Kakao Q1 Profit Slips 12% as Content Business Struggles

Seoul, South Korea - Kakao Corp reported a 12% year-on-year decline in first-quarter operating profit on Thursday as its content business faltered despite growth in platform services.

Operating profit fell to KRW 105 billion (US$71.3 million) in January-March from KRW 120 billion a year earlier, but rose 40% from the previous quarter.

Overall revenue decreased 6% to KRW 1.86 trillion, with content business revenue dropping 16% to KRW 871 billion, while platform revenue grew 4% to KRW 993 billion.

The gaming division showed the steepest decline, with revenue plunging 40% to KRW 145 billion due to underperforming new and existing titles.

Net profit jumped to KRW 191 billion from KRW 68 billion a year earlier, partly due to a KRW 53.7 billion gain from the disposal of an equity stake.

The company's messaging app KakaoTalk maintained 49.1 million monthly active users in South Korea, marginally higher than 48.7 million a year ago.

According to the company, Kakao Pay recorded its first quarterly operating profit.

Operating expenses decreased 6% to KRW 1.76 trillion year-on-year as the company reduced its workforce by 638 to 16,559 employees.

The company's commerce transactions totaled KRW 2.6 trillion, a 3% increase from the previous year.

Capital expenditures rose to KRW 135 billion in the quarter, driven by increased investment in artificial intelligence and data centers.

(US$1 = KRW 1,471.91)