NAVER Corporation ($A035420)

Good morning. We will now begin NAVER's 2026 Q1 Earnings Conference Call. For the benefit of our investors joining from home and abroad, we will provide simultaneous interpretation for the presentation and switch to consecutive interpretation for the Q&A.

Analysts, investors, good morning. I am Paul Choi from the Capital Markets Office. I would like to thank the analysts and investors for joining NAVER's 2026 Q1 earnings presentation. On this call, we are joined by CEO, Soo-Yeon Choi; and CFO, Hee-Cheol Kim, then they will walk you through NAVER's business highlights and strategies and financial results, after which we'll entertain your questions. Please note that the earnings results are K-IFRS based provided for timely communications and have not been audited by an independent auditor and hence, are subject to change after such review. With that, I will turn it over to our CEO to present on the business highlights.

Good morning. I am Soo-Yeon Choi, CEO. In 2026, NAVER plans to take actionable AI as core strategy with a focus on delivering a seamless experience in the end-to-end user journey from discovery and exploration and search to actual purchases and reservations. Beginning with the launch of a shopping agent in February, NAVER introduced user-facing agents through the launch of AI Tab in April. In the second half of the year, NAVER plans to launch an agent for advertisers and business owners, further enhancing the overall experience across the NAVER ecosystem. To enable this, NAVER in Q1 secured a diverse range of content, including Olympic broadcasting rights that could be leveraged across key services, including CHZZK, shopping and [ click ]. The company is also establishing a foundation to gather offline transaction data through Npay Connect devices, complementing existing online data capabilities. By integrating these data assets with existing data sets across search, commerce, content and ads, NAVER will leverage an integrated large-scale recommendation model to deliver optimized user experiences and content consumption and transactions, further reinforcing its competitive edge. Competition in the global AI market is rapidly shifting from conversational quality to the completeness of execution and conversion. In this environment, NAVER is uniquely positioned with an integrated stack spanning search, commerce and payment and is best positioned to deliver a seamless agent-driven experience for purchases and reservations. AI briefing introduced early last year, continued its strong momentum into Q1. As of March, long-tail queries grew by more than 2.5x year-on-year, while clicks on follow-up questions increased more than tenfold compared to the initial launch period. In particular, the CTR of follow-up questions within AI briefing exceeded that of traditional search recommendation models by more than 2.5x, indicating that users are actively engaging with AI-generated insights and expanding the depth of their exploration. Starting in Q2, NAVER will begin testing GenAI advertising integrated with shopping and local services, followed by full-scale monetization in Q3. This initiative is expected to establish a virtuous flywheel in which AI search seamlessly leads to purchases and reservations within the platform with the goal of building a meaningful new revenue stream by year-end. Furthermore, on April 27, NAVER launched the AI Tab for NAVER Plus members. AI Tab delivers a conversational AI search experience that provides personalized responses based on user search and purchase history while seamlessly connecting NAVER services to drive transactions such as purchases and reservations. At launch, the service supports shopping and restaurant discovery with plans to expand connected services and phases following a broader rollout. Moving forward, NAVER will define conversion contribution or the extent to which agent-driven recommendations lead to actual purchases and reservations as a key metric for actionable AI while establishing a virtuous flywheel to drive transaction growth in key verticals, including Shopping and Place. In this context, NAVER plans to focus its efforts on acquiring offline data this year. As GenAI becomes more widespread, the differentiation of broadly available public data is gradually diminishing, while the strategic value of proprietary data, which is difficult to collect and replicate is increasing rapidly. NAVER will integrate offline data captured through Npay Connect devices and [ Place ] services with its existing online data assets, further reinforcing a structurally differentiated data mode. Further details on NAVER's offline strategy will be provided in the service section later in the call. Next, I'll discuss our advertising business. In Q1, AI contributed more than 50% of total ad revenue growth. In 2026, NAVER plans to drive structural advancement of its advertising business through 3 key growth drivers with AI's revenue contribution expected to expand further over time. The first driver is enhanced targeting. AI-driven ad optimization and the impact of AdVoost are expected to continue scaling this year. In addition, NAVER is refining and integrating data previously dispersed across its services to train an integrated hyperscale recommendation foundation model. Based on this model, NAVER aims to improve the relevance of content and ad recommendations while enhancing prediction accuracy at the industry and inventory level, ultimately driving higher advertising efficiency. The second driver is the creation of new revenue streams from GenAI services. AI briefing ads are currently in testing and are expected to begin contributing to revenue following their official rollout in the second half of this year. The rollout will begin with informational queries