flow. Finally, in accordance with the shareholder return program, a cash dividend of KRW 168.4 billion was paid on April 16th, following approval at the regular shareholders' meeting in March. The shareholder return program for the past three years will conclude with a cancellation of 1% of the company's treasury stock within this year.
In a new three-year shareholder return policy, which will take into account NAVER's investment plans, liquidity, and debt ratio, will be shared with the market within this year. This concludes our overview of Q1 financial performance. We now welcome any questions from the investors.
[Foreign language] 지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 *와 1번을 누르시기 바랍니다. 질문을 취소하시려면 *와 2번을 누르시면 됩니다.
Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
[Foreign language] 처음으로 질문해 주실 분은 키움증권의 김진구 님입니다.
The first question will be provided by Jingu Kim from Kiwoom Securities. Please go ahead with your question.
[Foreign language] 예, 질문 기회 감사드립니다. 두 가지 질문을 드릴 건데요.
[Foreign language] 첫 번째는 우리 커머스에서 AI 솔루션 전문 시너지 효과를 좀 여쭤보려고 하는데, 특히 우리 서드파티 셀러 대상으로 B2B 솔루션 사업 진척 현황에 대한 설명을 좀 부탁드리고, 관련해서 향후에 구체적인 전략이나 플랜이 있으시면 좀 추가로 말씀을 부탁드리도록 하겠고요. 두 번째 질문은 최근에 글로벌 이슈에 대해서 좀 질문을 드려볼까 하는데요. 검색 쿼리를 포괄한 유저 인게이지먼트 지표가 전년 대비 변화가 좀 어떠하신지에 대한 사안인데요. 최근 글로벌 AI 서비스 출시로 검색 트래픽이 좀 저감된다는 노이즈가 있는데, 이에 대한 우리 회사의 상황에 대해서 좀 문의를 드리도록 하겠습니다. 이상입니다.
Thank you. I would like to ask you two questions. The first question relates to the synergies that you were able to see with the adoption of AI solutions into your commerce business. Would like to also gain an update as to the B2B solution sales to the third-party sellers.
If you have any plans or strategies for the future, it would be appreciated if you could share that with us. Second question relates to a recent issue on a global basis. The people are saying that with the emergence and adoption of AI services, basically the search queries and the user engagement metrics are actually coming down. So there is a bit of an issue or global issue that had recently emerged. Would like to understand whether you believe that that AI service is pushing down on the overall search query metrics.
[Foreign language] 네, 먼저 커머스 AI 솔루션 관련해서 답변을 좀 드리겠는데요. 현재 저희가 네이버 쇼핑에서 약 100여 개 넘는 솔루션을 판매자들한테 제공을 하고 있고, 이 중에 많은 부분들이 AI를 활용해서 추천하거나 마케팅, 거래 및 유입 등의 트렌드 등을 파악하여 판매자분들께서 전략적으로 사용할 수 있도록 도움을 주는 솔루션들입니다.
[Foreign language] 현재 저희는 이 중 판매자들의 활성화를 위해서 유료 솔루션들도 무료로 좀 제공하는 방향으로 내용을 잡고 있고요. 단기적으로 솔루션 자체의 매출은 감소할 수 있겠지만, 해당 솔루션을 활용하는 판매자들의 비중이 높아지면서 거래액 확대에 기여할 것으로 예상을 하고 있습니다.
So responding to your question about the impact of AI solutions into our commerce business, at this point, NAVER Shopping currently provides around 100 different solutions to our sellers, and most of these solutions are AI-powered in terms of making recommendations, marketing, transactions, and also facilitating the inflow of users. And the sellers can make use of such trends and data and can benefit from the use of such solutions. So our strategy at this time is to provide some of these solutions free of charge to the sellers so that we can onboard as many sellers as possible.
So from a short run, this may bring down the top line slightly, but it also means that the number of sellers who will be making use of such solutions are going to rise as we go into the future, and that will, we believe, contribute to the GMV growth.
[Foreign language] 커머스 B2B 솔루션 사업의 경우에는 현재 여러 가지로 검토 중에 있지만, 아직 구체화된 내용은 없어서 관련된 내용이 구체화되는 대로 말씀드리도록 하겠습니다.
And regarding the commerce B2B solution business, we are looking into this opportunity from many different aspects, but no confirmed decision has yet been made. We will come back to you in due course.
