KaKao

- Continue to invest in infrastructure, such as building and multiplexing data centers, to provide stable and uninterrupted service

- Plan to build future growth engines, such as AI foundation models and boldly invest in healthcare

- Segment communication by revamping KakaoTalk’s main tabs and cooperate with SM Entertainment in global businesses

 

[May 4, 2023] Kakao (CEO Hong Euntaek) reported the company’s 2023 first quarter financial results under the Korean-IFRS. Kakao’s revenue for the quarter was 1.74 trillion KRW, a quarter-on-quarter decrease of 2% and a year-on-year increase of 5%, and operating income was 71.1 billion KRW, a quarter-on-quarter decrease of 29% and a year-on-year decrease of 55%, with an operating profit margin of 4.1%.

 

Kakao’s revenue for its platform business in Q1 2023 was 964.7 billion KRW, which is similar to the previous quarter and a year-on-year increase of 9%.

 

Revenue from the KakaoTalk business decreased 1% from the previous quarter due to advertisers’ conservative marketing execution which resulted from delayed economic recovery, and with the first quarter typically being a slow season but recorded a 12% year-on-year increase to 151.6 billion KRW due to increase in sales of transaction-type models. Revenue from KakaoTalk’s ad-type models, including Biz Board and KakaoTalk Channels, decreased 8% QoQ but increased 1% YoY. Revenue from KakaoTalk’s transaction-type models, including Gift and Talk Store, increased 7% QoQ and 25% YoY. Revenue from the portal business decreased 15% QoQ and 27% YoY to 83.6 billion KRW. Due to the steady growth of Kakao Mobility’s Taxi, Driver and Parking business, and the increase of revenue in KakaoPay payments and financial services, revenue of other platforms increased 5% QoQ and 18% YoY to 365.6 billion KRW.

 

Revenue from Content was 775.6 billion KRW, a quarter-on-quarter decrease of 4% and and year-on-year increase of 1%.

 

Revenue from Story increased 3% QoQ to 228.6 billion KRW due to record-breaking quarterly sales in the Japanese market and continued growth in turnover. However, revenue in the North American and South Korean markets decreased 5% YoY due to Kakao’s efforts to make the operational structure more efficient and the execution of more efficient and profit-oriented marketing activities. Revenue from Music was 232 billion KRW, which is similar to the previous quarter and an increase of 13% YoY. Revenue from Media was 67.7 billion KRW, down 46% QoQ and 10% YoY. Revenue from Games was 247.3 billion KRW, a QoQ increase of 7% and similar to that of the year before. Impacts of new releases in the first quarter will be reflected in this year’s Q2 revenue.

 

Operating costs of Q1 2023 were 1.66 trillion KRW, which is similar to the previous quarter and a 12% year-on-year increase. To provide safe and stable service, Kakao actively invested in multiplexing data centers, resulting in an 18% increase in outsourced infrastructure costs compared to the previous year. Depreciation costs increased 15% YoY due to increased CAPEX investment related to data center construction.

 

Kakao will continue to raise operating cost efficiency and invest in infrastructure to provide safe and uninterrupted service, while expanding investment into artificial intelligence and healthcare, which are Kakao’s future growth engines. Kakao will make bold investments in building AI foundation models to secure leadership in the field of artificial intelligence.

 

Meanwhile, Kakao’s goal for this year is to provide a more segmented way to communicate, which is the essence of KakaoTalk, so that users can enjoy a service that is more tailored to their personal needs and context. To do so, KakaoTalk’s main tabs will be revamped, and various features will be upgraded. Through KakaoTalk’s evolution, Kakao will build a virtuous cycle that will improve users’ experience and satisfaction, maximize business partners’ efficiency, and strengthen benefits provided to users. Kakao and SM Entertainment will cooperate to distribute global content music and operate the entertainment management business to accelerate Kakao Group’s vision of going “Beyond Korea” and “Beyond Mobile.” [End]