Naver, South Korea's largest online portal operator, reported a 20.9 percent year-on-year decline in third-quarter operating profit on Thursday, even as revenues climbed, citing heavy spending on artificial intelligence infrastructure and capabilities. The results underline a deliberate strategic trade-off: short-term margin compression in exchange for long-term AI competitiveness.

Key Financial Figures

Naver posted an operating profit of 451.3 billion won (approximately US$338.5 million) for the July–September 2026 quarter. Net profit fell more sharply, down 45.2 percent to 402.5 billion won. Sales, however, rose 10.7 percent to 3.47 trillion won, signalling that the top line remains healthy even as the bottom line takes the hit from elevated capex.

In a regulatory filing, the company attributed the profit decline to 'increased investments to secure competitiveness in AI, including those in infrastructure, content and offline data.'

Business Segment Performance

Naver's platform division — its core domestic business spanning search and advertising — recorded sales growth of 7.3 percent on-year, buoyed by a rise in advertising revenue and expanded consumer purchases. The company's global ventures segment outperformed the platform unit, with sales up 15.9 percent on-year. That growth was driven by the success of its global commerce platforms, including second-hand goods marketplace Poshmark, as well as its enterprise operations in Saudi Arabia.

The AI Factory Play

Choi Soo-yeon, Chief Executive Officer of Naver, indicated that the company's AI factory — being jointly developed with Brookfield and Nvidia Corp. — is set to begin contributing to revenues in the coming quarter. 'Revenues from our AI factory business will gradually be generated, as we have secured customers through a computing service contract of around 2 trillion won,' she said in a release. The AI factory initiative represents a significant bet on cloud and computing infrastructure at a time when South Korean tech majors are racing to establish credible AI capacity. Notably, the involvement of Nvidia and Brookfield — global leaders in semiconductors and infrastructure capital respectively — lends the venture considerable scale and credibility.

Logistics Expansion Plan

Naver also announced plans to establish a dedicated logistics affiliate aimed at strengthening its delivery capabilities and sustaining growth in its commerce business. Speaking during the third-quarter earnings call, CEO Choi said, 'We will establish a company dedicated to logistics services to bring our delivery competitiveness up a notch, and gradually strengthen our delivery infrastructure, focusing on leased logistics centres.' The new entity is expected to require around 1 trillion won in investments by 2030. Naver said it plans to finance this in ways that minimise impact on cash flow, though specific financing instruments were not disclosed.

Outlook and What Comes Next

Naver's AI factory revenues are expected to be reflected in fourth-quarter results. The company said it intends to advance AI-based services to unlock new revenue streams while expanding its customer base for the AI factory venture. With a 2-trillion-won computing contract already in hand and partnerships with two global heavyweights, analysts will be watching closely to see whether AI revenues can offset sustained margin pressure in the quarters ahead.