[Foreign language] 또한 검색 트렌드에 대해서도 문의를 좀 주셨는데요. 저희 내부 데이터상 지금까지 검색 쿼리 트렌드에서 생성형 AI 서비스로 인한 악영향은 보이지 않고 있고, 안정적으로 가고 있다고 생각을 하고 있습니다.
Responding to the question about the recent search query trend, based upon responding to your question relating to the search query trend, we, based upon our internal data, do not yet see any negative or bad impact on our query trend coming from the use of the generative AI. The current trend is maintained at a quite steady state.
[Foreign language] 그 이유는 네이버 검색 서비스의 특징에 기인한다고 저희는 판단을 하고 있는데요. 저희의 검색 서비스 자체가 예전부터 정답형 검색을 제공하는 것에 집중하기보다는 이용자들이 쇼핑을 한다거나 맛집을 찾는다거나 이런 여러 가지 탐색형 정보들에 대해서 유지율에 대한 높은 제공을 보이면서 검색 만족도를 높이는 데 저희가 전략을 집중하고 있기 때문에 아직까지는 이러한 생성형 AI 서비스들이 이런 비상업적인 정답형 정보성 검색 쿼리가 비중이 좀 높은 그런 경쟁사의 영향을 주고 있는 것으로 생각을 하고 있고, 저희가 상대적으로 강한 비즈니스적인 쿼리들, 탐색적인 쿼리들, 그리고 정답이 없는 쿼리들에 대해서는 오히려 지속적으로 증가하고 있다고 생각을 하고 있습니다.
The key characteristics that you see from NAVER Search is that our strategy has always been focused on enhancing user satisfaction, especially around the UGCs, as people search for where to shop and where to go eat. So it's mostly focused on the discovery aspect rather than a simple factual-based search queries. So I believe that the application of the generative AI and the impact from it is going to be more bigger for our peers that focus more on the non-commercial and factual-based queries. For us, it's always been focused on discovery and also providing people with information in terms of the commerce and the business, so queries that don't necessarily have one single answer to. So I think in that sense, we are impacted less.
[Foreign language] 다만 생성형 AI 검색 서비스의 활용 방식이 다양해지고 있고, 최근에 플레이스라든지 쇼핑을 연결하려는 그런 여러 가지 흐름들도 저희가 잘 인지를 하고 있습니다.
[Foreign language] 이처럼 생성형 AI 검색이 더욱더 진화하게 되면 이용자들의 정보 소비 행태도 결국 다변화될 것으로 저희는 판단을 하고 있는데요. 이러한 경우에는 더더욱 저희가 이용자 개개인의 좀 파편화된 관심이나 맥락에 맞춰서 콘텐츠와 정보를 제공하는 것이 가장 중요하다고 판단을 하고 있습니다. 따라서 연내에 네이버만이 보유하고 있는 방대한 데이터와 기술을 기반으로 저희의 앱 서비스와 통합 검색을 개편할 계획인데요. 이를 통해서 탐색을 고도화하고 개인화된 콘텐츠 소비를 확대하여 AI 기반 기능 등을 통해서 저희가 가장 강점을 가지고 있는 검색, 쇼핑, 플레이스 등 서비스로 잘 연결될 수 있도록 경험을 고도화해 나갈 계획입니다.
But with the continued use of generative AI, we see that the generative AI usage is being tied up with, for instance, shopping experience and NAVER Place as well. With the continuous evolution and development of generative AI into the future, we believe that we will be able to see more diversified consumer behavior when it comes to use of such services.
Hence, it's going to be more important for us to be able to provide the content and information that individuals seek based upon their interests and their preferences. It would be very important for us in that sense to be targeting that as well. Underpinned by NAVER's data and technology, hence we've decided to revamp the application as well as our main search of NAVER, which will be further enhanced so that we can provide a way for the consumers to basically use these different types of search and also really cater to their need for search, shopping, and other services that we can provide.
[Foreign language] 다음 질문 받겠습니다.
Next question, please.
[Foreign language] 다음으로 질문해 주실 분은 Goldman Sachs의 에릭 차 님입니다.
The following question will be presented by Eric Cha from Goldman Sachs. Please go ahead with your question.
[Foreign language] 네, 질문 기회 감사합니다.
Earnings release call. I have two questions. My first question relates to the AI Briefing, which was released in the first quarter. It seems like the query coverage is not that big. I'm curious whether that's to control the click volume or for cost control. And for the second, I want to ask about the shopping app. From what you've seen so far, what do you think are the merits and demerits, and how do you judge them? I'm curious. Also, due to this reorganization and combining it with other strategies, when do.
