Kakao reports triple-digit profit jump with AI release on horizon

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Kakao reports triple-digit profit jump with AI release on horizon

Published: 07 Nov. 2024, 15:13 Updated: 07 Nov. 2024, 16:32

LEE JAE-LIM
[email protected]

Kakao's headquarters in Pangyo, Gyeonggi [NEWS1]

Kakao recorded triple-digit jump in net profit for the July-September period compared to the year before, citing base effect due to high operating costs last year and the recent sell-off of some of its subsidiaries.

The operator behind the country’s dominant mobile messenger, KakaoTalk, recorded 78.5 billion won ($56 million) in net profit, a surge of 113 percent on year, according to a regulatory filing released Thursday.

Operating income increased 5 percent on year to 130.5 billion won, while sales fell 4.5 percent to 1.92 trillion won.

The earnings fell short of market expectations. The average estimate of net profit by analysts stood at 94.6 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Despite higher net profit, Kakao's sales decreased, mainly due to the sluggish performance of its content business unit.

Revenue from the content unit dropped 14 percent on year to 977.9 billion won, with sales from games, music and story, or webtoons, all going down.

But sales from the platform business unit rose 7 percent on year to 943.5 billion won on higher revenue from KakaoTalk.

KakaoTalk's advertising revenue rose 6 percent to 507.3 billion won, and revenue from the messenger's e-commerce function climbed 8 percent to 215.1 billion won.

Revenue from other platforms, including Kakao Pay and Kakao Mobility, expanded 13 percent on-year to 359.8 billion won.

The company said it plans to introduce its new AI platform, Kanana, and other related services next year. The technology is currently undergoing internal testing.

“Due to external market challenges, it will take some time for all the results to materialize,” said Kakao CEO Chung Shin-a said. “We plan to streamline noncore businesses and focus on our core gaming business in the content sector.”

BY LEE JAE-LIM, YONHAP [[email protected]]