to minimize cannibalization with existing search ads while progressively improving monetization per traffic to better reflect its underlying value, taking conversion performance into account. NAVER's competitive strength lies in its ownership of transaction data and integrated payment infrastructure, which are critical assets in the era of agentic AI. The full realization of actionable AI depends on a seamless transaction flow from log-in to reservation, order and payment, which is also a decisive factor in advertising performance. In fact, NAVER's internal data shows that ad conversion rates can differ by nearly double depending on whether payment infrastructure is integrated. And this effectiveness has also been validated through case studies from leading global competitors. Building on these strengths, NAVER plans to progressively introduce AI agents for advertisers, making NAVER's advertising solutions more accessible to small- and medium-sized businesses, thereby broadening the overall advertiser base. The third driver is expansion into off-platform media. Since last November, NAVER has been conducting tests with Meta to enhance integration and will roll out sequential integrations with Criteo and Google in Q2. This expansion into external inventory is expected to strengthen advertiser retention while driving external traffic back into the NAVER ecosystem. Through these initiatives, NAVER aims to firmly establish new growth drivers for its ad business in 2026. Next, I'll discuss commerce, which has been a key driver of service growth. In Q1, Smartstore GMV grew 14% year-on-year, marking a solid start towards the company's full year target of double-digit growth. This performance reflects both favorable market dynamics and the successful execution of NAVER's commerce strategy, where NAVER Plus store membership and logistics capabilities are reinforcing one another to form a virtuous ecosystem. The NAVER Plus Store app, which marked its first anniversary, has now established itself as a core transaction channel driving growth. In Q1, GMV through the app grew 28% quarter-on-quarter, significantly outpacing overall GMV growth. and has entered a self-sustaining growth phase supported by continued organic installs. And more importantly, user behavior continues to evolve. App users show higher engagement than web users, both in time spent and visit frequency, along with meaningfully higher purchase conversion rates. Time spent on the app has more than doubled since launch. The number of returning users increased 23% quarter-on-quarter and purchase conversion rates are approximately 84% higher than on the web. In addition, NAVER membership penetration among app purchasers has remained consistently above certain level. Notably, this quarter's app GMV growth was driven not only by new user acquisition, but also by increased purchase frequency and spending from existing users, indicating that the NAVER Plus Store app has firmly established itself as a go-to shopping channel. At the end of February, NAVER officially launched Shopping AI agent, which brings together NAVER's unique data advantages. Hundreds of millions of product listings, extensive user-generated content such as reviews and user shopping histories are NAVER's proprietary data assets that are not accessible externally and are serving as a core competitive engine of the shopping AI agent. Although still in the early stages, user adoption and the share of queries handled by the agent have increased significantly. There are also positive user signals, including higher conversion rates compared to traditional search and more than fourfold increase in returning users since launch. Starting in May, NAVER plans to integrate key assets of NAVER commerce, including membership benefits and delivery and gifting with the agent. This will further enhance the agent into a business agent, which will go beyond a simple shopping guide to simultaneously improve user experience and monetization. Looking ahead, the agents will move beyond context-aware product recommendations to seamlessly incorporate membership benefits such as rewards and discounts into the decision-making process, enabling users to naturally select options that maximize tangible value. Strengthening logistics competitiveness is one of NAVER's top strategic priorities for commerce in 2026. And then NAVER is actively expanding and delivery adoption for key products while increasing direct fulfillment partnerships. In the second half, the company also plans to introduce unlimited free shipping in line with our membership benefits. The impact of N delivery is also evident in the data. Sellers adopting and delivery have recorded GMV growth rates approximately 4 percentage points higher than those have not, while order frequency among NAVER membership users increased by more than 25% following the enhancement of shipping benefits. These results demonstrate that improvements in logistics are driving both transaction growth and stronger user retention, reinforcing a virtuous cycle within the ecosystem. Kurly N Mart, NAVER's fresh grocery service where fast delivery is essential, has also shown rapid momentum with GMV nearly tripling quarter-on-quarter. And looking ahead, NAVER plans to further strengthen its differentiated logistics ecosystem through the rollout of membership-based unlimited free shipping in the second half and continued expansion of direct fulfillment partnerships through year-end. Q1 marked the initial phase where execution outcomes began to materialize on top of the commerce structure newly established in 2025. And going forward, NAVER will continue to organically integrate apps, AI, logistics and membership into a unified growth engine, further solidifying its position in the commerce market. And