First of all congratulations to the CFO for your debut earning relates to AI breifing which was in release in the first quarter it's seems like fully covered it's not that big
Was it your intention to actually control the cannibalization that may take place in terms of the number of clicks, or was the intention to control cost? And so we'd like to ask you that question. Second has to do with the NAVER Shopping app. What are the pros and cons related to the launch of this application? I understand that there is a strategy to revamp this as you go into the future. So when do you think is the timing for us to be able to see an accelerated trend in terms of GMV growth for NAVER Shopping? And another aspect of the question is that your competitor had said that the overall macro headwind is not really impacting their business. What about NAVER Commerce?
[Foreign language] 네, 먼저 AI Briefing 관련해서는 현재 저희가 QC 중에서 한 1% 정도 대상으로 AI Briefing 노출을 시작을 했는데요.
[Foreign language] 그 이유는 워낙에 네이버, 특히 한국에서 전체적인 인터넷 생태계에 네이버 검색이 미치는 영향이 크다 보니까 이러한 쿼리들을 좀 일부를 먼저 적용을 해서 서비스를 좀 안정적으로 출시하고 그 영향도를 좀 관리하기 위한 측면이 컸고요. 연내에는 한 두 자릿수 정도까지 커버리지를 넓힐 예정입니다.
Yes, internally we've decided to apply AI Briefing to 1% of the factual related queries. Basically, we've done that with intention because search really has a big impact across the overall internet ecosystem of Korea. So we've decided to take a small portion and apply this feature first so that we can steadily, gradually expand this into the future within the control of the impact that may be generated during this process. So before the end of the year, our plan is to expand the coverage to double digit.
[Foreign language] 네, 쇼핑 앱은 현재까지는 저희가 출시했던 의도에 맞게 빠르게 좀 시장에 잘 안착하면서 저희가 원래부터 잘 하고 있었던 가격 비교라든지 탐색을 위한 여러 가지 상품의 비교라든지 이런 캐주얼한 유저들은 기존의 네이버 앱과 또 모바일 웹에 있는 쇼핑 서비스를 이용을 하면서 저희 플러스 멤버십에 있는 충성도 높은 고객들처럼 자주 방문하고 그리고 어떤 핫딜을 발견하는 그런 단골 유저들을 가고 있는 부분들은 앱을 통해서 저희가 유입을 하면서 결국에는 전체적인 유입 경로 확대를 통해서 전체 이용자 볼륨을 확대하는 증가에 긍정적인 기여를 하고 있다고 생각하고 있 습니다.
Regarding the shopping application, its development is ongoing as per our plan and our intention, and it is very quickly gaining its solid market positioning. So there are positive impacts. For instance, if you look at casual visitors to our services who use NAVER App and the mobile web, they would come to have price comparisons and also to discover the products that they wish.
On the other hand, we have a highly loyal customer base, user base, who are more frequent users of the services. And for them, our intention is to have them come to the standalone shopping application. So our intention was to increase and expand the channel through which these consumers come visit us, and we believe that that will have an impact, a positive impact that is, and driving up the number of users.
[Foreign language] 이러한 투트랙 전략을 통해서 저희가 기존의 네이버 앱이라든지 모바일 웹을 통해서 유입되는 일반 사용자들의 규모는 애초에 우려가 되었던 cannibalization 없이 유지하고 있으면서도 방문 빈도수나 구매 전환율이 높은 충성 고객을 중심으로 앱으로 유입을 시키고 있고요. 이 때문에 초기에는 저희 무리하게 모든 이용자들을 앱으로 유입시키기보다는 사용자의 행동 패턴을 파악해서 저희 목적에 맞게 앱을 고도화시키는 것에 저희가 초점을 더 두고 있고요.
[Foreign language]그러한 전략 하에서 지금 한 출시한 지 두 달이 좀 안 되는 시점인데 다운로드 수라든지 이용자 지표에서 모두 긍정적으로 유의미한 결과를 보고 있다고 생각하고 있습니다.
So as I've explained, we are taking on a two-track approach for the NAVER app and the NAVER web. Basically, we have not seen any cannibalization in terms of the users that come through this channel. We're maintaining the previous metrics, and for more highly loyal users in terms of people who visit us more frequently and where there is a higher level of conversion, basically they are coming through the application, the standalone application, so our intention is to not just recklessly try to channel everybody through the application, the standalone application. We will continuously enhance the application as well as the services that we provide that is well in line with the consumer behavior pattern.
