KaKao

- Company reports record revenue for third straight quarter, nearing KRW two trillion for 2017
- 4Q revenue totaled KRW 544.7 billion with FY 2017 revenue reaching KRW 1.97 trillion
- Key business sectors of Ads, Content and Others all showed significant YoY growth
- Operating income topped KRW 34.7 billion for 4Q and KRW 165.0 billion for FY

[Seoul, South Korea – February 8, 2018] Kakao Corp. (KRX 035720, CEO Ji-Hoon Rim) today reported fourth quarter and fiscal year 2017 financial results under Korean-IFRS. Consolidated revenue for fourth quarter totaled KRW 544.7 billion, with fiscal year 2017 revenue at KRW 1.97 trillion. Fourth quarter operating income was KRW 34.7 billion and yearly total was KRW 165.0 billion.

Quarterly revenue for key business sectors of Ads, Content and Others all showed significant YoY growth of 13%, 20%, and 31%, respectively. In terms of yearly revenue, the increase was 12% for Ads, 40% for Content, and 71% for Others.

Kakao’s advertising platforms recorded yearly revenue of KRW 159.5 billion, showing 13% YoY growth and 5% QoQ growth. Advertising services centered around Kakao Talk, including Plus Friend, Info Talk, Auto View and Brand Emoticons, are growing steadily, and the new A.I.-based advertising platform introduced last November is producing meaningful results.

Content platforms grew 2% QoQ and 20% YoY to KRW 265.9 billion. Game revenue decreased 5% QoQ and 4% YoY to KRW 89.2 billion, while music content revenue increased 6% QoQ and 21% YoY powered by 150,000 new subscriptions in the last quarter. Revenue for other content businesses reached KRW 47.7 billion, representing a 5% QoQ and 123% YoY growth, largely due to Kakao Page’s transactions increasing by 60% QoQ and Kakao Japan’s Piccoma service growing its paid users by 20%.

For Others, strong year-end performance from commerce platforms, including Kakao Talk Gift and Makers with Kakao, as well as growing revenue from Loen Entertainment’s artist management business, resulted in fourth quarter revenue of KRW 119.3 billion. The figure represents QoQ growth of 16% and YoY growth of 31%.

Operating cost for fourth quarter increased KRW 42 billion QoQ and KRW 94.3 billion to KRW 510.0 billion, due to fees related to a number of services showing rapid revenue and transaction growth, in addition to aggressive investments in new business areas such as artificial intelligence and year-end employee incentives. For 2017, total operating costs increased YoY KRW 459.2 billion to KRW 1.81 trillion.

Overall, operating income for fourth quarter decreased 27% QoQ and 9% YoY to KRW 34.7 billion, with an operating income ratio of 6.4%. For fiscal year 2017, operating income grew KRW 48.9 billion to KRW 165.0 billion, with an operating income ratio of 8.4%. Net income for fourth quarter decreased KRW 19.2 billion YoY and KRW 7 billion QoQ with an operating income ratio of 3.8%. For the year, net income increased KRW 62.1 billion to KRW 127.6 billion with an operating income ratio of 6.5%.

By spinning off key platforms and actively investing in new business areas, Kakao delivered balanced growth in 2017. For 2018, Kakao will continue to evolve Kakao Talk into an all-in-one life platform while incorporating it's A.I. technology into key services. Plus, the company plans to expand its global reach through Webtoon, game, music, video and other content services. Strengthening Kakao’s advertising and commerce business will also be a top focus, while finding new ways to increase synergy among its subsidiaries and partners via Kakao T and Kakao Pay. (End)