as mentioned earlier, NAVER aims to extend its core strengths built on online data and user scale into the offline domain. In particular, the company will focus on strengthening its AI competitiveness through the acquisition of offline transaction data while establishing an early leadership position in the offline e-commerce ecosystem. For the Pace business, NAVER will prioritize the acquisition of offline restaurant data. To drive reservation growth, NAVER is planning on multiple initiatives, including enhanced benefits integrate NAVER Pay, integration of order transaction data from external POS partners to advance search and CRM capabilities and the introduction of agent to search that reflects user context. More specifically, NAVER will expand partnerships with high-demand restaurants and commercial districts as well as hotel buffets and Michelin-boost establishments, significantly strengthening data integration, accelerating GMV growth in these segments. Through these efforts, NAVER aims to expand the scope its Place business while securing a strong leadership position in emerging offline categories. At the center of this strategy is Npay Connect, an integrated offline device supporting payments, ordering, coupons, rewards and reviews. NAVER aims to establish a unified online to offline data ecosystem by connecting online search and reservation data with offline orders, payments and customer loyalty data. Through Npay Biz, an integrated business management platform for business owners, NAVER will provide insights such as visitor trends, commercial district analysis and customized CRM marketing while offering consumers a seamless experience that extends online benefits into offline environments. The offline GMV generated through these initiatives is expected to serve as a new growth driver for NAVER Pay, while the accumulated global offline data will become a critical foundation for NAVERs agentic AI capabilities. And over time, this structure where NAVER's online strengths naturally extend to offline will evolve into a differentiated ecosystem that is difficult to replicate. NAVER's global C2C platforms are strengthening their core capabilities and are reinforcing their positions in the global market. Poshmark has been driving structural improvements to enhance search quality, UI/UX upgrades and improved marketing and operational efficiency since the second half of last year. And as a result, both user traffic and conversion rates have steadily improved, leading to approximately 30% year-on-year growth in both GMV and revenue in Q1. As these initiatives remain in the early stages, NAVER expects this solid growth trajectory to continue. In Q1, Soda delivered a strong performance with GMV more than doubling year-on-year, driven by robust demand in the Japanese trading card category and strong performance from offline stores. Kream continued its stable growth supported by ongoing category expansion and the addition of new brands, further strengthening its competitive positioning. Wallapop newly consolidated in Q1 is a comprehensive C2C platform. By focusing on engagement within its core user base and accelerating activity in the used car category, the platform reached 23 million MAUs and continues to maintain its leading position in Spain. As C2C emerges as another key growth pillar, NAVER will continue to strengthen the competitiveness of its platforms while expanding collaboration across its ecosystem, including search, advertising and payments to unlock further synergies. Finally, I'll discuss NAVER's enterprise business performance. AI-related B2B revenue, including GPU-as-a-Service contracts secured in the second half of last year, continued to be recognized in Q1, driving growth in the enterprise segment. In addition, NAVER WORKS was selected in March as the official collaboration platform by the Ministry of the Interior and Safety, Ministry of Science and ICT and the Ministry of Food and Drug Safety in Korea. This proves a meaningful opportunity to further strengthens NAVER's leadership in the public sector AI transformation. Globally, NAVER sovereign AI initiatives are progressing as planned. In Q1, the company generated project-based revenue in Saudi Arabia related to the digital twin platform service expansion and super app development. NAVER also successfully transitioned the robotics deployment in New Murabba into the operational phase. In addition, NAVER recently signed a strategic MOU with Tata Consultancy Services, one of India's largest IT service providers to explore a range of business opportunities in the region. Discussions are also ongoing with multiple partners across Europe on sovereign AI initiatives, and NAVER plans to provide further updates as progress continues. LINE WORKS continues to deliver steady revenue growth, supported by strong adoption of SaaS offerings such as AiNote and Roger. The company plans to further expand its customer base through the introduction of additional AI-driven features. In Taiwan, where NAVER entered the market late last year, the company is steadily building partnerships by securing leading enterprises across multiple industries of customers. And looking ahead, NAVER will continue to focus on enhancing its AI capabilities while actively pursuing sovereign AI opportunities across both domestic and global markets. Going forward, NAVER will continue to strengthen the competitiveness of its core business by building a virtuous flywheel in which actionable AI drives traffic growth and expanded monetization. At the same time, the company will actively pursue opportunities and deliver results in global growth areas such as C2C, sovereign AI and content with the goal of accelerating overall revenue growth. Now CFO, Hee-Cheol Kim, will discuss the financial performance.

