Kakao needs a new revenue stream, plans to expand into delivery service
November 12, 2015

Kakao Corp. (KOSDAQ 035720) today reported third quarter financial results under Korean-IFRS. Kakao’s consolidated revenue for the quarter was KRW 229.6 billion with mobile businesses making up 56%.

For the third quarter, Kakao focused on actively identifying and promoting new ideas and business opportunities. This led to uniform growth in mobile businesses, and consolidated revenue for the quarter grew 1.4% QoQ and 3.5% YoY.

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Kakao’s commerce platform showed the greatest growth in revenue. Introduction of the Special Price tab and continued enrichment in product lineup in Kakao Talk’s Gift Store attributed to a 12.1% revenue increase QoQ, resulting in KRW 15.3 billion. This represents a 97.8% increase YoY.

Revenue from the advertising platform decreased 5.2% QoQ to KRW 142.9 billion as a result of the off season factor, but steady growth in mobile ads revenue helped bring a 0.7% increase YoY.

In the game platform, there were positive signs of growth in mobile game revenue following the increase in revenue by top grossing for Kakao game alongside strong performance of ‘Friends Pop’—a Kakao Friends branded IP game which recorded 7.5 million downloads in two and a half months. However, the disposal of OnNet shares in the third quarter caused a net 4.8% decrease QoQ and 23.8% decrease YoY in total games revenue to KRW 51.4 billion.

Other revenue reached KRW 19.9 billion, a 146.3% increase QoQ and a 326.5% increase YoY, reflecting the change in revenue recognition method and period for Kakao Page and Kakao Music, respectively.

Operating cost for third quarter was KRW 213.4 billion, as a result of continued investment in a variety of new services including Kakao Taxi. Kakao Taxi continues to display rapid growth, already securing 180,000 registered drivers and accumulating 37 million requests in just seven months since launch.

Finally, operating income for the third quarter increased 41.5% QoQ but decreased 47.4% YoY to KRW 16.2 billion. Net income for the quarter was KRW 14.8 billion.

Kakao plans to continue investment in core business areas, focusing on the concept of on-demand, referring to the goal of delivering everything users need, unbound by time or location.

Kakao will continue to connect various sectors of the economy ranging from O2O, content, search, game, ads and finance, and embrace innovative attempts and challenges to strengthen its position as a mobile lifestyle platform company.

* Please check out more about new tech products from Korea at "beginning" system.

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