Korean mobile platform giant Kakao made a modest income gain in the second quarter on stable revenue from existing apps and flouring content services despite aggressive spending to expand global presence and skirmish with Google over in-app purchase fee.

Kakao on Thursday reported a consolidated operating income of 171.0 billion won ($130.8 million) for the second quarter ended June 30, 2022, rising 7.8 percent from the previous quarter and 5.2 percent from a year earlier.

Revenue came to 1.8 trillion won, up 10.3 percent on quarter and 34.8 percent on year.

The result is roughly in line with analysts’ estimate of 171.9 billion won operating income and 1.8 trillion won revenue compiled by local financial data tracker Yonhap Infomax.

On Thursday, Kakao shares rose 7.1 percent to close at 81,400 won.

Growth was even across the board.

The platform division, operating various mobile platform services via the country’s dominant chat app Kakao Talk, generated 930.7 billion won in the second-quarter revenue, up 5 percent on quarter and 22 percent on year.

It expanded with an added feature of Open Chat, which lets a user join a chat room by clicking a link that can be shared on social media and other online channels. Open Chat already has attracted 9 million active monthly users without any special promotional events, said Kakao Chief Executive Officer Namgoong Hoon at the conference call. The company is planning to separate out Open Chat as an independent app, he added.

Revenue from its Talk Biz, running Kakao Talk-linked advertisement and e-commerce services, fell 2 percent on quarter but jumped 16 percent on year to 453.2 billion won. Advertisement sales from Kakao Talk Channel and Biz Board rose 28 percent on year while e-commerce service added a 2 percent growth in sales.

Google’s policy of charging fees on in-app purchases and banning app operators from using outlink for redirecting purchases damaged emoticon sales. The number of new users for its monthly emoticon subscription service has dropped to one-third, said Namgoong.

The company will closely monitor the further impact of Google’s policy change while running additional promotional events.

The Portal Biz contributed 102.4 billion won in revenue, down 10 percent on quarter and 18 percent on year.

Other platform services delivered 375.1 billion won in revenue, up 21 percent on quarter and 52 percent on year, mainly due to higher income from mobile wallet Kakao Pay. Kakao T, running taxi-hailing and other transportation-related services, also saw an improvement in demand. The company has been testing Zigzag Global, its fashion-beauty online store platform targeting overseas consumers, in July ahead of its official launch in September, Kakao Chief Investment Officer Bae Jae-hyun said, joining the conference call.

The content division, overseeing game to cartoon services, recorded 891.7 billion won in revenue, up 16 percent on quarter and 51 percent on year.

The Story, servicing digital cartoons delivered 227.6 billion won in revenue, down 5 percent from the previous quarter, as weak Japanese yen hurt its revenue from its web cartoon operation in Japan. Against a year-ago, sales gained 22 percent.

The Story platform’s gross merchandise value from overseas expanded by nearly 80 percent, according to Bae. The monthly user count of Piccoma, its e-comics service in Japan, has exceeded 9.5 million and the monthly transaction amount hit a record high of 8 billion Japanese yen ($60 million)

Music service reported 209.3 billion won in revenue, up 2 percent on quarter and 11 percent on year. Revenue from the media service rose 57 percent on quarter and 35 percent on year to 118.0 billion won.

Game business delivered 336.8 billion won in revenue, up 37 percent on quarter and a whopping 162 percent from a year ago, primarily due to additional incomes from the Taiwan market roll-out of “Odin: Valhalla Rising” and the launch of “Uma Musume Pretty Derby” in Korea.

Kakao estimated its operating expense at 1.65 trillion won for the second quarter, up 11 percent on quarter and 39 percent on year. The increase is mainly due to marketing costs for the global expansion of its content business.

By Cho Jeehyun

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