Kakao profit falls in Q3 as investment costs rise

Kakao, the operator of Korea’s top mobile messenger, KakaoTalk, said Thursday its third-quarter operating profit fell 35 percent from last year due to increased costs from new businesses.

Operating income reached 30.7 billion won ($27.3 million) in the July-September period from 47.4 billion won a year ago, the company said in a regulatory filing.

Sales rose 16 percent on-year to a quarterly record high of 599.3 billion won, the company said.

Kakao said its operating income plunged due to increased investments in new businesses, such as Kakao Mobility, that the company recently launched in an effort to secure new growth engines.

Kakao said the revenue from its content platform remained steady at 306.7 billion won, with the figure representing a 17 percent year-on-year increase.

Advertising sales grew 10 percent year on year to 167.1 billion won over the cited period on the back of mobile advertising revenue growth.

Music content sales increased by 11 percent year on year to 136 billion won in the third quarter due to steady revenues from the Melon streaming service.

Kakao said it will keep up efforts until the end of this year in order to expand its foothold by wrapping up a merger with its entertainment affiliate, Kakao M. The tieup will allow the company to move forward on various business collaborations.

Kakao said the decision is aimed at bolstering its entertainment content based on the users of Melon, which is currently operated by Kakao M.

Yonhap