Kakao Games posts record-high operating profit in Q2

Kakao Games Corp., the game publishing unit of South Korean web service giant Kakao Corp., said on Wednesday it achieved record-high operating profit in the second quarter of this year. Net profit for the April-June quarter soared 164.2 times on-year.

Compared with a year earlier, the gaming company’s second-quarter revenue increased 161.68% to 338.8 billion won ($258.3 million), and its operating profit shot up a whopping 900.17% to 81 billion won, the highest quarterly posting ever.

Net profit skyrocketed to 64 billion won, 164.2 times the net profit of the same quarter in 2021.

Prior to the disclosure on Wednesday, analysts forecast the gaming firm to log 354.6 billion won in revenue and 78.4 billion won in operating profit for the quarter. The firm’s revenue came in slightly below estimates while operating profit exceeded expectations.

By platform, the company achieved 213.1 billion won revenue from mobile games during the second quarter, up 153% from a year earlier. Revenue from personal computer online games was 15 billion won, down 20% on-year, as the content updates slowed while preparing for a game server relocation.

The other revenue, including that from Kakao VX Inc. focusing on the indoor golf business, reached a record-high 110.8 billion won in the second quarter marking a 319% increase from a year earlier. Operating expenses reached 257.8 billion won, up 112% from a year earlier, including 94.5 billion won of fees for Apple's App Store and Google Play Store.        

The quarterly performance was led by Odin: Valhalla Rising, the firm’s flagship massively multiplayer online role-playing game (MMORPG). Based on its huge success in Korea, the game was released in Taiwan in March.

Another flagship mobile game Uma Musume Pretty Derby, which Kakao Games released on June 20 in Korea, posted 15 billion won in revenue on that day alone. The game, which has gained huge popularity in Japan since early 2021, boasted the top revenue among the games on the App Store and Google Play Store in Korea last month, Kakao Games said.

The earnings from the simulation game will be reflected in the third-quarter performance in earnest, and the number of active users of the game will significantly affect sustainable revenue growth.

Kakao Games is planning to release several new mobile, PC and blockchain games in the second half of this year.

The new games list includes role-playing game Eversoul, MMORPG survival game Dysterra, developed by Kakao Games’ subsidiary XL Games, and MMORPG Ares: Rise of Guardians. Some blockchain games include Birdie Shot, Aki World and Competz, respectively developed by Kakao Games’ subsidiaries Metabora, XL Games and RisingWings.

The company focused on settling its games in the market during the first half of this year and will strive to expand its game business in the global market during the second half, said Kakao Games CEO Cho Kye-hyun.

Cho added that the IPO plan for Lionheart Studio Corp., Odin's creator and Kakao Games' subsidiary, remains unclear. The public offering process needs time for each stage such as Korea Exchange (KRX) screening and filing a securities registration statement, and the details on the timeline are yet to be disclosed, the CEO said.

Kakao Games is proactively communicating with investors and will announce a new Lionheart-developed game after submitting the securities registration statement, the CEO added.

Kakao Games stock closed at 57,900 won on August 3, up 13.98% from the previous day. Its share price is down 37.74% from early January of this year.

Write to Han-Gyeol Seon at always@hankyung.com
Jihyun Kim edited this article.