Kakaopay's Surge: A Deep Dive into Q2 2023's Stellar Performance

Philip Lee -

Seoul, South Korea - Kakao Pay (KRX: 377300) posted impressive results in the second quarter of 2023.

Why it matters:

These numbers provide invaluable insight for industry strategists and investors looking to understand the company's growth trajectory.

The Key Points

1. Financials paint a positive picture:

  • Kakao Pay's Q2 report showed a total transaction value (TPV) of KRW 34.2 trillion (US$26.72 billion), up 18% year-on-year.
  • The company's consolidated revenue reflected this growth, increasing 11% year-on-year to KRW 148.9 billion (US$116.32 million).

2. Service Businesses Show Broad Growth

  • TPV revenue, a key indicator of business health, grew approximately 20% to KRW 9.9 trillion (US$7.73 billion).
  • Figures for all service lines were impressive. Payments grew by 18%, financial services by a robust 23%, and other services, including remittances, by 17%.
  • Strong growth in TPVs for overseas and offline payments was a key driver.

3. Cross-border payments - the star performer:

  • Revenues from cross-border payments grew by a staggering 90% year-on-year.
  • This is particularly noteworthy given the revival of travel, hospitality, and duty-free sectors in the post-COVID-19 landscape. The growth trend in cross-border payments is expected to continue.

4. User engagement and merchant network expansion:

  • The quarter saw a surge in user engagement metrics, with the platform reaching over 24 million MAUs, an increase of 11% year-over-year.
  • Also of note is the online and offline merchant network expansion, which grew 32% year-over-year and now includes 2.19 million merchants.

5. Revenues, expenses, and performance of subsidiaries:

  • Q2 revenues reached KRW 148.9 billion (USD 116.32 million), up 11.0% year-on-year and 5.2% quarter-on-quarter. This was supported by the 90.2% year-on-year increase in foreign payment receipts, mainly from foreign tourists flocking to Korea.
  • Despite the positive revenue trend, operating expenses increased by 10.1% year-on-year to KRW 161.4 billion (US$126.09 million) in the second quarter.
  • This escalation, mainly due to the expansion of payment service revenues, resulted in an operating loss of KRW 12.6 billion (US$9.84 million).
  • KakaoPay's subsidiaries, namely KakaoPay Securities and KakaoPay Insurance, showed commendable performance. In particular, the assets of KakaoPay Securities reached approximately KRW 2 trillion (US$1.56 billion).

The Big Picture:

Kakao Pay has reaffirmed its commitment to becoming the quintessential financial platform for everyday transactions.

Through synergy with strong financial partners, the company can strengthen its revenue streams and has a promising outlook for the future.

* US$1=KRW1280.06