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 announced on Friday after the company announced 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 the board chair on Thursday and his comeback will be voted at the general shareholders meeting in March.
Lee would 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 compete better 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 a big headline 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 further 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 the company’s 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 achieving solid growth in earnings.
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 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 its 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 crack the market dominance.
BY DIVISION
Naver’s robust results were led by record earnings of its core business units, search engine and shopping.
Naver’s search engine business raked in 3.95 trillion won in revenue, up 9.9% after offering tailored content to different 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, called webtoons, and 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 traded down 2.6% at 226,000 won on Friday morning.
By Hyeon-woo Oh and Joo-Wan Kim
ohw@hankyung.com
Sookyung Seo edited this article.
