Kakao's operating profit in the fourth quarter of last year saw a decrease rate in the 30% range due to the one-time bad debt expense (unrecoverable accounts receivable) caused by the 'Time Flop incident.' The decline in content sales, including music and KakaoStory, also affected the poor performance.
On the 13th, Kakao announced that its consolidated revenue in the fourth quarter of last year was 1.9591 trillion won, with an operating profit of 106.7 billion won. This represents a decrease of 2% and 33.7%, respectively, compared to the same period last year. Kakao explained that the significant drop in operating profit was due to the one-time bad debt expense of Kakao Pay caused by the 'Time Flop incident.'
Kakao's annual revenue last year reached 7.8738 trillion won, an increase of 4.2% from the previous year. Its operating profit rose by 6.6% to 491.5 billion won, resulting in an operating profit margin of 6.2%. Kakao noted that if the bad debt expense from the 'Time Flop incident' is adjusted, the annual operating profit would be 523 billion won, a 13.5% increase from the previous year, and the operating profit margin would also rise to 6.6%.
On a separate basis, last year's annual revenue was 2.5951 trillion won, with an operating profit of 496.5 billion won. Revenue increased by 3.8% compared to the previous year, while operating profit decreased by 6.9%. Excluding the operating loss in the artificial intelligence (AI) sector, which was reflected from June last year due to the acquisition of Kakao Brain, the operating profit improves to 558.6 billion won, up 4.8% from the previous year.
In terms of business divisions, Kakao's platform sector revenue for the fourth quarter of last year was 1.0485 trillion won, marking a 10% increase compared to the same period last year. Within the platform sector, the Talk Biz revenue was 562.7 billion won, a 5% increase compared to the same period last year. The advertising revenue from Talk Biz, including Biz Board and Business Message, was 321.2 billion won, also up 5% year-over-year. The revenue from transaction-type (commerce) services, such as gifting and Talk Deal, was 241.6 billion won, representing a 4% increase compared to the same period last year. The total transaction amount in commerce for the fourth quarter of last year was 27 trillion won, a 3% increase year-over-year.
The revenue from platforms other than mobility and pay amounted to 403.1 billion won, up 22% compared to the same period last year, while portal business revenue, including Daum, decreased by 6% to 83.2 billion won.
The revenue in the content sector for the fourth quarter of 2024 was 910.1 billion won, a 13% decrease compared to the same period last year. Among this, music revenue declined by 6% to 470.2 billion won. Story revenue was 203.0 billion won, down 5% from the previous year, and media revenue was 73.9 billion won, a decline of 25%. The deepening vacancy in the IP lineup is the main reason.
Kakao plans to introduce various forms of B2C (business-to-consumer) AI services within the Kakao ecosystem this year. Collaboration with OpenAI is underway, and Kanana is expected to be publicly released after user closed beta testing in the first half of the year. An AI mate within KakaoTalk will also be officially launched in the first half of the year. Furthermore, due to expected business uncertainties in the content sector this year, Kakao intends to focus not only on improving financial soundness but also on strategies of selection and concentration.
CEO Jeong Shin-a said, 'This year, Kakao intends to sequentially unveil new services,' adding, 'We will actively pursue growth focused on the core of KakaoTalk and AI.'