Kakao's Spring: Record-High First-Quarter Results, But Shares Remain Sluggish (Comprehensive)

Operating Profit Reaches 211.4 Billion Won, Up 66% Year-on-Year
Double-Digit Growth in Platform, Mobility, and Pay
KakaoTalk Evolves into an AI Agent
"Will Become an AI Agent for All 50 Million Users"
Lack of New Growth Engines... Stag

Thanks to strong growth in its platform segment, Kakao achieved its highest-ever first-quarter performance.

On May 7, Kakao announced in a disclosure that its consolidated revenue for the first quarter of this year reached 1.9421 trillion won, an 11% increase compared to the same period last year, while operating profit rose 66% to 211.4 billion won. The operating margin stood at 11%.

Revenue from the platform segment grew by 16% to 1.1827 trillion won. Revenue from Talk Biz, which accounts for the largest share of the platform business, increased by 9% to 608.6 billion won. Of this, advertising revenue rose 16% to 338.4 billion won. This was attributed to a surge in overall message volume driven by increased demand from financial advertisers and to a broader range of offerings for advertisers, resulting from the expansion of message product types.

The total transaction volume for Talk Biz Commerce, which includes services such as Gift and Talk Deal, reached 2.9 trillion won in the first quarter, reflecting 10% growth. This was the result of expanding product offerings around high-demand categories such as fresh food and home appliances, as well as providing personalized benefits to users. In particular, the "Kakao Shopping Festa" held in March led to an 18% year-over-year increase in Talk Store transaction volume and a 53% jump in self-purchase transactions within the Gift service. Commerce revenue for the first quarter was 270 billion won.

Other platform revenue—which includes mobility and Pay—rose by 30% to 506.5 billion won. Mobility, encompassing taxi, parking, last-mile logistics, and advertising, recorded double-digit year-over-year revenue growth for the third consecutive quarter. Kakao Pay surpassed quarterly revenue of 300 billion won for the first time, driven by growth across all related services.

Content segment revenue also grew by 5% to 759.4 billion won. Within this, music revenue increased by 11% to 484.6 billion won, while media revenue rose by 23% to 92.4 billion won. Story revenue was 182.4 billion won.

Although the first quarter is typically a seasonal off-peak period with relatively low profitability, Kakao was able to improve its profit margins thanks to efficiency gains from focusing on core platform businesses. The company is currently restructuring by streamlining non-core subsidiaries.

KakaoTalk Evolves Beyond Messenger into AI Agent... "From Chatting to Product Payment"

Sam Altman, CEO and founder of OpenAI, developer of ChatGPT, and Jeongshina, CEO of Kakao, are attending the "Kakao Media Day" held on the 4th at the Plaza Hotel in Jung-gu, Seoul, posing for a photo. Photo by Jinhyung Kang

Kakao plans to make agentic AI its future growth driver and is pushing ahead with the transition to an AI platform. On the earnings conference call, Jeongshina, CEO of Kakao, announced the goal of evolving KakaoTalk into an AI agent (assistant) platform. She emphasized, "Starting in the second half of the year, all users will be able to experience agents that enable them to complete product purchases while chatting on KakaoTalk," and added, "We will showcase a future where all 50 million users communicate daily with their own personalized AI agents."

The cumulative number of subscribers to "ChatGPT for Kakao," an AI chatbot provided through cooperation with OpenAI on KakaoTalk, has surpassed 11 million. Compared to the previous quarter, monthly active users (MAU) nearly doubled, and the average number of messages sent per user per month more than doubled.

The number of users for "Kanana in KakaoTalk," which runs on Kakao's proprietary on-device model, is also increasing. CEO Jeong said, "We expect the number of users downloading and using Kanana in KakaoTalk to reach 31 million by the end of the year," adding, "We will continue to advance the model to offer even more users a high-quality AI experience and improve the completeness of the service."

Kakao is also continuing its own AI model development. The company plans to release Kanana 2.5, a large language model (LLM) with 15 billion (150B) parameters. CEO Jeong emphasized, "We developed Kanana 2.5 from scratch using our own technology, and confirmed that it delivers the best performance among domestic and international LLMs of a similar scale."

Meanwhile, Kakao faces mounting pressure to boost its stock price as it has failed to join the KOSPI 7000 era. As of the previous day's closing price, Kakao shares stood at 46,300 won, down 33% from the 71,600 won annual high recorded on June 24 last year. Among investors, there is growing dissatisfaction over the lack of new growth engines at Kakao, which is currently focused on its platform-centric business.

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