NewsPress Release
May 10, 2018
Kakao Reports First Quarter Results
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Kakao, the operator of Korea’s dominant mobile messaging app Kakao Talk, today announced consolidated financial results for its fiscal 2018 first quarter ended on March 31. The Company posted record quarterly sales of KRW (hereinafter ‘won’) 555.4 billion, an increase of 25 percent from the year-ago quarter, and the first quarter operating profit of 10.4 billion won, down 73 percent over the comparable period of last year.
Thanks to the double digit quarterly sales growth across all business sectors including Advertising, Content and Others, quarterly sales hit the all-time record while operating profit was down by 73 percent due to investment growth in new businesses that the Company recently launched in an effort to secure new growth engines including Kakao Mobility, Kakao Pay, AI and Piccoma.
For the first three months ended on March 31, the Advertising sector’s sales grew 16 percent to 154.6 billion won over the same period last year on the back of sales growth of Info Talk, Cash Friends and Auto View, all based on Kakao Talk, and the introduction of new advertising platform.
The Content sector sales for the first quarter also jumped 28 percent year-over-year to 285.6 billion won. To be more specific, the game content sales rose by 32 percent to 105.6 billion won thanks to the hike in transaction value of newly launched mobile games, namely Friends Marble and Grand Chase; robust sales growth of Black Desert; and the integration of Kakao VX as a consolidated subsidiary. The Music content sales also expanded by 14 percent year-over-year to 126.3 billion won as Melon, the nation’s top music streaming service, saw more paid subscribers for its music content thanks to the seamless integration between Kakao and Kakao M. At the same time, the Other Content sector witnessed robust sales of 53.8 billion won, up 62 percent compared to the same period of the prior year, thanks to the registration of more paid users for its web novel and comics services of Kakao Page in Korea and Piccoma in Japan.
The Others sector’s quarterly sales rose 33 percent year-over-year to 115.2 billion won, as a result of increased sales contributions from Kakao Talk Gift, Makers with Kakao, and from new businesses including Kakao Mobility and Kakao Pay.
Operating expenses for the January-March period stood at 545 billion won, up 35.4 billion won quarter-on-quarter and up 139.6 billion won year-over-year, which is attributable to a rise in marketing costs induced by aggressive investment in new businesses including Kakao Pay, and an increase in labor costs incurred by hiring employees for new businesses and the integration of Kakao VX as a consolidated subsidiary.
As a result, Kakao recorded 10.4 billion won in operating profit and operating profit margin of 1.9 percent.
At a press conference in March, co-CEOs of Kakao, Yeo Min-soo and Joh Su-yong, announced a new vision of Kakao, referred to as Kakao 3.0, and to continue to make investment in new businesses including AI and blockchain technology in a way to secure long-term growth momentum.
To achieve this goal, Kakao Mini, its AI-based smart speaker, added some of the key features such as calling a cab, ordering food and making mVoIP calls earlier this year. The smart speaker is set to integrate new services including kids’ content within the second quarter of this year. Kakao continues to sync its AI platform with cars and home appliances in cooperation with Korea’s leading automotive and electronics makers to offer an increasingly intelligent user experience both at home and on the go.
Moreover, Kakao’s major service platform - Advertising and Content business - is projected to enjoy continued growth momentum this year. In April, Kakao has integrated its performance-based display advertising platform into its new AI-based ad platform currently in beta testing, and plans to consolidate all display ad platform into the new platform in the second half of the year. The new ad platform has in fact far exceeded existing ones in key business indicators and is set to go under continued algorithm improvement to optimize advertisement.
The Games business is expected to benefit from robust sales growth of Black Desert Online; the launch of new mobile games of varying genres; and monetization of PlayerUnknown Battleground Kakao. The Music business has fared quite well, with Kakao Melon, launched at the beginning of the year, attracting over 1 million new users. It currently plans to shift the competitive landscape of the music streaming market through seamless integration between Kakao and Kakao M. Kakao Page, a monetized content platform optimized for mobile devices, also seeks to secure quality contents through joint production of popular novels and comics, and provide a wide array of VOD content—a business initiated at the beginning of the year— from films, dramas to entertainment to cater to various needs of customers.
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About Kakao
Kakao, better known as South Korea's largest mobile messaging app operator, is an integrated mobile lifestyle platform company with services including mobile messaging (Kakao Talk), gaming (Kakao Games), music (Melon), e-mail (Daum Mail), search (Daum Search), news (Daum News), and more. With the mission of "Connect Everything", Kakao is dedicated to creating an ecosystem of connectivity where people can stay connected with family and friends by sharing what matters to them. For more, please visit at www.kakaocorp.com.
