Naver's Q3 Operating Profit Falls 21% as AI Infrastructure Costs Rise 29%

Naver reported third-quarter operating profit of 451.3 billion won ($338 million), down 20.9% from a year earlier and roughly 9% below the 497.6 billion won analyst consensus, as infrastructure spending on AI computing climbed faster than revenue. The figure, filed on South Korea's DART disclosure system at 8:05 a.m. Seoul time on Thursday, shows the cost of building AI capacity now weighing directly on margins at Korea's largest search company.

Revenue rose 10.7% year over year to 3.4724 trillion won ($2.6 billion), but that growth could not absorb the cost base. Net profit fell 45.2% to 402.5 billion won, and profit attributable to shareholders dropped 45.0% to 399.5 billion won. Won figures convert at 1,337 won per dollar.

What drove the profit decline?

Infrastructure costs rose 29.1% from a year earlier, driven by depreciation of new computing assets plus higher data center and network expenses. Marketing costs rose 32.3%. The operating margin narrowed to 13.0% from 15.4% in the second quarter and 18.2% a year earlier, as calculated from the filing.

The pattern held across segments. The Naver Platform segment's margin fell 9.7 percentage points, and Financial Platform's fell 4.4 points, partly due to the rollout of Npay Connect offline payment terminals. For the first nine months, revenue rose 14.3% to 10.1022 trillion won while operating profit fell 5.3% to 1.5134 trillion won.

CFO Kim Hee-cheol said depreciation, sports IP investment and marketing all landed in the same quarter, and that the margin decline should ease in the fourth. "We will work to stably maintain a margin of around 25% going forward," he said, while acknowledging that a 30% margin would be hard to regain in the short term.

How did each segment perform?

Naver now reports three segments. The Naver Platform segment, holding search advertising and commerce, grew 7.3% to 1.9484 trillion won. Within it, service revenue rose 13.1% to 473.6 billion won on the Naver Plus Store app, membership and N-Delivery.

• Financial Platform (Naver Pay): up 14.1% to 487.7 billion won. Payment volume rose 15.6% to 26.2 trillion won. Payments outside Naver's own sites grew 21.8% and now make up 58.2% of the total.
• Global Challenge: up 15.9% to 1.0364 trillion won, helped by consolidating Spanish resale app Wallapop, growth at Poshmark and Soda, and enterprise work including a Saudi digital twin project.

What is the AI factory delivering?

Naver's AI factory venture with Brookfield and NVIDIA has signed an initial computing supply contract worth about 2 trillion won ($1.5 billion). The deal covers roughly 20 megawatts over four to five years, using a mix of NVIDIA B300 and Vera Rubin GPUs.

The company expects revenue from the first half of 2027 and operating profit from 2027. It is in talks with at least 10 companies for the remaining capacity of about 180 megawatts. The GPU assets sit in a Brookfield-funded vehicle that Naver consolidates.

Chief Executive Choi Soo-yeon said a personal AI agent app will launch this year, linking AI recommendations to purchases and bookings across Naver's services. The company also plans a logistics subsidiary this year, with about 1 trillion won ($748 million) invested through 2030. N-Delivery transaction volume rose 38%. Naver gave no numeric guidance.

Where does the Dunamu deal stand?

The results arrive as the Korea Fair Trade Commission reviews Naver Financial's planned all-share takeover of Dunamu, operator of the Upbit crypto exchange, at about 2.54 Naver Financial shares per Dunamu share. On Tuesday, the commission's examiners flagged competition risks and recommended behavioral conditions. The commission chairman has said the review will finish this year. Coverage of Thursday's results did not report new comment on the deal from the earnings call.

The quarter's message is plain: Naver is buying AI capacity at a real near-term cost to margins, and management has told investors to expect roughly 25% rather than the 30% it once delivered — with the AI factory revenue not arriving until 2027.