Kakao's Q3 profit drops 12% on games, data center construction

South Korea’s mobile platform giant Kakao Corp. announced its third-quarter earnings on Nov. 3, including quarterly operating profit of 150.3 billion won ($105.9 million) which fell 12% and 11% from the previous quarter and the same period last year, respectively.

Third-quarter revenue amounted to 1.9 trillion won, up 2% and 7% from the second quarter of 2022 and the same period of 2021, respectively.

The revenue combines 986.9 billion won and 871.8 billion won, respectively, from the platform and content business units. The platform business includes messaging app Kakao Talk’s emojis and gifting features as well as taxi-hailing app Kakao Mobility Corp. and fintech app KakaoPay services. The content business consists of webtoons, games, media, music streaming services and others.

The platform business revenue rose by 6% and 27% from the previous quarter and the same period of the last year, respectively, driven by the sales growth of both Kakao Mobility and Kakao Pay.

The revenue from the parking business, Kakao Mobility’s new cash cow, skyrocketed by 285% in the third quarter as we expanded parking lots for our services and the demand for mobility recovered to pre-pandemic level,” said Kakao’s Vice Chairman and CEO Hong Eun-taek on Thursday.

“We are preparing for smart parking services to share parking lots more efficiently through artificial intelligence (AI), as well as bolstering infrastructure for electric vehicle charging hubs. The taxi-hailing services with premium brand cars had a 32% increase in the number of daily rides, compared with the same quarter of 2021,” the CEO added.

Kakao Pay business is on the uptrend in terms of the number of active users and transactions. Third-quarter transactions jumped 28% from the same period of last year as the payment service is available at more businesses, he said.

The content business revenue fell 2% and 9% from the previous quarter and the same period of the last year, respectively. Kakao Games Corp.’s revenue plunged by 36% as some Korean users of Japan-created Uma Musume Pretty Derby boycotted the game for what they regarded as unfair treatment and the latest version of Odin: Valhalla Rising didn’t attract users for long.

The third-quarter capital expenditure was 186.7 billion won, up 82% from the same period last year. The increase comes from investment in building Kakao’s own internet data center, the company stated.  

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