Daum Kakao Corp., the operator of South Korea’s top mobile messenger, said Thursday its net profit more than halved from a year earlier due largely to increased marketing costs for newly launched services.
Net income reached 21.4 billion won ($18 million) in the April-June period, down 62 percent from 55.9 billion won the previous year, the company said in a statement.
The figure fell far short of the median consensus of 37.1 billion won in a poll by Yonhap Infomax, the financial news arm of Yonhap News Agency.
The IT giant revealed the on-year comparisons only through a press release instead of a regulatory filing, since Daum Communications Corp. and Kakao Corp. merged in October last year.
It booked 11.4 billion won in operating profit in the cited period, down 82 percent from a year ago. Sales gained 1 percent on-year to 226.5 billion won.
The weaker bottom line is attributable to a hike in operating costs, Daum Kakao said, including marketing expenses for new flagship products such as KakaoTaxi, a cab-hailing app launched in April that has been a success with a rapid growth in the number of users.
The company said its operating expenses soared 32 percent on-year to 215 billion won in the second quarter. It spent 19.7 billion won on marketing and promotion, more than doubling from 8.9 billion won the previous year.
A decline in sales from its faltering mobile games business weighed on the overall revenue, it added. Its sales came to 54 billion won, down 14 percent from a year ago as competition intensified.
In contrast, Daum Kakao posted robust growth in its mobile commerce business due to increasing demand for purchases through smartphones and the company’s aggressive push into more roll-outs of new mobile tools and content.
Sales from mobile commerce amounted to 13.7 billion won, up 55 percent from a year earlier.
The mobile revenue accounted for 52 percent of the entire sales, Daum Kakao said.
Its advertising revenue gained 2 percent to 150.7 billion won over the cited period, buoyed by firm demand for display ads and newsfeed-style ads that are widely used in its social network service platform KakaoStory.
Daum Kakao said it will keep up efforts in the second half to expand its foothold by coming up with more “lifestyle-oriented” platforms based on its 38 million KakaoTalk messenger users, which represents 76 percent of the country’s population.
It is preparing to roll out chauffeur call and delivery apps, which market watchers expect to be another gauge of Daum Kakao’s innovation in the mobile platform industry.
Regarding the envisioned mobile bank, being pursued with its financial partner Korea Investment Holdings Co., Daum Kakao hinted that it could raise its stake in the new investment from the current 10 percent.
The move comes after the financial authorities decided in June to allow non-financial firms to enter Internet-only banking to bolster the new business model combining banks and IT companies, known as FinTech.
On Wednesday, it unveiled a plan to start a high-end taxi-hailing service by signing deals with a related firm and industry guild. Analysts forecast that the luxury taxi call service will become a very lucrative profit source for Daum Kakao as it can be monetized, unlike KakaoTaxi which kicked off as a free service.
Shares of Daum Kakao gained 2.3 percent to 238,000 won as of 10:47 a.m. on Thursday from a day earlier. The earnings report came before the stock market opened. (Yonhap)
