Kakao confirms beauty, designated driver apps

Kakao will launch a designated driver service and a mobile platform to book salon appointments in the first half of this year.

The operator of the nation’s most popular mobile messaging service confirmed the moves in a conference call on Friday.

The call followed Kakao’s announcement of its fourth-quarter earnings earlier that day, which largely disappointed market expectations.

“Kakao Driver, the mobile chauffeur service, will be released in the first half of this year,” said Choi Se-hoon, CFO of Kakao. “The application will be made available to drivers next month, and users will get access in the first half of the year.”

The CFO also detailed plans for the launch of Kakao Hairshop, which will let people find and make appointments with hair salons and stylists.

“We will test the platform within the first quarter and officially launch the service within this year,” the CFO added. Choi said the new platform can help people save time and provide different discounts and promotions.

The salons will likely benefit from having fewer no-show customers, as the app requires payment at the time of reservation.

Kakao estimates it will take a 5 percent commission on reservations made through the app.

Kakao Hairshop will leverage the expertise of Hasys, a beauty solution start-up acquired by Kakao last October, which already manages a network of over 9,000 beauty-related shops.

Kakao said some 2,000 hair salons have already registered as partners.

Despite the bold move, heavy spending on new services and business expansion took a big bite out of the company’s profit margins in the fourth quarter.

The company posted 20.4 billion won ($17 million) in operating profit, a whopping 68.8 percent decrease compared to the same period in 2014.

Revenue also decreased by 4.9 percent to 241.7 billion won between October and December, from 254 billion won a year earlier. Net profit also sank 80.2 percent to 10.2 billion won in the fourth quarter, compared with 51.7 billion won the previous year.

The culprit behind the declining profit lies in the increased spending on its wide range of mobile commerce platforms, ranging from taxi-hailing to bank wallets and payment systems.

Kakao’s operating costs associated with opening new mobile commerce platforms this year were 221.3 billion won in the final quarter alone.

Still, the announcements weren’t all gloomy. KakaoTalk’s monthly active users exceeded 40 million people in the fourth quarter, a record for the company.

Kakao said it will continue to strengthen its mobile commerce platforms by leveraging its substantial number of users.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]