2020 was turnaround year for Kakao's bottom line

Kakao reported record earnings for 2020, fueled by robust growth in advertising and commerce tied to its instant messaging platform and digital content services like webtoons, which thrived during the pandemic.

The Jeju–based tech company posted a record net profit of 167.1 billion won ($149.6 million) last year, a dramatic turnaround from a net loss of 341.9 billion won in 2019.

Sales broke the 4-trillion-won level for the first time, reaching 4.2 trillion won, up 35.4 percent, while operating profit rose 121 percent to 456 billion won, a new high.

The sales and operating profit figures were in line with market expectations, although net profit fell considerably short of a consensus of 486.6 billion won, due mainly to costs related to marketing and hiring.

The upbeat results were driven by Kakao’s major businesses across the board including advertising, commerce, payments and taxi-hailing apps.

Kakao’s Biz Board advertising, which places ads at the top of KakaoTalk’s main page, was a major contributor with average daily sales of 1 billion won as of December, according to CEO Yeo Min-soo.

The company cited sales growth of 71 percent in the e-commerce sector in the fourth quarter with more gifts being sent through the messenger app. While the gift service had been used to send small items like coffee coupons among friends or colleagues, pricier gifts like luxury brand cosmetics and health supplements have become more popular.

Transactions at the webtoon business in Japan rose 188 percent last year, as Piccoma, Kakao Japan’s manga subscription service, ranked first among Japan’s comic apps.

Transactions on the Piccoma platform grew threefold in the final quarter on year to 140.3 billion won.

The company plans to integrate its content and intellectual property businesses by launching a new affiliate named Kakao Entertainment in March.

The new unit will combine Kakao M, a record production agency, with KakaoPage, an operator of webtoons and novels.
“We have set the transaction target at 700 billion won for KakaoPage as [the company] plans to expand in China and Southeast Asia,” said Bae Jae-hyun, executive vice president of Kakao.

“Piccoma aims to achieve 1 trillion won in transactions,” he said during a conference call on Tuesday.

Kakao Mobility, a taxi-hailing app, saw its sales jump 97 percent in 2020 to 174 billion won.

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