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Kakao has another record quarter

May 10,2019
Kakao saw its operating profit for the first quarter skyrocket 166 percent on year as the company’s sales hit all-time highs for eight consecutive quarters thanks to its growing platform businesses.

Korea’s top mobile messenger operator announced that its operating profit during the first three months this year reached 27.7 billion won ($23.4 million), up 166 percent from 10.4 billion won a year ago and up 544.4 percent from 4.3 billion won in the fourth quarter last year.

The company’s sales jumped 27.2 percent on year to 706.3 billion won in the first quarter from 555.4 billion won in the same period last year. This broke the former quarterly record for the eighth consecutive time.

Kakao largely divides its business into platform and content sectors.

The robust performance in the first quarter largely came from the platform business, which consists of advertising sales from its messenger app and portal site Daum, as well as fees from its new businesses. Revenue in the sector rose 35 percent on year to post 313.1 billion won in the first quarter.

Notably, sales from KakaoTalk, a mobile messaging platform, jumped 43 percent on year to 126.9 billion won due to active advertising and commerce services.

Sales from new businesses, such as Kakao Pay and Kakao Mobility, which includes the taxi-hailing app, more than doubled on year to 59.8 billion won and operating profits increased 32 percent on year.

This was upbeat news considering that, in its previous earnings announcement, Kakao cited heavy investment in the services as the reason behind its annual operating profit last year falling to half what it made in 2017.

For the content business - which includes music streaming app Melon, webtoons and novels on its portal site Daum and games - revenue saw 22 percent on-year growth to post 393.2 billion won in the first quarter.

In the sector, its music business generated the largest revenue of 137.2 billion won, up 9 percent on year. The largest increase came from its intellectual property (IP) business which comes from selling Kakao’s character goods and royalty fees. Sales in the sector grew 84 percent year on year to 87 million won.

Revenue from paid content like webtoons and novels also increased 71 percent on year to 74.6 billion won. Its game business, however, saw sales slump 11 percent on year to 94.0 billion won.

Bae Jae-hyun, executive vice president at Kakao, said in a conference call Thursday that Kakao is up for a positive year in terms of both sales and profits.


BY KO JUN-TAE, SONG KYOUNG-SON [ko.juntae@joongang.co.kr]


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