This file photo taken Oct. 17, 2022, shows an office building of Kakao Corp. in Pangyo, just south of Seoul. (Yonhap)
SEOUL, Aug. 3 (Korea Bizwire) — Kakao Corp., the operator of South Korea’s top mobile messenger, on Thursday said its second-quarter net profit dropped due to increased costs and investments.
Its net profit reached 56.3 billion won (US$43.3 million) in the April-June period, down 44 percent from a year earlier, the company said in a regulatory filing.
Its operating profit declined 33.7 percent from a year ago to 113.5 billion won, while sales rose 12.1 percent to 2.04 trillion won over the cited period.
The earnings were behind market expectations. The average estimate of net profit by analysts stood at 93.8 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Its operating costs climbed 17 percent on-year to 1.92 trillion won due to increased investments in artificial intelligence, health care and data center facilities, the company said.
“Sales growth has slowed amid macroeconomic woes in and out of the country, while spending on labor and infrastructure, as well as fixed costs related to a rise in capital expenditures, have increased over the past few years,” the company said.
Kakao said it will try to enhance investment efficiency and continue to adjust investment strategies to maintain financial soundness.
Kakao’s content business, which includes its games, digital comics and music, took up 52 percent of the second-quarter sales, while the rest came from its platform business.
The content business reported 18 percent on-year growth in sales at 1.05 trillion won for the April-June period. The platform business reported 988.7 billion won in sales, up 6 percent from a year ago.
Its “story” business, which refers to entertainment content, posted a 1 percent on-year growth to 231 billion won, while sales of its games declined 20 percent to 268.6 billion won.
The number of monthly active users of KakaoTalk, its flagship mobile messenger, came to 48.2 million as of the end of the second quarter, up 703,000 from a year ago.
Kakao CEO Hong Eun-taek (Yonhap)
Kakao said it will continue investing in infrastructure to provide stable service, as well as in future growth engines like artificial intelligence and health care services.
During an earnings call, the company said it planned to unveil a “cost-effective hyperscale AI” model after October, which it will use for various business activities on KakaoTalk.
“There are many AI models out on the market, but we haven’t seen any that satisfy us in terms of cost, speed, up-to-dateness and accuracy,” Kakao CEO Hong Eun-taek said.
“It is important to create a cost-effective AI model and apply it to the service,” he said, adding AI will enable more personalized services in areas like online ordering, consulting and paying.
Kakao’s earnings report was released before the market opened.
(Yonhap)
