#Asia Kakao sees drop in gaming, advertising revenue in Q3 2015


The South Korean tech company will continue investing in on-demand services, such as Kakao Taxi


South Korean technology company Kakao Corp, the firm behind its flagship chat app KakaoTalk, reported its third quarter revenue (July-September) yesterday, which came up to 229.6 billion KRW (about US$197 million).

Its operating profit for Q3 2015, which was calculated to be 16.1 billion KRW (about US$13.9 million) has gone down by 47 per cent, as compared to the same period last year, according to the Korea Herald.

Sales, on the other hand, went up by four per cent to 229.6 billion KRW (about US$197 million), as compared to Q3 2014.

According to the Nikkei Asian Review, the company saw its revenue from games go down by 24 per cent year-on-year to 51 billion KRW (about US$44 million). The decline is linked to Kakao’s offloading of its affiliate Onnet Co’s shares, reported Yonhap News Agency.

Image Credit: Kakao

Image Credit: Kakao

Kakao’s advertising revenue this quarter totalled 142 billion KRW (about US$122 million), which has taken a five per cent hit quarter-on-quarter.

At Kakao’s third quarter regulatory filing, Saehoon Choi, CFO, Kakao told investors and analysts present that revenue from advertisements is the company’s cash cow, but the firm did not manage to meet the market’s expectations in Kakao’s advertising business.

He added that Kakao intends to come up with fresh mobile advertisements to get its advertising revenue back on track.

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Kakao has also been investing in various new services like Kakao Taxi, which was launched in March this year.

There are now 180,000 registered drivers on the platform, which has facilitated 37 million booking requests in the last seven months. This “continued investment” has led to an increase in operating cost, which was reported to be 213.4 billion KRW (about US$184 million).

Its operating income for Q3 2015 is calculated to be 16.2 billion KRW, which is a 41.5 per cent increase quarter-on-quarter, but a 47.4 per cent year-on-year drop. It also reported its net income for the quarter to be 14.8 billion KRW (about US$13 million).

Kakao has gone through several management changes since it merged with Daum Communications to form Daum Kakao, led by Sirgoo Lee, then-CEO of Kakao, and Saehoon Choi, then-CEO of Daum. Both of them carried the Co-CEO title.

Then, in August 2015, Daum Kakao named Jihoon Rim its new CEO, rebranded itself as just ‘Kakao’, and saw the two Co-CEOs step down to take on other roles.

Most recently, Lee resigned after being indicted for his alleged failure to stop the sharing of child pornography on the platform.

Choi said, “Kakao and all the employees appreciate his efforts for the company and will always support him.”

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In the fourth quarter of 2015, Kakao will be investing more resources into its ‘on-demand’ businesses.

It also has plans to bridge the gap between different industries, such as finance and mobile, which may have something to do with its bid for a South Korean online banking license.

The post Kakao sees drop in gaming, advertising revenue in Q3 2015 appeared first on e27.

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