KaKao

[Seoul, South Korea – May 12, 2016] Kakao Corp. (KOSDAQ 035720) today reported first quarter financial results under Korean-IFRS. Kakao’s consolidated revenue for the quarter was KRW 242.5 billion, with KRW 21.1 billion in operating income. The company showed firm growth in the mobile sector, with 63% of the revenue coming from its mobile businesses.

Kakao also showed sound growth from the game platform. Revenue from games increased 23.3% QoQ to record KRW 70.3 billion, following the strong performance of top ranking ‘for Kakao’ games and the surging popularity of Black Desert Online in Europe and North America.

The commerce platform grew 4.3% in revenue QoQ to KRW 18.3 billion, with steady performance from Kakao Talk Gift Shop bolstered by its growing product line. An expanded product lineup and sales of Kakao Friends merchandise helped boost commerce revenue YoY by 54.8%. 

Revenue from the advertising platform was KRW 129.4 billion, a 15.7% decrease QoQ. The decline reflects the off season factor plus the termination of deals with a number of ad network partners as part of Kakao’s continued efforts to optimize ad traffic and revamp the overall ad platform.

Other revenue totaled KRW 24.5 billion, which is an 80.4% increase QoQ and 243.8% increase YoY. This is a result of Podotree’s incorporation as a subsidiary of Kakao in December 2015. 

Kakao continues to focus on developing new growth engines, centered on the concept of new ‘connections.’ Continued investments in various areas including new O2O services such as Kakao Driver (on-demand designated driver service) and Kakao Hairshop(hair salon reservation service), both of which are scheduled to launch in the first half of the year, brought operating cost for the quarter to KRW 221.4 billion. Operating income for the first quarter increased 2.3% QoQ to KRW 21.1 billion, and net income for the quarter was KRW 10.9 billion. 

In 2016, Kakao will pursue further investment and development to concretize its position as a mobile platform company that helps design the lifestyle of its users. 

With the Kakao Game platform, Kakao is initiating new measures to enhance the effectiveness of the platform for partners. Introduction of the Game tab in Kakao Talk and strengthening of the pre-registration program will help partners efficiently attract new users and retain them. An in-game ad model called Kakao Game AD+ has been under beta testing since April, and is expected to officially launch this July. This addition will contribute to profit model diversification for game developers, allowing for an ad-based revenue model to the paid model and the currently dominant freemium model. 

For IP games, Friends Run for Kakao, which has already secured 1 million pre-registration users, is expected to launch in May. In the mobile game publishing business, Kakao is currently in active talks with developers for the publishing of more than 10 games, including O.N.E. for Kakao which is currently available as a CBT version.

In the O2O sector, Kakao will continue to strive to bring convenience to everyday life. Kakao plans to examine new O2O business areas that could positively affect society by means of new ‘connections.’ The company will work to swiftly present new services that will satisfy end users and service providers alike.

Meanwhile, Kakao continues to bring innovation across all areas of its service and business portfolio, including ads, commerce, content and more. (End)