Kakao's Annual Revenue Jumps from 4 Trillion to 6 Trillion Won... Remaining Task is 'Image Renewal' (Comprehensive)

2021 Sales of 6.1361 Trillion KRW... 48% Growth
This Year, 300 Billion KRW Worth of Treasury Stock Burned... Enhancing Shareholder Value
Yeominsu "Apologies for Controversies Surrounding Kakao... Will Create Innovation"

[Asia Economy Reporter Kang Nahum] Kakao achieved its highest-ever performance last year with sales reaching 6 trillion KRW. During the same period, it closely pursued Naver, which recorded sales of 6.8176 trillion KRW. The remaining challenges are the cold public perception due to controversies such as the management's insider stock sell-off and infringement on local businesses. Despite the earnings surprise, both the new and old management teams are actively working to revamp Kakao's image.

On the 11th, Kakao announced that its consolidated sales for last year reached 6.1361 trillion KRW, a 48% increase compared to the previous year. Operating profit rose by 31% year-on-year to 596.9 billion KRW. All sectors, including platform and content, showed balanced growth.

Platform segment sales grew 44% year-on-year to 3.2408 trillion KRW. The Talk Biz segment, including KakaoTalk, recorded 1.6439 trillion KRW, portal business 492.5 billion KRW, and other platforms such as mobility and payment generated 1.1044 trillion KRW in sales. The content segment posted total sales of 2.8953 trillion KRW, growing 52% year-on-year, with games at 998.8 billion KRW, music at 772.5 billion KRW, stories (webtoons, web novels) at 791.1 billion KRW, and media at 332.9 billion KRW.

Annual operating expenses in 2021 increased by 50% year-on-year to 5.5392 trillion KRW.

In the fourth quarter, platform segment sales rose 48% year-on-year to 1.0048 trillion KRW. Content segment sales increased 41% year-on-year to 780.3 billion KRW. Fourth-quarter operating expenses rose 54% year-on-year to 1.6766 trillion KRW.

The gap with Naver continues to narrow. Kakao's sales in 2019 were only in the 3 trillion KRW range, half of Naver's, but it grew to 4 trillion KRW in 2020 and reached 6 trillion KRW this year, closely trailing Naver. Naver recorded consolidated sales of 6.8176 trillion KRW and operating profit of 1.3255 trillion KRW last year.

Although the company has grown large enough to threaten Naver, its brand image is not as strong as before. This is due to ongoing fallout from controversies such as insider stock sell-offs by affiliate management and infringement on local businesses, which have led to stock price declines.

Yeo Min-soo, co-CEO of Kakao, stated during the earnings conference call, "Over the next three years, we will allocate 15-30% of Kakao’s standalone free cash flow as resources, of which 5% will be used for cash dividends and 10-25% for share buybacks and cancellations." In particular, this year, a total of 300 billion KRW worth of shares will be canceled following shareholder approval.

Kakao plans to maintain a minimum basic dividend per share during this period while providing additional dividends in line with company growth. This is a measure to boost the stock price, which has fallen due to controversies surrounding the company.

CEO Yeo also apologized for the previous controversies. He said, "I apologize for the recent controversies surrounding Kakao," and added, "Going forward, under the leadership of the incoming CEO Namgoong Hoon, Kakao will take thorough measures to prevent recurrence of these issues and promise to create future-oriented innovations that society originally expects from Kakao." This expresses his commitment to responsible management until the end.

Earlier, Namgoong Hoon, the incoming CEO of Kakao, also announced the day before that he would only accept a minimum wage-level salary until the company’s stock price reaches 150,000 KRW. This is seen as a decisive move as the next CEO. Namgoong said, "I discussed with Chairman Kim Beom-su ways to put more heart and will into Kakao," and added, "I will do my best to make Kakao a company loved again by society, shareholders, and our crew."

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