[At a Crossroads] Mobile Leader, Successful Subsidiary but Struggling Core Business... Hopes on Deep Learning

[Asia Economy Reporter Hyunseok Yoo] Despite MobileLeader recording solid performance, concerns about being designated as a management item have emerged this year. While consolidated results continue to show profits thanks to its subsidiary InjiSoft, the company has posted losses for three consecutive years on an individual basis. The company plans to improve its performance through the launch of new products applying deep learning.

MobileLeader is a software development company based on image processing technology, established in 2000. Image processing is a technology that recognizes characters and forms optically and scans documents to digitize and datafy their contents. The company entered the KOSDAQ market in 2010.

In its early business phase, it operated using sync solutions. Sync solutions support synchronization of personal information and multimedia data between mobile devices such as phones and PCs via data communication. At the time of its KOSDAQ listing in 2010, consolidated sales were 10 billion KRW, which increased to 16.6 billion KRW by 2013. On an individual basis, sales slightly decreased from 12.6 billion KRW to 12 billion KRW.

However, the expansion of the smartphone industry and the contraction of the feature phone market, along with the relocation of client companies overseas, negatively impacted performance. Individually, sales were 7.1 billion KRW and 5.2 billion KRW in 2014 and 2015 respectively, and on a consolidated basis, 13.6 billion KRW and 14.3 billion KRW respectively, showing a decline in performance since 2013. A company official explained, "As the mobile division of a major client relocated overseas, related sales decreased. Because it became difficult to generate sales from existing business, we acquired and merged with other companies. Now, sales from sync solutions are minimal, and revenue mainly comes from financial solutions."

However, thanks to InjiSoft, acquired in 2012, consolidated performance improved rapidly. InjiSoft is a company developing software based on image processing technology. Image processing recognizes characters and forms optically and scans documents to digitize and datafy their contents. It provides software that replaces simple repetitive paperwork in banks, securities companies, and other institutions.

Due to its subsidiary, MobileLeader's consolidated sales increased from 13.3 billion KRW in 2017 to 15.3 billion KRW in 2018, 23.6 billion KRW in 2019, and 20.1 billion KRW last year. Last year's performance declined due to COVID-19. The problem lies in MobileLeader's own performance. On an individual basis, MobileLeader recorded sales of 5.6 billion KRW in 2018, 5.5 billion KRW in 2019, and 4.7 billion KRW last year. Operating profit turned to a loss of 86 million KRW in 2018 compared to the previous year, followed by operating losses of 73 million KRW in 2019 and 400 million KRW last year, marking three consecutive years of losses.

For KOSDAQ-listed companies, if operating losses are recorded for four consecutive years on an individual basis, they are designated as management items. If performance does not improve this year, MobileLeader could be included in the management item list. The company plans to improve performance through new products. A company official stated, "Internally, we plan to invest in research and development (R&D) to apply deep learning to financial solutions and enter new businesses. The new product is scheduled to be launched in the second half of this year, and commercialization and securing sales channels will be necessary to make forecasts."

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