Kakao's Q1 2025 Operating Profit Falls 12% YoY to ₩105.4 Billion

Kakao announced its Q1 2025 earnings, reporting a revenue of KRW 1.8637 trillion, a 6% decrease year-on-year, and an operating profit of KRW 105.4 billion, down 12%. However, operating expenses were also reduced by 6%, demonstrating efforts to protect profitability. Despite challenging conditions, the platform sector showed robustness, growing by 4% to KRW 993 billion. In particular, Talk Biz revenue, a core component, increased by 7% to KRW 553.3 billion. Talk Biz Ads recorded a 3% increase to KRW 286.1 billion, with business messages growing by 11% and playing a significant role. The 'Brand Message' service, set to launch in May, is expected to accelerate future growth. Talk Biz Commerce revenue, including Gift하기 (Gifting) and Talk Deal, surged by 12% to KRW 267.2 billion, driven by the Lunar New Year holiday special and an increased proportion of shopping live streams. Total commerce transaction volume increased by 3% to KRW 2.6 trillion, with Gift하기 and Talk Deal transaction volumes growing by 4% and 5% respectively. Other platform sectors, including Mobility and Kakao Pay, also grew by 3% to KRW 365.6 billion. Notably, Kakao Pay continued its high growth, showing double-digit revenue growth across all areas. In contrast, the content sector suffered a decline, decreasing by 16% to KRW 870.7 billion. Music revenue decreased by 6% due to a base effect from a focus on artist activities last year, and story revenue also fell by 6%. Media revenue plummeted by 21% due to a slowdown in the broadcast advertising market and a contraction in content investment, impacting overall performance. Kakao also presented a blueprint for future growth. KakaoTalk plans to evolve into a 'super app' by enhancing content and social features through the launch of the 'Discovery Area' in the second half of the year, aiming to increase user retention time. The company is betting its future on AI as a core growth engine. Starting with the CBT (Closed Beta Test) of the new AI service 'Kanana', Kakao plans to successively introduce various AI products such as AI Mate (shopping, local) and generative search. The strategy is to maximize user engagement by creating new user experiences and synergies with existing businesses. CEO Jung Shin-a emphasized the commitment to lay the foundation for AI to firmly establish itself as Kakao's new growth engine, promising to showcase the fruits of various experiments and endeavors throughout this year.