Kakao Reports Q1 Revenue of 1.74 Trillion KRW and Operating Profit of 71.1 Billion KRW

Operating Profit Down 55% Year-on-Year
Impact of Weak Portal and Media Businesses

Kakao's operating profit in the first quarter of 2023 decreased to half of last year's level due to the weakness of the portal 'Daum' and other factors.

Kakao announced on the 4th that its sales in the first quarter of this year reached 1.7403 trillion KRW, a 5% increase compared to the same period last year. Operating profit was 71.1 billion KRW, down 55% from the same period last year, with an operating profit margin of 4.1%.

Kakao's platform segment sales in the first quarter were similar to the previous quarter and amounted to 964.7 billion KRW, a 9% increase compared to the same period last year.

Talk Biz sales decreased by 1% compared to the previous quarter due to advertisers' conservative marketing execution amid delayed economic recovery and seasonal off-season effects, but continued its growth trend by recording 515.6 billion KRW, a 12% increase compared to the same period last year, thanks to growth in transaction-type sales. Among Talk Biz sales, advertising-type sales such as Biz Board and KakaoTalk Channel decreased by 8% compared to the previous quarter but increased by 1% compared to the same period last year. Transaction-type sales such as Gift and Talk Store grew by 7% compared to the previous quarter and 25% compared to the same period last year.

Portal Biz sales were 83.6 billion KRW, down 15% from the previous quarter and 27% from the same period last year. Portal Biz includes businesses such as the portal Daum and KakaoStory. Platform other segment sales recorded 365.6 billion KRW, up 5% from the previous quarter and 18% from the same period last year, driven by steady growth in Kakao Mobility's taxi, designated driver, and parking businesses, as well as increased sales from Kakao Pay's payment and financial services.

Kakao's content segment sales were 775.6 billion KRW, down 4% from the previous quarter but up 1% from the same period last year.

Story sales recorded 228.6 billion KRW, a 3% increase from the previous quarter, achieving the highest quarterly sales ever in the Japanese market and continuing growth in transaction volume. However, due to operational structure optimization efforts in North America and domestic markets and a profitability-focused efficient marketing execution policy, sales decreased by 5% compared to the same period last year.

Music sales increased by 13% compared to the same period last year to 232 billion KRW, while media sales decreased by 46% from the previous quarter and 10% from the same period last year to 67.7 billion KRW. Game sales were 247.3 billion KRW, up 7% from the previous quarter and similar to the same period last year. The effect of new game releases in the first quarter is expected to be reflected in sales in the second quarter of this year.

Operating expenses in the first quarter increased by 12% compared to the same period last year to 1.6692 trillion KRW. Outsourced infrastructure costs increased by 18% year-on-year due to active investments such as data center redundancy. Depreciation expenses increased by 15% year-on-year due to increased CAPEX (capital expenditure) investments related to data center construction.

Kakao plans to continue investing in infrastructure to ensure stable and continuous service provision while promoting efficiency in operating expenses, and also plans to expand investments in future growth engines such as artificial intelligence and healthcare. In particular, to secure leadership in the artificial intelligence (AI) field, Kakao will invest in building AI foundation models.

Meanwhile, Kakao plans to further segment the essence of KakaoTalk's communication this year to provide services tailored to individual users' purposes and contexts. To this end, Kakao is reorganizing the main tabs of KakaoTalk and upgrading various functions. Additionally, by visualizing cooperation with SM Entertainment in global content music distribution and management businesses, Kakao plans to accelerate the realization of the Kakao community's 'Beyond Korea' and 'Beyond Mobile' visions.

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