Press Contact
Jeff Kim
Communications Manager
jeff.kim@kakaocorp.com
+82-02-6718-2889
Thanks to the double digit quarterly sales growth across all business sectors including Advertising, Content and Others, quarterly sales hit the all-time record while operating profit was down by 73 percent due to investment growth in new businesses that the Company recently launched in an effort to secure new growth engines including Kakao Mobility, Kakao Pay, AI and Piccoma.
For the first three months ended on March 31, the Advertising sector’s sales grew 16 percent to 154.6 billion won over the same period last year on the back of sales growth of Info Talk, Cash Friends and Auto View, all based on Kakao Talk, and the introduction of new advertising platform.
The Content sector sales for the first quarter also jumped 28 percent year-over-year to 285.6 billion won. To be more specific, the game content sales rose by 32 percent to 105.6 billion won thanks to the hike in transaction value of newly launched mobile games, namely Friends Marble and Grand Chase; robust sales growth of Black Desert; and the integration of Kakao VX as a consolidated subsidiary. The Music content sales also expanded by 14 percent year-over-year to 126.3 billion won as Melon, the nation’s top music streaming service, saw more paid subscribers for its music content thanks to the seamless integration between Kakao and Kakao M. At the same time, the Other Content sector witnessed robust sales of 53.8 billion won, up 62 percent compared to the same period of the prior year, thanks to the registration of more paid users for its web novel and comics services of Kakao Page in Korea and Piccoma in Japan.
The Others sector’s quarterly sales rose 33 percent year-over-year to 115.2 billion won, as a result of increased sales contributions from Kakao Talk Gift, Makers with Kakao, and from new businesses including Kakao Mobility and Kakao Pay.
Operating expenses for the January-March period stood at 545 billion won, up 35.4 billion won quarter-on-quarter and up 139.6 billion won year-over-year, which is attributable to a rise in marketing costs induced by aggressive investment in new businesses including Kakao Pay, and an increase in labor costs incurred by hiring employees for new businesses and the integration of Kakao VX as a consolidated subsidiary.
As a result, Kakao recorded 10.4 billion won in operating profit and operating profit margin of 1.9 percent.
At a press conference in March, co-CEOs of Kakao, Yeo Min-soo and Joh Su-yong, announced a new vision of Kakao, referred to as Kakao 3.0, and to continue to make investment in new businesses including AI and blockchain technology in a way to secure long-term growth momentum.
To achieve this goal, Kakao Mini, its AI-based smart speaker, added some of the key features such as calling a cab, ordering food and making mVoIP calls earlier this year. The smart speaker is set to integrate new services including kids’ content within the second quarter of this year. Kakao continues to sync its AI platform with cars and home appliances in cooperation with Korea’s leading automotive and electronics makers to offer an increasingly intelligent user experience both at home and on the go.
Moreover, Kakao’s major service platform - Advertising and Content business - is projected to enjoy continued growth momentum this year. In April, Kakao has integrated its performance-based display advertising platform into its new AI-based ad platform currently in beta testing, and plans to consolidate all display ad platform into the new platform in the second half of the year. The new ad platform has in fact far exceeded existing ones in key business indicators and is set to go under continued algorithm improvement to optimize advertisement.
The Games business is expected to benefit from robust sales growth of Black Desert Online; the launch of new mobile games of varying genres; and monetization of PlayerUnknown Battleground Kakao. The Music business has fared quite well, with Kakao Melon, launched at the beginning of the year, attracting over 1 million new users. It currently plans to shift the competitive landscape of the music streaming market through seamless integration between Kakao and Kakao M. Kakao Page, a monetized content platform optimized for mobile devices, also seeks to secure quality contents through joint production of popular novels and comics, and provide a wide array of VOD content—a business initiated at the beginning of the year— from films, dramas to entertainment to cater to various needs of customers.
###
About Kakao
Kakao, better known as South Korea's largest mobile messaging app operator, is an integrated mobile lifestyle platform company with services including mobile messaging (Kakao Talk), gaming (Kakao Games), music (Melon), e-mail (Daum Mail), search (Daum Search), news (Daum News), and more. With the mission of "Connect Everything", Kakao is dedicated to creating an ecosystem of connectivity where people can stay connected with family and friends by sharing what matters to them. For more, please visit at www.kakaocorp.com.
Press Contact
Jeff Kim
Communications Manager
jeff.kim@kakaocorp.com
+82-02-6718-2889
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