Kakao Corp (XKRX:035720) Q3 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Consolidated Revenue: KRW1.9 trillion, a 4% decrease YoY.

  • Operating Profit: KRW130.5 billion, a 5% increase YoY.

  • Platform Revenue: KRW944 billion, up 7% YoY.

  • Talk Biz Revenue: KRW507 billion, up 6% YoY.

  • Ad Revenue under Talk Biz: KRW292 billion, up 4% YoY.

  • Commerce GMV: KRW2.5 trillion, up 5% YoY.

  • Commerce Revenue: KRW215 billion, up 8% YoY.

  • Content Revenue: KRW978 billion, down 14% YoY.

  • Operating Expenses: KRW1,791 billion, down 5% YoY.

  • Net Profit: KRW78.5 billion.

  • CapEx: KRW90 billion, down KRW80 billion QoQ.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kakao Corp (XKRX:035720) reported a 5% year-on-year growth in operating profit, reaching KRW130.5 billion.

  • The Platform segment, particularly Talk Biz within KakaoTalk, maintained solid growth despite challenges in the advertising market.

  • Business messaging revenue saw a 21% year-on-year increase, driven by a 10% rise in active advertisers and a 17% increase in Talk Channel friends.

  • Kakao Healthcare's PASTA app reported 130,000 downloads within nine months, establishing itself as a key app for diabetes management.

  • Kakao is actively developing AI services, with plans to integrate AI into KakaoTalk and launch new AI-powered services next year.

Negative Points

  • Consolidated revenue for Kakao Corp (XKRX:035720) decreased by 4% year-on-year, totaling KRW1.9 trillion.

  • The Content segment underperformed, with a 14% year-on-year decline in content revenue.

  • Talk Display ad revenue fell by 1% year-on-year due to a sluggish domestic economy and increased competition.

  • Kakao Games faced challenges, with no new game titles expected in Q4, impacting revenue.

  • The media revenue dropped by 49% year-on-year, affected by delays in production schedules and a sluggish advertising market.

Q & A Highlights

Q: When will the official service launch for Kanana be, and what is the company's monetization model for this AI service? Are there concerns about potential cannibalization with KakaoTalk? A: Shina Chung, CEO, stated that a closed beta test for Kanana will begin before the end of the year, with a user beta test expected in the first quarter of next year. The monetization model is likely to be subscription-based, but details will be finalized after user feedback. There are no concerns about cannibalization with KakaoTalk, as Kanana serves as an AI interaction tool distinct from KakaoTalk's messaging function.

Q: What is the outlook for the fourth quarter, excluding seasonality, and can you provide more details on Kakao Healthcare's financials and metrics? A: Jayden Shin, CFO, indicated that Talk Biz is expected to continue its upward trend due to high seasonality and solid fundamentals. However, uncertainties in the ad market persist. Kakao Healthcare's PASTA app has seen 60% growth QoQ, with a significant market share in the CGM market. The data platform business is expected to contribute to sales starting in the second half of next year.

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