And if you look at the initial metrics, although it's only been two months since the release in terms of the number of downloads and the number of user metrics, we are seeing quite positive results.
[Foreign language] 지금 외부 매크로 환경은 사실은 아주 좋지 않다고 저희도 판단을 하고 있고 저희와 같은 경우에 외부 제휴 거래의 경우를 살펴보면 마이너스 성장을 하고 있다고 생각을 하고 있습니다. 저희와 같은 그 비즈니스 모델을 생각하면 저희는 외부 매크로 환경에 대해서 아주 영향을 받지 못한다고는 볼 수 없을 것 같고요. 다만 쇼핑 앱 개편이라든지 저희의 제휴 생태계를 통해서 멤버십 혜택을 강화하는 저희만의 전략으로 올해 좀 도전적인 두 자릿수 거래 성장을 위해서 노력할 것입니다. 아마 경쟁사의 경우에는 저희도 좀 더 살펴보아야 되겠지만 그로서리라든지 이런 장보기성에 저희가 어떻게 보면 컬리와의 제휴로 더 강화하고자 하는 그런 상대적인 카테고리 영향이 크지 않을까 생각합니다.
Our take on the external macro environment that it is quite bad in terms of therefore the outlink partner ecosystem wherein and if you look at the GMVs basically we've seen negative growth from there. However, and so we cannot say that we are completely insulated from these external negative macro headwinds. Now, having said that, we will continuously further enhance our shopping application and also strengthen our partnership ecosystem through ways of providing stronger benefits to our user base so that we can really meet the bold and aggressive growth target of driving double digit growth this year. In terms of the competitive landscape, we believe that the macro environment is having its toll on specific categories such as groceries, and as you know, groceries, it's an area that we've decided to partner up with Kurly.
다음 질문 받겠습니다.
[Foreign language] 다음으로 질문해 주실 분은 Macquarie Securities의 Lee Dong-Ryun 님입니다.
The following question will be presented by Dong-Ryun Lee from Macquarie Securities. Please go ahead with your question.
[Foreign language] 네, 질문 기회 감사드립니다. 최근에 이제 오픈소스 LLM을 공개를 하셨는데 네이버에서는 이 LLM을 전반적으로 활용해서 어떤 생태계 구축을 계획하고 계시고 또 어떤 방식으로 수익화를 하실 계획인지 좀 공유 부탁드립니다.
Thank you for taking my question. NAVER recently unveiled your open source large language model. What is the ecosystem you're envisioning underpinned by the LLM, and what is the monetization model for this?
[Foreign language] 저희는 On-Service AI 전략에 맞춰서 현재 저희가 개발하고 있는 HyperClova X의 경우에는 네이버의 검색이라든지 네이버의 커머스를 고도화하는 데 집중할 계획이고요. 다만 이러한 언어 모델 자체가 또 생태계에 기여할 수 있도록 처음으로 좀 상업용으로도 사용할 수 있는 무료 오픈소스로 공개하는 것으로 결정을 했습니다.
Under the overarching strategy of On-Service AI, we will be using our HyperClova X to upgrade the search and the commerce, which are the key business areas that NAVER is in. And this language model that we've developed, we want to make sure that this also makes its contribution to the greater ecosystem, especially on the areas of commerce. So we've decided to open source it.
[Foreign language] 네, 이를 통해서 조금 아직 좀 더디게 성장하고 있는 국내 AI 생태계가 좀 더 활성화되고 고속 성장하기를 좀 기대를 하고 있고요. 저희의 경우에는 한국은행이라든지 원자력, 수자력 발전소와의 재유 모델이 단순히 어떤 공공기관의 재유를 떠나서 이런 어떤 금융 분야라든지 자원 관리 분야에 있어서의 좀 버티컬 AI 서비스를 제공하는 중요한 레퍼런스라고 판단을 하고 있고 그에 대한 B2B 레퍼런스를 확보하는 차원에서 수익화를 기대를 하고 있습니다.
So we believe that this move is going to help with the more vital growth of the AI ecosystem within Korea, and we hope that it will contribute to that progress. The partnerships that we've entered into with Bank of Korea and Korea Hydro & Nuclear Power, these are not just simply a partnership with a public entity, but it is important in that we will be able to provide more specialized AI services for each of the vertica ls, including the financials as well as the natural resources industry. So by winning such B2B reference points, that will be one of the ways in which we will go ahead with monetization.
