KaKao

- Company surpasses KRW one trillion in revenue for the first time

- Fourth quarter revenue totaled KRW 453.8 billion and revenue for FY 2016 neared KRW 1.5 trillion

[Seoul, South Korea – February 9, 2017] Kakao Corp. (KOSDAQ 035720, CEO Ji-Hoon Rim) today reported fourth quarter and fiscal year 2016 financial results under Korean-IFRS. Kakao’s consolidated revenue for FY 2016 totaled KRW 1.46 trillion on the strength of impressive growth from gaming and music platforms as the company surpassed KRW one trillion in yearly revenue for the first time. Revenue for fourth quarter was 453.8 billion with operating income of KRW 38.2 billion.

With consistent growth across all business platforms, Kakao’s fourth quarter revenue increased 16% QoQ and 87.8% YoY.

Continued strong performance from game and music businesses resulted in Content revenue of KRW 221.5 billion, an increase of 11.7% QoQ and 228.7% YoY. Game revenue totaled KRW 93.2 billion, a growth of 18.8% QoQ and 63.4% YoY, as a result of increased revenue from mobile titles such as Friends Popcorn for Kakao, Kung Fu Panda 3 for Kakao, and Destiny Child for Kakao, plus PC game revenue courtesy of Black Desert Online and EOS (Echo of Soul). Increase in paid subscribers for MelOn streaming service was the main reason for music platform revenue increasing 12.0% QoQ to KRW 106.9 billion. The acquisition of Loen Entertainment, MelOn’s parent company, is reflected in the music platform figures, as revenue increased by KRW 103.6 billion compared to fiscal year 2015.

Advertising platforms recorded revenue of KRW 141.5 billion, an increase of 11.5% QoQ and decrease of 7.9% YoY. When excluding the inefficient network ad traffic voluntarily removed by Kakao, revenue shows QoQ increase of 14.5% and YoY increase of 5.9%, respectively.

Revenue from the Others category reflects significant growth in various commerce platforms. The November opening of the Kakao Friends Hongdae Flagship Store and Kakao Talk Gift Store’s revenue increase, resulting from year-end seasonal factors, led to KRW 90.8 billion in total Others revenue. The figure reflects an increase of 37.4% QoQ and 337.9% YoY.

Marketing activities for various services, including Kakao Driver, led to an increase in advertising expenses, and increase in commission expenses for commerce platforms contributed to total operating cost of KRW 415.7 billion.

Kakao’s operating income for the fourth quarter was KRW 38.2 billion, representing a QoQ growth of 26.1% and YoY growth of 85.1%. Net income for the fourth quarter was KRW 29.4 billion. 

With the company surpassing KRW one trillion in yearly revenue, Kakao plans to take the next step of evolving the Kakao Talk platform while concentrating on R&D for artificial intelligence technology. Kakao Talk will go beyond a communication app and fully expand to deliver content, commerce and more. The first half of 2017 will see the launch of a revamped Plus Friend service that will offer Kakao Talk users a number of new functions including delivery, reservations, shopping and more. Partners will soon be able to deliver diverse, high-quality content with the new Kakao Talk Plus Friend. In the near future, Kakao Talk will serve as a all-in-one personal assistant that provides users with what they need, when then need it.

Kakao Brain, Kakao’s AI subsidiary, will be the source of Kakao’s future growth. Launched Feb. 1st, 2017, the company has KRW 20 billion allocated for AI R&D and investments. Kakao’s Chairman Beom-su Kim will personally head Kakao Brain with the goal of reaching new heights in AI innovation.