Good morning. This is Hee-Cheol Kim, the CFO. I will now walk you through Q1 financial performance. In Q1, revenue reached KRW 3.24 trillion, up 16.3% year-on-year, driven by accelerated growth in core businesses, including advertising and commerce as well as global C2C. Excluding the consolidation of Wallapop, total revenue increased by 15% year-on-year. Operating profit rose 7.2% year-on-year to KRW 541.8 billion, supported by continued investment in AI infrastructure and strategic IP, including media rights for the Winter Olympics and League of Legends Champions Korea, which are leveraged across NAVER's services. Operating margin came in at 16.7%. As mentioned in the previous quarter, starting from Q1, NAVER will present its financial results under a revised revenue classification framework that categorizes revenue into core businesses and global growth areas to better reflect this business performance and mid- to long-term vision. Compared to the previous classification, certain fintech revenues such as credit card-related ads were generated on NAVER's platform have been reclassified under platform advertising and the service segment now includes not only Shopping and Place-related take rates and membership revenue, but also other revenues previously categorized under the search platform such as CHZZK. In addition, the global growth segment includes C2C businesses, comprising Poshmark, Kream, Soda and Wallapop, which has been newly consolidated in Q1, marking the first time these businesses have been disclosed under dedicated category. NAVER will continue to provide transparent and consistent updates to investors on the performance of its core business. I will now discuss revenue by business segment. In Q1, NAVER platform revenue increased 14.7% year-on-year, supported by solid advertising performance and accelerated growth in commerce. Ad revenue grew 9.3% year-on-year to KRW 1.39 trillion, with AI technologies increasingly embedded across NAVER's inventory and ad products serving as a key growth driver. In particular, enhancements to ad performance prediction models improved both efficiency and targeting, contributing positively to overall performance. In 2026, NAVER plans to drive growth through enhanced targeting powered by unified recommendation model, the creation of new revenue streams from GenAI services and expansion into off-platform media. Building on last year's strong performance, NAVER expects to maintain stable and resilient growth momentum this year. Q1 service revenue increased 35.6% year-on-year to KRW 445.3 billion, driven by strong growth in commerce. In particular, shopping delivered meaningful performance, supported by the successful establishment of the NAVER Plus Store app as well as enhanced logistics capabilities and strengthened membership benefits, which together accelerates Smartstore GMV growth. In addition, the impact of take rate structure changes implemented last year further contributed to the strong revenue growth. Membership revenue also recorded solid growth, supported by increased engagement on the NAVER Plus Store app, which has established itself as a key purchase channel for NAVER membership users. Next, Q1 financial platform revenue increased 18.9% year-on-year to KRW 459.7 billion. Total payment volume grew 23.4% year-on-year, surpassing KRW 24 trillion, driven by continued Smartstore growth and the expansion of NAVER's external ecosystem. Of the total, off-platform payment volume reached KRW 13.5 trillion, up 32.9% year-on-year with a share expanding to 56% of total payment volume. In Q1, revenue from global growth areas increased 18.4% year-on-year to KRW 941.6 billion. The C2C segment delivered strong GMV growth across all platforms, including Poshmark and Soda. In particular, Poshmark has seen continued momentum with platform enhancement initiatives implemented since the second half of last year, translating into higher user traffic and improved conversion rates. And then as a result, both GMV and revenue have accelerated for 3 consecutive quarters with revenue growing 34% year-on-year in Q1. Kream continues to diversify its categories while strong performance in offline sales and trading card transactions in Japan by Soda contributed meaningfully to revenue growth. Wallapop newly consolidated this quarter continues to demonstrate stable revenue growth in EUR terms, supported by its leading position as a C2C platform in Spain and stronger user transaction activity across multiple categories. Content revenue decreased 1.4% year-on-year to KRW 440.1 billion in Q1. Within this segment, Webtoon revenue declined 2.3% year-on-year on a KRW reported consolidated basis. For more details, please refer to Webtoon Entertainment's earnings announcement. In 2026, NAVER Webtoon plans to