IT Companies' Performance Soars Amid Untact Boom

E-commerce and Content Growth
Kakao Q1 Revenue 868.4 Billion KRW
NHN Also Expected 374.6 Billion KRW

[Asia Economy Reporter Jin-gyu Lee] Kakao's record-breaking quarterly revenue and operating profit despite the impact of the novel coronavirus infection (COVID-19) was partly driven by the expansion of the contactless (untact) culture. As indoor activities increased due to concerns over the spread of COVID-19, sectors such as e-commerce and webtoons led to strong performance in the content division.

On the 7th, Kakao's first-quarter revenue and operating profit increased by 23% (868.4 billion KRW) and 219% (88.2 billion KRW) respectively compared to the same period last year, with the 'Talk Biz' business model of KakaoTalk (KakaoTalk) cited as the main contributor. At the beginning of this year, as concerns over COVID-19 spread, more people used KakaoTalk to check on each other, leading to increased usage. Tae-na Cho, a researcher at Heungkuk Securities, explained, "The expansion of untact culture due to COVID-19 led to an increase in KakaoTalk gift sending and showed favorable trends, and both traffic and transaction volume of Talk Store and Talk Deal increased, positively impacting performance improvement."

Talk Biz revenue rose 77% year-on-year to 224.7 billion KRW due to the expansion of new advertisers and steady growth in commerce. The total transaction amount of Kakao Commerce's first quarter, including Gift Sending, Talk Store, and Makers, increased by 55% compared to the same period last year. Revenue from new business sectors was recorded at 100.5 billion KRW, up 68% year-on-year, thanks to the expansion of the franchise business of the premium taxi service 'KakaoT Blue' and increased transaction volume of KakaoPay.

Content division revenue increased by 6% compared to the previous quarter and 8% year-on-year to 426.6 billion KRW. Paid content revenue grew sharply due to the expansion of global transaction volume, reaching 97 billion KRW, a 30% increase year-on-year.

The spread of untact culture is acting as a positive factor across IT companies. NHN, which is scheduled to announce its earnings on the 8th, is expected to report first-quarter revenue of 374.6 billion KRW, up 1% year-on-year, and operating profit of 22 billion KRW, up 1.5%, meeting initial market expectations. This is because indoor activities increased due to COVID-19, leading to more users of web board games and online shopping, which in turn increased users of NHN Korea Cyber Payment and Payco. Jin-man Lee, a researcher at SK Securities, said, "The increase in online payments due to COVID-19 will have a positive impact on Payco," and added, "With the relaxed regulations on web board games since last month, NHN's web board game revenue growth is also expected." Furthermore, Naver, the largest domestic portal, also achieved both external growth and profitability improvement by exceeding market expectations due to increased internet usage from more indoor activities despite the unexpected variable of COVID-19 in the first quarter.

This content was produced with the assistance of AI translation services.