Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kakao Corp (XKRX:035720, Financial) reported a 5% year-on-year growth in operating profit, reaching KRW130.5 billion.
- The Platform segment, particularly Talk Biz within KakaoTalk, maintained solid growth despite challenges in the advertising market.
- Business messaging revenue saw a 21% year-on-year increase, driven by a 10% rise in active advertisers and a 17% increase in Talk Channel friends.
- Kakao Healthcare's PASTA app reported 130,000 downloads within nine months, establishing itself as a key app for diabetes management.
- Kakao is actively developing AI services, with plans to integrate AI into KakaoTalk and launch new AI-powered services next year.
Negative Points
- Consolidated revenue for Kakao Corp (XKRX:035720) decreased by 4% year-on-year, totaling KRW1.9 trillion.
- The Content segment underperformed, with a 14% year-on-year decline in content revenue.
- Talk Display ad revenue fell by 1% year-on-year due to a sluggish domestic economy and increased competition.
- Kakao Games faced challenges, with no new game titles expected in Q4, impacting revenue.
- The media revenue dropped by 49% year-on-year, affected by delays in production schedules and a sluggish advertising market.
Q & A Highlights
Q: When will the official service launch for Kanana be, and what is the company's monetization model for this AI service? Are there concerns about potential cannibalization with KakaoTalk?
A: Shina Chung, CEO, stated that a closed beta test for Kanana will begin before the end of the year, with a user beta test expected in the first quarter of next year. The monetization model is likely to be subscription-based, but details will be finalized after user feedback. There are no concerns about cannibalization with KakaoTalk, as Kanana serves as an AI interaction tool distinct from KakaoTalk's messaging function.
Q: What is the outlook for the fourth quarter, excluding seasonality, and can you provide more details on Kakao Healthcare's financials and metrics?
A: Jayden Shin, CFO, indicated that Talk Biz is expected to continue its upward trend due to high seasonality and solid fundamentals. However, uncertainties in the ad market persist. Kakao Healthcare's PASTA app has seen 60% growth QoQ, with a significant market share in the CGM market. The data platform business is expected to contribute to sales starting in the second half of next year.
Q: Can you sustain the steady growth in commerce, and how long can the growth in messaging ads continue despite the unfavorable market?
A: Shina Chung, CEO, acknowledged the challenging market conditions but emphasized Kakao's potential for growth due to its influence and traffic. Business messaging is expected to sustain double-digit growth, driven by expansion into financial verticals. The company plans to focus on subscription services like Emoticon Plus and Talk Drive Plus for steady growth.
Q: What are the growth strategies for KakaoTalk Gift and non-gift commerce?
A: Shina Chung, CEO, outlined plans to increase self-gifting and expand gifting occasions. The company aims to enhance personalized shopping curation and build a participatory commerce community. Upgrades to the shopping tab will focus on personalized product recommendations and community-driven commerce content.
Q: How is Kakao addressing the macroeconomic challenges affecting the ad and commerce markets?
A: Shina Chung, CEO, noted that despite macroeconomic headwinds, Kakao plans to release new services to strengthen user engagement and provide appropriate business models to drive growth. The company is focused on leveraging its influence and traffic to capture a larger share of marketing budgets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
