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Earnings

Kakao hits all-time earnings high; tops $3.5 bn in revenue

By Feb 09, 2021 (Gmt+09:00)

Kakao hits all-time earnings high; tops .5 bn in revenue


South Korea-based mobile platform giant Kakao Corp. has posted an all-time earnings high for last year, thanks to robust growth of its core operations. The company plans to continue its upward momentum with aggressive expansion of its new businesses.

On Feb. 9, the company announced that it had around 4.2 trillion won ($3.7 billion) in revenue and 456 billion won ($408 million) in operating profit last year, up by 35% and 121% from the previous year, respectively.

The company has seen steady sharp growth, with its revenue surging by billions of dollars annually since 2017. But last year was the first time Kakao topped 400 billion won in operating profit.

Graphics by Jerry Lee
Graphics by Jerry Lee

ADVERTISING, PAID-CONTENT SURGE IN CONTACTLESS SOCIETY

Kakao's impressive performance was led by Talk Biz, a business-to-business service on its messaging app, Kakao Talk. The Talk Biz service pulled in 1.1 trillion won in sales, up by 72% from the previous year. It also accounted for 27% of the company's total revenue, largely owing to the Biz Board feature, which displays business ads in the app.

"Last December, the average daily sales for Biz Board stood at 1 billion won, double the amount from the year-earlier period," said Yeo Min-soo, the chief executive of Kakao, in a conference call following the earnings announcement.

Kakao plans to expand the Biz Board business this year as it is expected to grow 50% compared to the previous year. 

Biz Board features ads on top of the messaging app.
Biz Board features ads on top of the messaging app.


Kakao's commerce business also showed strong performance, with its transaction volume in last year's fourth quarter climbing 71%, owing to the frequent use of its online shopping services, "Talk Store," and "KakaTalk Gift," amid the contactless society.

Revenue from the company's new operations, including mobility, fintech, and IT services, also posted positive growth, reporting 550.1 billion won in sales, up by 111% from the previous year. Mobile payment service Kakao Pay's annual transaction amount reached 67 trillion won last year, up by 40%.

Meanwhile, Kakao's paid-content revenue jumped 78% on-year to 528 billion won. The company's Japanese webtoon platform Piccoma saw its transaction volume surge to 414.6 billion won, up by 188% from the year-earlier period.

KAKAO TO CONTINUE AGGRESSIVE MANAGEMENT

Kakao plans to beef up its overseas operations via content services, including webtoons and web novels. "Our goal is to top 1 trillion won in transaction volume for Kakao Japan's webtoon platform Piccoma," said Kakao Chief Investment Officer Bae Jae-hyun.

Kakao Page, the web novel and webtoon platform under Kakao, will also expand its global platform network this year. It aims to post over 700 billion won in transaction volume.

Kakao Page, a popular webtoon and web novel platform
Kakao Page, a popular webtoon and web novel platform


The company is also keen on boosting its entertainment business via the merger between its content affiliates, Kakao Page and Kakao M. The two companies are set to merge in March to create a content platform giant with annual revenue nearing 1 trillion won."We will establish an unrivaled intellectual property value chain to be at the forefront of the Korean entertainment industry's growth and innovation," Yeo said.

KAKAO GAMES ALSO SEES HIGHEST-EVER REVENUE

Meanwhile, Kakao's game unit Kakao Games Corp. also reported record-high earnings last year, posting 495.5 billion won ($442 million) in revenue and 66.6 billion won in operating profit, according to the company's regulatory filing on Monday.

The company’s revenue and operating profit each rose by about 27% and 90%, respectively. The net profit stands at 67.3 billion won, up by almost 659%. Kakao Games saw its performance improve in both online PC and mobile games.

The company’s online game revenue stood at 183.8 billion won, a 13.2% increase compared to the year-earlier period. Its robust sales were led by the online PC game Elyon, launched in Dec. 2020 and posting 10 billion won in sales within a month of its release. As for mobile games, Guardian Tales also realized great success, posting 249 billion won in sales, up by 37%.

Write to Joo-wan Kim at kjwan@hankyung.com

Danbee Lee edited this article.

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