focus on content diversification and strengthening personalized recommendations while also expanding its user base through new service initiatives. SNOW will continue to expand AI-powered camera features and diversify its monetization model, including subscription offerings while working to improve profitability. Enterprise revenue increased 18.8% year-on-year to KRW 150.5 billion in Q1, supported by continued recognition of AI-related B2B revenue, including GPU-as-a-Service contracts secured in the second half of last year. In Q1, NAVER's global sovereign AI initiatives continued to progress steadily, including the expansion of digital twin platform services and super app projects in Saudi Arabia. LINE WORKS also maintained solid growth with both paid IDs and revenues increasing consistently, supported by steady demand for SaaS offerings. Looking ahead, NAVER aims to further solidify its leadership position in Japan's rapidly evolving business chat market while continuing efforts to successfully establish its presence in Taiwan, where it entered late last year. Next, I'll discuss detailed cost items. Development and operations expenses increased 11.6% year-on-year, primarily due to headcount growth in the prior year and the consolidation effect of Wallapop. Partner expenses rose 19.9% year-on-year, driven by higher commission expenses in line with revenue growth, recognition of content rights costs, including the Winter Olympics as well as the expanded deployment of Npay Connect devices. For reference, logistics transportation costs related to C2C, which were previously included in development and operations expenses have now been reclassified under partner expenses to better reflect our nature. Prior period figures have been restated accordingly. Infrastructure expenses increased 32.5% year-on-year, mainly due to the acquisition of new computing assets, including GPUs. This year, NAVER plans to make strategic investments to strengthen the competitiveness of its AI services, including the expansion of actionable AI experiences and the acquisition offline data. As a result, infrastructure-related costs are expected to increase year-on-year. At the same time, NAVER continues to pursue infrastructure efficiency across service areas such as search for strategic [ GPU ] allocation and the company-wide adoption of efficiency platforms. These efforts are already showing tangible results, including a 30% reduction in actual GPU usage versus initial expectations. NAVER will continue to carefully review the scale of investment, taking into account AI monetization contribution, market conditions and the company's business direction. Marketing expenses increased 18.9% year-on-year, driven by strategic marketing investments in the commerce segment as well as higher promotional spending for Poshmark and Webtoon entertainment. Amid a rapidly evolving market environment, NAVER expects to continue expanding strategic investments in the near term to strengthen its competitive positioning. Ultimately, the company aims for these investments to support revenue growth in its core businesses and serve as a foundation for long-term growth drivers while contributing to enhance shareholder value. Next, I'll explain NAVER's operating profit by business segment. NAVER platform segment saw a 5.4 percentage point year-on-year decline in operating margin despite solid revenue growth in advertising and commerce, primarily due to increased infrastructure investment, including GPUs as well as higher costs related to securing content rights and strategic IP. Financial platform segment continued to deliver revenue growth. However, operating margin declined slightly year-on-year, reflecting the expanded deployment of Npay Connect devices. In the global growth segment, losses narrowed, supported by accelerated revenue growth in C2C business. Q1 consolidated net income declined 31.3% year-on-year to KRW 291 billion, primarily due to higher foreign exchange losses and increased losses from equity method investments. Q1 free cash flow decreased by KRW 152.1 billion year-on-year to KRW 319.8 billion. This is driven by increased CapEx, reflecting continued investment in infrastructure despite solid operating cash flow generation. And lastly, on April 14, NAVER paid a year-end dividend of KRW 393.6 billion, equivalent to approximately 30% of the average consolidated free cash flow over the past 2 years. As part of the company's efforts to enhance shareholder value, NAVER plans to consider additional retirement treasury shares exceeding the level required for employee compensation. Any future decisions will be communicated to shareholders through appropriate disclosures. This concludes the overview of our Q1 financial results. We will now move on to the Q&A session.

