South Korea’s leading mobile messenger operator Kakao Corp. posted a near 90 percent on-year plunge in operating profit in the fourth quarter last year as the company continued to spend heavily to build new businesses based on chat platform.

The company announced in a regulatory filing on Thursday that its operating profit for the October to December period last year reached 4.3 billion won ($3.8 million), down 87.7 percent from the same period of the previous year. Sales, on the other hand, rose 23.6 percent on year to 673.1 billion won.

On Thursday, shares of Kakao rose 2.45 percent to end at 100,500 won.

For the full 2018, the company posted 73 billion won in operating profit, down 65 percent from 2017. Revenue increased 23 percent, hitting a record high of 2.4 trillion won.

Kakao attributed the drop in profit in the Oct-Dec period to increased costs including year-end compensations for employees, marketing costs to strengthen new businesses and expanded fee payment due to rising transactions of its various services. Operating expenses in the fourth quarter last year reached 668.8 billion won, up 31 percent on year and 18 percent on quarter.

It was forced fold fledgling carpool business due to die-hard opposition from taxi drivers.

Sales remained robust across the board.

Revenue from advertising business grew 9 percent on quarter and 14 percent on year to 181.7 billion won, thanks to the peak end-of-year season and brisk advertising services of the mobile messaging platform Kakao Talk.

Content platform sales expanded 3 percent on quarter and 18 percent on year to 314.4 billion won. On the back of increased subscribers of its music streaming service Melon, it raked in 140.1 billion won in sales from music content business, up 9 percent from a year ago. Revenue from game business rose 13 percent on year to 100.3 billion won, and sales from paid contents grew 4 percent on quarter and 55 percent on year to 73.9 billion.

Other businesses including e-commerce and mobile payment saw a 48 percent on-year surge in sales to 177 billion won.

By Lee Dong-in and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]