Naver founder to return as board chair; 2024 earnings solid

Lee Hae-jin, the founder of South Korea’s No. 1 internet portal operator Naver Corp., is set to return to the company to lead the board amid the intensifying global artificial intelligence technology war.

His return as chairman of the board was made official on Friday after the company announced that its annual sales for 2024 topped 10 trillion won ($7 billion) for the first time since its inception.

Naver said in a regulatory filing that its board of directors approved Lee’s reinstatement as board chair on Thursday and his comeback will be voted on at the general shareholders meeting in March.

Assuming the vote goes through, Lee will return to Naver about eight years after he stepped down from the board as chairman in 2017 to focus on the company’s overseas businesses as global investment officer (GIO).

With Lee’s homecoming, Naver is expected to focus on reinforcing its AI technology to better compete against bigger rivals such as OpenAI as well as smaller AI players such as China’s DeepSeek.

Naver has developed its proprietary AI model, HyperCLOVA X, but its performance has not yet made big headlines on the global stage.  

In May last year, Lee took part in The AI Seoul Summit and met Nvidia Corp. CEO Jensen Huang a month later, heralding his more active role in reinforcing Naver’s new growth engine AI.

Besides AI, the founder is expected to work with Naver’s younger-generation leaders to advance its mainstay search engine as well as ad and shopping businesses with innovative features and technologies.

In April last year, Naver reshuffled its business divisions and promoted many in their 40s to be executives.

Naver’s Chief Executive Choi Soo-yeon, who took the helm in 2021, is also in her 40s. Under her leadership, Naver has succeeded in diversifying its business portfolio and has achieved solid earnings growth.

The company’s board of directors also approved a plan to extend Choi’s term for three more years. Her current term is due to end at the end of next month.

RECORD SALES IN 2024

Earlier on Friday, Naver announced that it posted 1.98 trillion won in operating profit in 2024, up 32.9% from the prior year.

Annual sales reached 10.74 trillion won, topping 10 trillion won for the first time since the company's inception with an 11% on-year gain.

Its solid results were largely owed to its aggressive spending on research and development.

Naver invests about 20-25% of its revenue in R&D on average. In the past 12 years, it spent nearly 16 trillion won in R&D in total, according to the company.

Despite its massive R&D investment, its operating profit margin remained at 18.4% last year, up 3.0 percentage points from the previous year.   

CEO Choi reiterated on Friday that Naver’s so-called On-Service AI initiative will gain further traction this year.

Naver’s On-Service AI strategy is designed to integrate its AI technology into its core services, including the search platform and shopping applications.

During an earnings conference call later Friday, Choi said Naver is open to using large language models developed by its rivals.

“Naver has its proprietary AI model so I think we are flexible in adopting other LLMs,” Choi said, adding that China’s DeepSeek is an innovative AI model, heightening expectations that any latecomer in the generative AI world could challenge the market dominance.  

BY DIVISION

Naver’s robust results were led by record earnings of its core business units, name search engine and shopping.

Naver’s search engine business raked in 3.95 trillion won in revenue, up 9.9% after offering tailored, personalized content to users.

Naver controlled 64.6% of Korea’s search engine market in the first 15 days of January, followed by Google with a 27.1% share. The gap between the two search engine giants widened to 37.5 percentage points from 22.4 percentage points a year ago.

Naver’s shopping division also recorded 2.92 trillion won in sales, up 14.8% on-year.

The company plans to speed up a revamp of its shopping app this year, with the introduction of a standalone Naver Plus Shopping app.

Its fintech division fared well with 1.51 trillion won in sales, up 14.8% from a year ago.

Its content business, consisting of digital comics – or webtoons – and its camera app, reported 1.80 trillion won in sales, a 3.7% on-year gain.

Its cloud business saw a 26.1 % on-year jump in sales to 563.7 billion won last year.  

Naver shares closed 2.8% lower at 225,500 won on Friday.

Write to Hyeon-woo Oh and Joo-Wan Kim at ohw@hankyung.com

Sookyung Seo edited this article.