[Operator Instructions] The first question will be provided by Min-joo Kang from Bernstein.

I am Kang Min-joo from Bernstein. I would like to ask you 2 questions. First, relating to the overall strategic direction of NAVER as a company. And the second question relates to the earnings figure that you have just mentioned. First, on commerce, you have previously mentioned that you will be expanding the portion of fast delivery under your logistics initiative to around 50%. I would like to understand as to the basis for that decision, what is the rationale behind setting that 50% as the N delivery scope? And also, can you give us an update as to your collaboration and partnership with some external partners? And from a mid- to longer-term perspective, what is your take and view on having to make a direct investment into the logistics network? Second question, you've mentioned that the margin for the NAVER platform has, for the first time, hit a 20% level. I would like to gain some more color on this aspect.

This is the CEO responding to your first question. As you know, when it comes to the delivery and the logistics initiative, we have been expanding it on a phased manner, but we still admit that it does not yet satisfy fully the expectations that our user base has. And hence, we have, for this year, selected NAVER delivery as our key strategic direction for NAVER commerce business. And the rationale behind why we are seeking to expand that scope to 50%, the N delivery scope to 50% in year 3 is because we wanted to first target highly sensitive categories that is sensitive to fast delivery. And also, we wanted to scale up the level of experience of our users on par with what is being provided by our peers. So for this year, we've set 25% as the coverage target for N delivery, and I can tell you that we are progressing in alignment with that objective. In order to achieve this, yes, there is the direct contracting or first-party arrangement that is required. And also, we are actively collaborating in terms of setting a strategic fulfillment center where NAVER's own products are stored and delivered on a firstly basis. We are, at the same time, also very actively reviewing potential for making a direct investment into logistics. Now if we were to adopt that approach, we will be able to lower the cost per delivery. And also, we can acquire the logistics data directly and also, at the same time, have a light asset structure. So we are, at this point, reviewing the most optimal approach that will enable and that will help us achieve this. And once we make that determination and once we finalize on which partners to work with, we will come back to you and share more information.

Responding to the second question as to the reason why the margin for NAVER platform has come down. Actually, there are 2 key factors that drove that. Firstly, as we've previously mentioned, there was an increase in CapEx. And so in terms of that infrastructure that had been the infrastructure assets that we had invested into is being used in NAVER services, which created higher depreciation cost and telecommunications costs. And the second driver is with regards to us investing into the broadcasting rights, the IPs for the Winter Olympics as well as for the League of Legends Champions, League-related broadcasting rights. And that whole impact of expense amounted to around KRW 18 billion that was booked in Q1.

The following question will be presented by Dong Hwan Oh from Samsung Securities.

I have 2 questions that I would like to ask. It has to do with AI. I know that it's only been very recent that you rolled out AI Tab, but would like to gain some color as to what the initial performance is currently that you are seeing at this point? And also in terms of the expectation, what is the monetization model that you are envisioning for this product? And also across the AI services, it seems to be that there's a discrepancy in the level of quality for verticals like real estate and commerce, the quality does not seem to be on par, whereas for AI Tab, the quality is quite good. So what explains the difference in that quality? And also then what are your plans to make improvements on the agents for commerce?

