Kakao Reports Q2 2017 Earnings Resultsregistration date : 2017.08.10
Company records second quarter revenue of
KRW 468.4 billion and operating profit of KRW 44.6 billion
- Ad revenue rebounds to 2014 levels and an enhanced ad system is expected to launch in the second half
- Content revenue continues to rise with mobile game Onmyoji for Kakao hitting one million downloads in just five days
- AI platform Kakao i will connect with Kakao Talk and other life services, with a number of outside partnerships also in the works
[Seoul, South Korea – Aug. 10, 2017] Kakao Corp. (KRX 035720, CEO Ji-Hoon Rim) today reported second quarter 2017 financial results under Korean-IFRS. Kakao’s consolidated revenue for the quarter was KRW 468.4 billion with an operating income of KRW 44.6 billion.
Kakao’s second quarter revenue increased 24% YoY and 6% QoQ.
Revenue from advertising platform grew 14% QoQ to KRW 151.4 billion. Despite the voluntary removal of inefficient ad products totaling approximately KRW 11 billion, overall rebound of the mobile ad market and seasonal issues, including the presidential election, resulted in a YoY growth of 11%. The figure rises to 26% when disregarding the voluntary removal of ad products.
Kakao’s content-related revenue of KRW 236.3 billion represented a growth of 7% QoQ and 24% YoY. MelOn continues to acquire new subscribers at impressive pace, and the music content business as a whole recorded second quarter revenue of KRW 117.1 billion, increasing 6% QoQ and 29% YoY. Game revenue maintained last year’s figures at KRW 78.7 billion despite intense competition in the domestic market, in part due to greater focus on mobile game publishing. With continued strong performance from Kakao Page and Kakao Talk Emoticons, other content revenue grew 30% QoQ and 88% YoY to KRW 40.5 billion.
Commerce businesses, including Kakao Talk Gift Shop and Kakao Friends, as well as Kakao’s growing Mobility services, contributed to revenue of KRW 80.8 billion in the Other category, which represents a 62% increase YoY and 9% decrease QoQ.
Fees related to Kakao’s various content services and broadcasting rights for the Korean Baseball Organization, plus marketing costs related to Kakao Page and key Kakao Game titles resulted in total operating cost of KRW 423.8 billion
In total, Kakao’s second quarter consolidated operating income of KRW 44.6 billion represents a QoQ increase of 16% and YoY growth of 68%, with a profit margin of 9.5%. Net income decreased KRW 42 billion QoQ and KRW 700 million YoY to KRW 12.5 billion with a profit margin of 2.7%.
For the second half of 2017, Kakao is expected to reap significant results from key business areas the company has been focusing on for the last two years.
Kakao’s comprehensive AI platform, Kakao i, will be connected with popular life services such as Kakao Talk, Daum, MelOn and Kakao Navi to offer new value to users. The company’s smart speaker Kakao Mini will launch soon, and as with the recently announced partnership with Hyundai/Kia’s Genesis G70, Kakao is in active discussion with a number of potential partners in order to make the Kakao i platform and related services widely available.
Partners will be able to select and utilize Kakao i’s core technologies, which include engines for speech (speech recognition/synthesis), visual (visual/object recognition), conversational (natural language processing) and recommendation (big data/machine learning-based), depending on their particular needs, and users will be able to recognize such products and services via the ‘Kakao i Inside” authentication logo.
Kakao Talk’s evolution into an all-in-one business platform continues as well. Kakao Talk Store, a new service that allows for effortless buying and selling via the Plus Friend platform, is currently in the beta testing phase with a number of key partners. Kakao Talk Order and Kakao Talk Mart, both launched in the first half of 2017, are receiving positive reviews from users for their easy sign-up process. A reservation service that offers similar convenience is expected to launch within the year.
A new advertising system is being fine-tuned with the help of more than 10 major brands and is expected to launch in the second half of 2017. Onmyoji for Kakao, a self-published mobile game that launched on August 1st, surpassed one million downloads in just five days and is among the top grossing games in major app stores. (END)