Kakao sets new earnings record Q1, is ready to debut more subsidiary stocks

2021.05.06 10:47:44 | 2021.05.06 15:53:15

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(Updated with conference call comments)

Kakao Corp., operator of Korea’s dominant chat app Kakao Talk, is ready to debut more subsidiaries including its Japanese operation, as it kept up a hot earning streak on accelerated migration to online lifestyle business through the pandemic momentum.

Mason Yeo, co-CEO of Kakao, at conference call following first-quarter earnings release on Thursday, said the company is reviewing various options to improve business operation and governance structure.

Going public is one, and Kakao Entertainment and Kakao Japan could be the next in the IPO pipeline following Kakao Pay and Kakao Bank, said Bae Jae-hyun, executive vice president. Parent to 118 subsidiaries, Kakao is putting up Kakao Pay and internet-only bank Kakao Bank for public offering this year.

Next IPO timeline is undetermined, Bae said adding that the company is not ready to go public with Kakao Commerce.

On Thursday, Kakao announced it had achieved $1 billion revenue milestone in the first quarter on thriving business from mobility, fintech to e-commerce and contents production based on its chat platform that connects almost all South Koreans.

[Photo provided by Kakao Corp.]이미지 확대

[Photo provided by Kakao Corp.]

The company registered 157.5 billion won ($139.9 million) in operating income for the first quarter ended March, on a consolidated basis, according to its regulatory filing. The figure, up 5.3 percent from the previous quarter and 78.6 percent from a year earlier, is its best on record.

Revenue also hit a fresh record high by expanding 1.8 percent on quarter and 44.9 percent on year to 1.3 trillion won.

Its bottom line shifted to 239.9 billion won in the black from the red of 195.5 billion won in the previous quarter. Compared to a year earlier, net profit is up whooping 200.2 percent.

Kakao shares closed Thursday down 0.43 percent at 115,000 won in Seoul.

The platform business division delivered 668.8 billion won revenue, up 3 percent on quarter and 51 percent on year. Revenue from Talk Biz, overseeing ads and e-commerce services via Kakao Talk, rose 2 percent on quarter and 61 percent on year to 361.5 billion won. Portal Biz contributed 117.5 billion won in revenue, down 4 percent from the previous quarter but up 1 percent on year.

Value-added services, which include Kakao Pay and mobility services such as taxi-hailing app, delivered revenue gains of 9 percent on quarter and 89 percent on year to 189.8 billion won. Kakao Pay transaction totaled 22.8 trillion won, breaking above the 20 trillion won mark for the first time ever, in the first quarter.

The content business division recorded 589.2 billion won in the first-quarter revenue, up 1 percent on quarter and 38 percent on year.

Revenue from paid-contents services, such as web cartoon, expanded 7 percent on quarter and 80 percent on year to 174.7 billion won, on growth in global transaction amount.

Intellectual property and other businesses delivered 127.4 billion won revenue, up 7 percent on quarter and 55 percent on year, led by brisk video and music contents distribution operation.

Game business generated 130.3 billion won revenue, down 7 percent from a quarter earlier but up 35 percent on year. Music contents revenue fell 3 percent on quarter but rose 4 percent on year to 156.8 percent.

Operating expense amounted to 1.1 trillion won, up 1 percent on quarter and 41 percent on year, largely due to hike in payrolls from new hires and aggressive marketing activities. Payroll expense totaled at 292.9 billion won in the first quarter, surging 47 percent from a year earlier.

By Cho Jeehyun

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