Yes. Responding to your question on AI Tab, yes, you are correct that it's only been recently introduced. So it's a bit too early for us to share with you any specific metrics. Now having said that, we are seeing some initial positive user signals. We see high level of interest as well as return visits. So once we get more color on the metrics, we will come back to you with the specifics. In terms of our monetization plans going forward for AI briefing, after going through testing phase in the second quarter, we will be able to introduce in the second half a generative AI ad product. Coming back to AI Tab, yes, we will have to look at the trend of what the feedback and the responses are from the user base and also their return visits. But once we take a look at those trajectory, then we will reflect that in making a decision in rolling it out in Q4. But what we consider most important and what we've determined as our key metrics is to track against the conversion. We believe that is the most important indicator and also that connects with what you've mentioned on the -- with the shopping agents as well. So in terms of user satisfaction, it does have some subjective element in it. So I will not be able to give you one definitive answer to that. But I believe that there are 2 aspects that may feel a bit different compared to the information that is provided by AI Tab. So basically, on top of HyperCLOVA X, we're also making use of other open source models, and we employ an overall broad orchestration strategy. So for the shopping agent, basically, the models that are used are specialized or specific for such commerce verticals, whereas for the AI Tab, it adapts and uses more large-scale general purpose model. So currently, under AI Tab, we support shopping and restaurant vertical as of this point. However, we were continuously going to expand into other vertical models such as beauty, travel, health and real estate property, for instance. So basically, we will continue to work on our vertical models to optimize them for specific purposes with specific verticals as well as in line with the intention for conversion as -- and also to align it with the database that is relevant. So compared to the initial phase of the service, I can assure you that we are going through scaling up and upgrading process. So please, I ask you to bear with us until that time comes for where the service quality is really beefed up. And when it comes to shopping agents, I think what the users are really seeking was very organic and seamless purchase conversion as well as for any repeated purchases, even automation. So right now, it is currently serving as a simple shopping guide. But before the end of the year, we are planning on scaling it so that it becomes a business agent, whereby providing a very distinct user experience as well as the purchase conversion. And so users will then be able to experience something that is only uniquely possible within NAVER by using the shopping agents.

The following question will be presented by Junhyun Kim from HSBC.

I have 2 questions. One relates to your global growth segments and the impact that we've seen on your P&L, the bottom line. We've seen an increase in the bottom line. And is it because of the recognition of the Wallapop business? Or is it due to other reasons? Second is that for this earnings, we see that the expenses have gone up, but at the same time, the top line has grown as well. So I'm wondering whether there could be a leverage effect as we move into the future? You've also talked about your strategy whereby you will be strengthening your competitiveness in logistics and delivery under commerce. And one of the key drivers behind that initiative is providing incentives to the sellers. Just wondering whether such investment into the expenses will have leverage effect going forward?

Responding to the first question on our global endeavors or growth segments and relating to the margin, yes, it's been about 2 months since we included the Wallapop numbers, and it turned into a profit. And yes, that would have had an impact. But the bigger contribution actually came from Poshmark, whose top line revenue reported 30% growth and Soda reported a 100% year-over-year growth. So the margin improvement was driven by the entire C2C segment as well as our global growth segment. On the second question about the leverage effect, Q1 increases in expense was not necessarily driven by marketing spend, but more so by infrastructure and investment into content. Of course, having said that, it doesn't mean that we're not putting effort behind marketing. Even excluding the impact from Wallapop, the growth rate in Q1 is actually above 15%. And as we move into the second quarter, we will continue to strengthen commerce and marketing efforts, which we expect will be driving further GMV growth as well as additional growth for our top line revenue. So we have those expectations, and we plan to conduct our investments accordingly.

Currently, there are no participants with questions. [Operator Instructions]

With no more questions in the queue, we would now like to close NAVER's Q1 2026 Earnings Call. Thank you to our analysts and investors for joining us this morning. [Statements in English on this transcript were spoken by an interpreter present on the live call.]