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(LEAD) Kakao Q2 net spikes 38 pct on robust sales, expects strong ad sales

Consumer Electronics 10:47 August 08, 2019

(ATTN: RECASTS headline; UPDATES with more details, comments from conference call in paras 8-12)

SEOUL, Aug. 8 (Yonhap) -- Kakao Corp., the operator of South Korea's top mobile messenger KakaoTalk, said Thursday its second-quarter net profit surged 38 percent from a year earlier on the back of robust revenues.

Net profit reached 31 billion won (US$25.5 million) in the April-June period on a consolidated basis, compared with a net profit of 23 billion won a year earlier, the company said in a regulatory filing.

Sales jumped by 25 percent on-year to reach a quarterly record of 733 billion won in the second quarter, and operating income rose to 41 billion won from 26 billion won over the cited period, it said.

The tally beat the market consensus of 34 billion won in operating income, estimated by local brokerages in a poll by Yonhap Infomax, the financial news arm of Yonhap News Agency.

Kakao said its second-quarter revenue showed brisk performance in both its platform and content businesses.

Kakao said the revenue from its platform business surged by 30 percent on-year to 327 billion won during the cited period on the back of steady growth of Biz Message and increased revenues from new businesses, such as Kakao Mobility and Kakao Pay.

Revenue from the content business also expanded by 20 percent on-year to 406 billion won in the second quarter mainly due to steady revenues from the country's top music streaming service, Melon, under its arm.

(LEAD) Kakao Q2 net spikes 38 pct on robust sales, expects strong ad sales - 1

Kakao said a new advertising platform, called Kakao Talk Biz Board, will greatly improve its revenue this year. The company launched a closed beta test of the Talk Board in May, with a limited number of corporate partners participating.

"Kakao Talk Biz Board's sales will expand 50 percent this year to exceed over 600 billion won of revenue by year-end, and the growth momentum will continue next year," Yeo Min-soo, co-CEO of Kakao, said in a conference call. "We are analyzing data, such as usage patterns, clicks and purchases, to enhance the advertising campaign and work on improving the platform's functions."

Kakao also vowed to ramp up investment in Kakao Bank, the Internet-only bank under its arm, after getting approval last month to raise its stake in the financial subsidiary to 34 percent from 18 percent.

"As Kakao can become the first local IT company capable of becoming the largest shareholder of an Internet-only bank, we will continue to increase investment and develop technologies to spur its growth in the banking sector," Yeo said.

Kakao Bank began operations in July 2017 and quickly gained popularity among local mobile-savvy customers. It had over 10 million accounts as of last month.

sam@yna.co.kr
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