In reversal, Kakao posts net loss

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In reversal, Kakao posts net loss

Despite Kakao’s annual revenue reaching the 3 trillion won ($2.5 billion) mark for the first time, the internet giant recorded a net loss of 339.8 billion won last year.

The company announced Thursday that its 2019 revenue registered 3.09 trillion won, up 28 percent from the previous year.

Operating profit also jumped 183 percent to 20.66 million won compared with a year ago. The company’s net loss, however, represented a sharp reversal of its 2018 net profit of 15.9 billion won.

Kakao did not give reasons for its switch to a net loss, Yonhap reported.

In the fourth quarter, revenue rose 29 percent to 867.3 billion won compared to the same month last year, while operating profit soared 1,750 percent to 79.4 billion won.

One of the biggest contributors to the revenue bump was the advertising platform Biz Board, which places ads at the top of KakaoTalk’s main page listing chat rooms. The messaging app began testing the feature in May before launching it officially in October. The move was met with pushback from some users, who criticized the placement of the ads.

Over that short time period, Biz Board managed to bring in more than 500 million won in sales per day, Kakao CEO Yeo Min-soo said during a conference call.

“A guidance [report] projected last month that daily revenue from Biz Board stood at 500 million won, but it earns above the level,” Yeo said.

Helped by the advertising tool, 2019 sales from KakaoTalk increased 38 percent to 1.43 trillion won on year.

Growth from Kakao T, a ride-hailing app, and Kakao Pay also boosted revenue.

Sales from the mobility and payment units expanded 113 percent to 261.2 billion won last year compared to the previous year, the company said.

With the launch of a new brokerage subsidiary, Kakao Pay Securities, Kakao offers a broader range of financial products, including securities and insurance.

“In the so-called ‘Money 1.0 era,’ [Kakao Pay] focused on payment and money transfers, which increased the burden of covering commission fees from the transaction,” Bae Jae-hyun, an executive vice president at Kakao, said during a conference call.

Bae added that Kakao is keen on entering the insurance business.

The company announced a partnership last year with Samsung Fire & Marine Insurance, the largest non-life insurer in Korea, to establish an online insurance company that primarily deals with miscellaneous non-life insurance on digital platforms.

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