Kakao 1Q operating profit of 38.3 billion KRW, 83% ↑ from the previous year
Kakao announced on January 11 that it recorded 443.8 billion KRW in revenues and 38.3 billion KRW in operating profit in the first quarter of 2017 based on K-IFRS (International Financial Reporting Standards).
Consolidated revenues from 1Q increased 83% compared to the same of last year, and 2% compared to the last quarter.
Sales from content platform marked 228.8 billion KRW, a 142% increase from the same quarter last year. In particular, music content sales surged to 110.3 billion KRW thanks to the increase in revenue from LOEN Entertainment, which started to be reflected in Kakao’s financials from 2Q last year.
Game contents sales declined 14% compared to the last quarter due to lack of new game launches and intensive competition in the domestic mobile game market, but still marked 80.3 billion KRW which is 14% higher than the same period last year thanks to the increased proportion of publishing game sales and growth in PC game sales.
Other content sales, which reflected steady growth of the Kakao page and KakaoTalk emoji business, marked 31.2 billion KRW which is 46% increase from last quarter and 74% increase from last year.
Advertising platform sales was 133.3 billion KRW which is 6% lower compared to last quarter due to weak seasonality, but still 3% higher than last. Mobile advertising accounted for 53% of the total.
Other sales are 88.7 billion KRW. Despite a 2% decline from last quarter due to weak seasonality, the result was a 312% year-on-year increase, driven by the growth in KakaoTalk gift and Kakao Friends flagship store.
The company’s 1Q operating expenses totaled 405.5 billion KRW which included advertisement cost from content-related marketing activities including Kakao page and major mobile games, and the acquisition of LOEN Entertainment.
As a result, operating profit in 1Q was 38.3 billion KRW, up 82% from last year. Rate of operating profits is 8.6%. Net income totaled 54.5 billion KRW which is 26.8 billion KRW increase from the previous quarter and 43.5 billion KRW increase from last year.
On the other hand, Kakao is committed to evolving KakaoTalk and making its leap into a technology company based on artificial intelligence. KakaoTal’s new features of ordering franchise food, and grocery shopping are getting positive feedback from the market. By the end of the year, you will be able to purchase, book, and reserve through KakaoTalk Plus.
Research into artificial intelligence technology is also undergoing. The Kakao Brain, which was founded in February, has begun research and development to create an artificial intelligence ecosystem. In the AI division of Kakao, the company is preparing to release its own artificial intelligence platform and its own Kakao smart device
It is also expected that Kakao’s other service platforms will go through a great deal of growth. In the advertising business, Kakao plans to launch a new ad platform that allows for more sophisticated targeting around 3Q this year. In the game division, mobile game called Yin Yang and Kakao Friends IP games will be released during the second half of the year. Yin Yang now has 200 million downloads and is the top at the ranking of revenue among games in China, Taiwan, and Hong Kong, The Kakao Page, which recorded 30.5 billion KRW in sales in the first quarter, will put their efforts into adding the high-quality video contents and introducing cash rewards in the first half of the year for higher profitability.