Kakao Announces Surprise Partnership With Google...Delivers Record-High Earnings Last Year (Comprehensive)

Strategic Partnership with Google
Comprehensive Collaboration on On-device AI, TPU, and AI Glass

Revenue of 8.0991 Trillion Won and Operating Profit of 732.0 Billion Won...Up 3% and 48% Year-on-Year
Talk Biz, Including Advertising and Commerc

Kakao has entered into a strategic partnership with Google to further advance its artificial intelligence (AI). The two companies plan to significantly expand AI experiences on Android devices based on AI technology. Kakao will adopt Google's proprietary AI chip, the Tensor Processing Unit (TPU), and will also join forces to build interfaces for AI Glass, Google's extended reality (XR) device.

On February 12 in the morning earnings conference call for fiscal year 2025, Kakao CEO Jung Shina made a surprise announcement, saying, "We are beginning a collaboration with Google Android to advance our on-device AI services, which started last year with Kanana in KakaoTalk."

Gyeonggi Seongnam Kakao Pangyo Ajiteu. Photo by Kang Jinhyeong

Jung explained, "To strengthen our AI infrastructure, we are in discussions with Google Cloud on operating a TPU cloud, and we are also initiating collaboration on AI Glass."

Kakao formed this partnership with Google to advance "on-device AI," in which AI tasks are processed only within the device itself. The two companies will work on optimization so that Kakao's on-device AI models can run smoothly on smartphones that use Google's Android OS.

Jung added, "From a mid-term perspective, we aim to build a cooperative structure that can create synergies by maximizing Kakao's strengths while focusing on areas that only Google can handle," and continued, "We also want to jointly explore potential AI-based business opportunities."

In the earnings announcement, Kakao stated that it recorded its highest-ever annual revenue and operating profit last year. On a consolidated basis, last year's annual operating profit came to 732.0 billion won, up 48% year-on-year, while revenue for the same period reached 8.0991 trillion won, a 3% increase. In the platform segment, the Talk Biz division, which includes advertising and commerce businesses, drove the earnings growth.

Last year, Kakao sold its healthcare business units, including Kakao Healthcare, to the CHA Bio Group. As a result, the performance generated by the healthcare business units up to the loss of control was classified as discontinued operations. When compared on a basis that does not classify the healthcare business units as discontinued operations, revenue and operating profit increased by 2.9% and 59.1%, respectively, compared with the previous year.

Looking at the results by quarter, consolidated operating profit for the fourth quarter of last year was 203.4 billion won, up 136% from the same period a year earlier. Revenue for the same period was tallied at 2.1332 trillion won, a 9% increase. Fourth-quarter revenue was the highest ever on a quarterly basis.

By business area, the platform segment’s fourth-quarter revenue rose 17% year-on-year to 1.2226 trillion won, leading overall growth. Jung said, "The results of our structural reforms, which have focused the group’s capabilities on core areas, are clearly reflected in our financial indicators," adding, "We will prove our performance through improved results and at the same time demonstrate Kakao's mid- to long-term growth potential with tangible outcomes."

This year, Kakao will focus on the growth of its core businesses, AI and KakaoTalk. In the first quarter of this year, it will officially launch the on-device AI service "Kanana in KakaoTalk" on both Android and iOS. Kanana in KakaoTalk is currently in a closed beta test (CBT) with a subset of iOS users.

For this year’s performance, the company has set targets of more than 10% year-on-year growth in annual consolidated revenue and an operating margin of 10%. It plans to achieve both profitability and top-line growth by relying on two main pillars: the structural growth trend of its advertising business and the establishment of a foundation for monetizing artificial intelligence (AI). Jung stressed, "Structural growth centered on platforms and improvements in profitability will begin to be fully reflected in our results from the second quarter," and added, "This year will be when Kakao re-enters a full-fledged growth phase."

Meanwhile, Jung’s term as CEO is set to end in March this year, but it is virtually certain that she will lead Kakao for two more years through reappointment. The previous day, Kakao’s board of directors held a meeting and approved the agenda to reappoint CEO Jung Shina for a new two-year term.

Over the past two years, Jung has been credited with overseeing Kakao’s overall management and achieving both internal stability and growth. Shortly after taking office, she began the process of streamlining affiliates unrelated to the company’s core business, reducing the number of affiliates from 132 to 94 as of the end of last year, a decrease of about 30%. Since 2024, Jung has purchased a total of 400 million won worth of company shares on the open market in four separate transactions, which observers interpret as a sign of her commitment to enhancing shareholder value and exercising responsible management.

Jung Shina, CEO of Kakao. Provided by Kakao

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