[Foreign language] 저희가 공개한 오픈소스 모델의 경우에는 굉장히 가벼운 용량 대비에서 굉장히 고도화된 성능을 보이고 있는데요.
[Foreign language] 이 부분 역시 결국은 한국어에 가장 강점을 보이고 있고 좀 맥락에 맞는 서비스라는 평가를 받고 있어서 향후로 좀 국내에 광고 카피를 제안하는 솔루션이라든가 여행 안내하는 서비스라든가 다양한 영역에서 좀 활용할 수 있는 가능성이 높을 것으로 예상을 하고 있고 또 그러한 생태계 조성을 지원하는 것이 나중에 저희 네이버의 생태계에도 도움이 될 것이라는 판단 하에 앞으로 이 부분도 더 강화할 예정입니다.
So the recently unveiled open source model is very light compared to the high level of performance that it offers, and it really has strength in terms of Korean language and also in terms of context-aware service delivery. So we believe that the usage will be quite high in terms of, for instance, recommending certain advertisement or commercial copyright messages or providing a travel-related guide for the domestic travels. And we believe that helping with the creation of such ecosystem eventually is also going to help with NAVER ecosystem as well.
[Foreign language] 궁극적으로는 이러한 국내의 AI 생태계가 더욱더 조성되고 또 기업들의 AI 채택률이 올라가게 되면 저희가 클라우드로 제공을 하고 있는 뉴로클라우드라든지 또 GPU as a service와 같은 저희의 수익화 모델들이 더욱더 성공적으로 안착하리라 기대하고 있습니다.
So once the AI ecosystem takes root within the domestic market, we believe that companies will start to adopt AI much more quickly, and that will in turn have a positive impact on our cloud business, including NeuroCloud and GPU as a service, and give us or ensure us a good success in terms of monetization and business model.
[Foreign language] 다음 질문 받겠습니다.
[Foreign language] 다음으로 질문해 주실 분은 삼성증권의 오동원 님입니다.
The following question will be presented by Dong-Won Oh from Samsung Securities. Please go ahead with your question.
[Foreign language] 네, 질문 감사드립니다. 저희 시장에서 딥시크 R1 등장 이후로 AI 모델이 증류 기술 등을 통해서 적은 CPU를 사용해도 숏타크 모델을 만들 수 있다는 기대감이 좀 커진 상황이긴 한데요.
[Foreign language] 근데 이러한 DeepSeek조차도 GPU를 수만 개 정도 보유하고 있다라고 알려져 있는데 저희도 GPU가 추가로 필요하지 않을까 좀 궁금합니다. 그래서 관련해서 향후에 저희 CapEx 전략 자체에 좀 변화가 생길지 말씀해 주시면 감사하겠습니다.
Thank you for taking my question. Even with the emergence of DeepSeek and using less number of GPUs, still DeepSeek, I understand, uses tens of thousands and it owns tens of thousands of GPUs. So I would presume that NAVER would need more number of GPUs going forward. What's the CapEx implication for this?
[Foreign language] 네, CapEx 투자 관련해서 저희의 검색이나 커머스나 주요한 버티컬 서비스의 경쟁력 강화를 위한 AI 전환 노력은 지속될 것이기 때문에 이를 위해서 필요한 GPU, CPU 등의 CapEx 투자와 이에 따른 인프라비의 매출 대비 비중은 기존 대비 저희는 더 크게 확대될 것으로 예상하고 있습니다.
Yes, regarding CAPEX, as we go forward, we're going to see more use of AI in our core services like search, commerce, and other key verticals. So we believe that there would be more CAPEX investment that would be required for GPUs and CPUs. So compared to the top line revenue, our infrastructure spending is expected to increase.
[Foreign language] 다만 이러한 저희의 투자 확대가 어떤 무조건적으로 글로벌 빅테크나 그런 트렌드를 따라가겠다는 것보다는 저희 네이버가 가진 역량과 전략 방향성, 그리고 자원 여력을 고려해서 적절한 수준이 되기 위한 어떤 그런 재무적인 검토는 지속적으로 수행할 예정입니다.
Having said that, that does not mean that we will just recklessly mimic the path that the global big techs are going. Naver will be fully considering our capabilities, our strategic direction, and the resources that are available for us. We will make appropriate assessment in terms of financials.
[Foreign language] 시간 관계상 질문 하나 더 있으면 질문이 없어서 이것으로 컨퍼런스 콜을 마치겠습니다.
Thank you very much. With no questions in the queue, we would.