Kakao Corp (XKRX:035720) Q2 2024 Earnings Call Highlights: Strong Revenue Growth and AI ...

GuruFocus News
4 min read

In This Article:

  • Consolidated Revenue: KRW 2,005 billion, up 4% year-over-year.

  • Operating Profit: KRW 134 billion, up 19% year-over-year.

  • Platform Revenue: KRW 955 billion, up 10% year-over-year.

  • Talk Biz Revenue: KRW 514 billion, up 7% year-over-year.

  • Ad Revenue: KRW 307 billion, up 9% year-over-year.

  • Commerce GMV: KRW 2.4 trillion, up 6% year-over-year.

  • Content Revenue: KRW 1,050 billion, flat year-over-year.

  • Operating Expense: KRW 1,871 billion, up 2% year-over-year.

  • Labor Cost: KRW 481 billion, up 2% year-over-year.

  • Marketing Expense: KRW 1.8 billion, up 8% year-over-year.

  • Depreciation and Amortization: KRW 207 billion, up 8% year-over-year.

  • Operating Profit Margin: 6.7%, up 0.8 percentage points year-over-year.

  • CapEx: KRW 1.73 billion, down KRW 68 billion year-over-year.

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) 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.

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