By Kwanwoo Jun


South Korean internet giant Naver reported weaker fourth-quarter earnings but still delivered record annual results, led by solid growth in its search, e-commerce and financial-technology businesses.

The company is stepping up its artificial-intelligence push by integrating AI tools--including its homegrown large language model--across its businesses, saying the strategy is opening new revenue opportunities and supporting earnings growth.

Revenue last year climbed 12% to a record 12.035 trillion won, equivalent to $8.18 billion, and operating profit reached a new milestone, increasing 12% to 2.208 trillion won, the company said Friday. Full-year net profit fell 5.8% to 1.820 trillion won after a weak fourth-quarter result.

The company's search-platform advertising business posted 5.6% revenue growth in 2025. Revenue from its e-commerce and fintech businesses jumped 26% and 12%, respectively, it said.

Earnings for the final quarter were a sharp miss, with net profit slumping 68% from a year ago to 164.60 billion won. Naver said goodwill impairment losses and corporate taxes weighed on earnings. Analysts had expected 508.26 billion won, according to a FactSet consensus.

Quarterly revenue rose 11% to 3.195 trillion won, and operating profit increased 13% to 610.60 billion won.

Chief Executive Choi Soo-yeon said on an earnings call that Naver will expand its AI-powered search service, AI Briefing, and roll out an integrated AI agent, AI Tab, within the first half of 2026 to further boost growth, especially in its e-commerce and online advertising segments.

Analysts have mixed views on Naver's aggressive AI drive.

Angela Hong and Won Kang of Nomura said Naver's AI-related investment looks "strategically compelling but financially unproven." They expect the internet giant to increase capital expenditure in the coming years, estimating it will rise to 1.6 trillion won in 2026 to 1.9 trillion won in 2027. The company's planned purchase of 60,000 graphics processing units from Nvidia could start pressuring profit margins this year, the analysts wrote.

HSBC analyst Junhyun Kim said in a recent note that as Naver expands its new service allowing other companies to use powerful GPUs over the internet without purchasing the expensive hardware, revenue from the new business could soar from an estimated 66 billion won in 2026 to 1.325 trillion won in 2030--enough to offset depreciation costs from increased capital spending.

Shares in Naver were recently about 3% lower after the earnings release, amid a broad selloff in local stocks on Friday following overnight declines on Wall Street. The stock has climbed nearly 3% so far this year, underperforming the benchmark Kospi's more than 20% gain.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

02-05-26 2226ET