Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kakao Corp (XKRX:035720, Financial) reported a 4% year-over-year growth in consolidated revenue for Q2 2024, reaching KRW2,005 billion.
- Operating profit increased by 19% year-over-year, demonstrating strong financial performance despite challenging macroeconomic conditions.
- The company plans to expand its Kakao Talk advertising and commerce, leveraging its competitive advantage in relationship-based services.
- Kakao Corp is focusing on AI innovation, with plans to launch a new AI service in the second half of the year, aiming to create new growth drivers.
- Kakao's business messaging posted a 16% year-over-year growth, achieving record high quarterly revenue, indicating strong demand and market position.
Negative Points
- Overall profit contribution from affiliates was offset by a gap in new game releases and intensified competition in the Japanese webtoon market.
- Kakao Games faced challenges due to a lack of new game title releases, impacting its financial performance.
- The domestic e-commerce market is experiencing slowing growth, which could affect Kakao's commerce business.
- Kakao's advertising business is facing increased competition for limited marketing budgets, particularly from Chinese e-commerce platforms.
- Operating expenses increased due to higher marketing costs and investments in data centers and AI infrastructure, potentially impacting profitability.
Q & A Highlights
Q: Could you provide some color on the potential sale of Kakao subsidiaries and your efforts to improve corporate governance?
A: Shina Chung, CEO: We are in the process of defining our core business areas, focusing on Kakao Talk and AI innovation. Non-core businesses, which lack relevance to our core platform, may be subject to efficiency plans. Details are still being finalized, and we will update once ready.
Q: What is the outlook for the third quarter, particularly for advertisement and eCommerce businesses?
A: Shina Chung, CEO: The advertisement market is entering a slow season, but business messaging shows solid growth. Kakao Pay continues robust growth, while Kakao mobility has launched a new taxi franchise. Content business may see varied results due to timing of releases. Cost efficiency measures are in place, and AI-related expenses may increase slightly.
Q: How is user engagement on Kakao Talk, and are there concerns about declining user activity?
A: Shina Chung, CEO: Domestic monthly active users remain strong at 48.93 million. User engagement has increased, especially with the revamped French tab and open chatting. We aim to enhance user convenience and drive up activity across all tabs, exploring additional business opportunities.
Q: What is the current market outlook, and how do you see it evolving in the second half of the year?
A: Shina Chung, CEO: The advertisement market faces competition, but we are introducing new branding display products. The domestic eCommerce market growth is slowing, impacting mid-tier players. We will focus on personalization and expanding gifting occasions to build a foundation for long-term growth.
Q: How are new initiatives impacting financial performance, and what is the effect of the AI development merger?
A: Shina Chung, CEO: Kakao Enterprise's financial structure has improved, reducing operating losses. The AI merger allows for faster service development and cost savings. AI-related expenses were KRW30 billion in Q2, and we are exploring monetization opportunities through AI innovation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
