Kakao's operating profit in Q1 jumps 92% on advertising, content

Kakao's headquarters in Pangyo, Gyeonggi [JOONGANG ILBO]

Kakao logged 120.3 billion won ($87.9 million) in operating profit for the first quarter of 2024, up 92.2 percent on year, thanks to its robust platform and content business, the tech company reported in an electronic disclosure on Thursday.

The figure was below the market consensus of 127.1 billion won compiled by market tracker FnGuide.

Quarterly revenue jumped 22.5 percent on year to 1.99 trillion won, in line with market expectations.

Net profit skyrocketed 711.6 percent to 67.7 billion won, but missed the analyst forecast of 99.1 billion won.

By unit, revenue generated from advertising platform TalkBiz rose 8 percent to 522.1 billion won, accounting for more than half of the platform's business revenue of 954.8 billion won. In the content business, the music unit spiked 102 percent to 468.2 billion won, while revenue from its story unit encompassing webtoons, dramas and films dropped 1 percent to 227 billion won.

The company will focus on strengthening earlier businesses and regaining market credibility this year after being riddled with a series of scandals that compromised the company's reputation, according to Kakao CEO Chung Shin-a.

“Kakao’s sustained growth amid a challenging external business environment is viewed positively,” Chung said in an online conference call Thursday. “However, there was some disappointment as KakaoBrain expanded investment in AI foundation models in the first quarter that offset some of the financial restructuring effects achieved by Kakao Enterprise last year.

"Among the key subsidiaries, Kakao Entertainment continues its profitable trend, and Kakao Pay's deficit has narrowed with full-fledged revenue from new businesses such as securities and insurance — several positive indicators of an improved gradual contribution to profit this year."

Kakao will continue to direct attention to core projects related to AI. The company recently decided to absorb its AI subsidiary, KakaoBrain, into its headquarters to fuse its technologies to Kakao infrastructure to expedite the process of launching new AI services.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]