Kakao recorded disappointing results in the first quarter of 2025, with operating profit dropping by 14.9 billion won compared to the same period last year. While its advertising business based on KakaoTalk grew, the overall content business, including music, webtoons, and media, faced struggles that hindered performance.
Kakao disclosed on the 8th that its consolidated performance in the first quarter of this year totaled revenue of 1.8637 trillion won and operating profit of 105.4 billion won. The operating profit margin is 5.7%. Compared to the same period last year, revenue decreased by 6.3%, while operating profit fell by 12.4%. Compared to the previous quarter, revenue decreased by 4.8%, while operating profit increased by 39.7%.
Kakao is operating its business divided into platform and content institutional sectors. In the first quarter of this year, revenue from the platform institutional sector amounted to 993 billion won, a 4% increase compared to the same period last year. Meanwhile, revenue from the content institutional sector was 870.7 billion won, a 16% decrease from the previous year.
Revenue from Talkbiz in the platform institutional sector increased by 7% year-on-year to 553.3 billion won. This includes Talkbiz advertising revenue for the first quarter, which totaled 286.1 billion won, reflecting a 3% increase compared to the same period last year. The revenue from business messages included in Talkbiz advertisements grew by 11%, driving this growth. The company noted that "the brand message product, which is sent based on customer marketing consent, is slated to launch in May," adding that "the growth trend is expected to accelerate from the second quarter of this year."
Sales from Talkbiz commerce, including gift-giving and Talk Deals, amounted to 267.2 billion won, a 12% increase compared to the previous year. The company explained that this was due to the direct purchase operation of popular products for the Lunar New Year and an increased share of Kakao Shopping Live, which is highly profitable. The integrated transaction amount for commerce in the first quarter of this year recorded 2.6 trillion won, a 3% increase from the same period last year. The transaction amounts for gift-giving and Talk Deals increased by 4% and 5%, respectively, compared to the previous year.
Revenue from other platform services, including mobility and payments, was reported at 365.6 billion won, a 3% increase year-on-year. In the mobility sector, parking and quick service continued to show growth, while payments achieved double-digit revenue growth across all areas.
Kakao identified the 16% decrease in revenue from the content institutional sector compared to the previous year as primarily attributable to "differences in artist activities." It explained that activities of its affiliated artists were concentrated last year and in the previous quarter, resulting in a base effect that led to the revenue decline. Within the content institutional sector, music revenue was 437.9 billion won, down 6% from the same period last year.
Revenue from storytelling, including webtoons and web novels, showed a decrease of 6% year-on-year, totaling 212.6 billion won. Media revenue also fell by 21%, recording 75.1 billion won. The company explained that this was due to "a slowdown in the broadcast advertising market and a reduction in content investment."
Kakao pointed to artificial intelligence (AI) as a core business moving forward. It plans to expand new AI services, starting with the private beta testing of "KanaNa", into shopping and local sectors. The business strategy aims to enhance platform convenience by integrating AI into vertical service areas. To accomplish this, Kakao is collaborating with OpenAI, the company behind ChatGPT. The two companies plan to unveil products developed together sequentially.
The company stated that "the new AI services are expected to create additional synergies through strong integration with existing businesses or by creating user contexts that did not previously exist on the Kakao platform, thereby enhancing user engagement."
Kakao also plans to actively promote the evolution into a "super app" by enhancing KakaoTalk's content services and social features. To this end, it will launch the "discovery area" in the third tab of KakaoTalk during the second half of the year.
Chung Shina, the representative of Kakao, said, "This year, Kakao will sequentially introduce various experiments and initiatives we are preparing, laying the foundation for AI to become a new growth engine for Kakao."