(Seoul=Focus News) Kakao has joined the ‘1 trillion won annual revenue club.’
Kakao announced on the 9th that it recorded KRW 1.4642 trillion in consolidated revenue and KRW 116.1 billion in operating profit last year. Revenue increased by 57.1% year-over-year, and operating profit grew by 31.1%. Net income was KRW 67.2 billion, a decrease of 14.7%.
This is the result of significant growth in content platform revenue from games, music, and other areas. Consolidated revenue for the fourth quarter was KRW 453.8 billion, with an operating profit of KRW 38.2 billion for the same period.
Content platform revenue was KRW 221.5 billion, up 11.7% from the previous quarter and 228.7% from the same period last year. Thanks to the expansion of sales from new mobile games launched in the fourth quarter, such as ‘Friends Popcorn for Kakao,’ ‘Kung Fu Panda 3 for Kakao,’ and ‘Destiny Child for Kakao,’ as well as strong performance from PC publishing games like ‘Black Desert’ and ‘Eos,’ game content revenue recorded KRW 93.2 billion, an increase of 18.8% quarter-over-quarter and 63.4% year-over-year. Music content revenue was tallied at KRW 106.9 billion, a 12.0% increase from the previous quarter.
An increase in Melon’s paid subscribers was the biggest factor. Compared to 2015, before Loen Entertainment was incorporated as an affiliate, the music content platform alone showed an annual revenue increase of KRW 103.6 billion.
Advertising platform revenue was KRW 141.5 billion, up 11.5% from the previous quarter but down 7.9% from the same period last year. Considering the voluntary decrease from excluding low-efficiency network ads for advertisers, this represents a growth of 14.5% quarter-over-quarter and 5.9% year-over-year.
In the other revenue segment, commerce sales were the main driver. Strong sales from the Kakao Friends Flagship Store in Hongdae, which opened last November, and a rise in sales from KakaoTalk Gift during the year-end peak season brought total other revenue to KRW 90.8 billion. This is a 37.4% increase from the previous quarter and a 337.9% increase from the same period last year.
In the fourth quarter, total operating expenses amounted to KRW 415.7 billion, due to increased advertising costs from marketing various services like Kakao Driver and higher commission fees from the rise in commerce sales. As a result, the fourth-quarter operating profit was KRW 38.2 billion, an increase of 26.1% from the previous quarter and 85.1% from the same period last year, with an operating profit margin of 8.4%. The net income for the quarter was KRW 29.4 billion.
Having entered the KRW 1 trillion annual revenue range, Kakao is focusing on the evolution of KakaoTalk and R&D in artificial intelligence technology this year. KakaoTalk will evolve beyond a platform for personal conversations into one that connects content and business. The new KakaoTalk Plus Friend, scheduled for release in the first half of the year, will enable ordering, reservations, consultations, and purchases. Long-term, the vision is for KakaoTalk to evolve into a personal assistant that provides limitless information and helps with all necessary tasks.
Research and development in artificial intelligence to secure next-generation growth engines will also begin in earnest. ‘Kakao Brain,’ an AI technology subsidiary established on the 1st with an initial capital of KRW 20 billion, will be central to the development and investment in related core technologies. Kim Beom-su, Chairman of Kakao’s Board of Directors, will personally serve as the CEO of Kakao Brain to lead development and innovation in the AI field.
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