Kakao (035720) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated revenue reached KRW 2,005 billion, up 4% year-over-year and 0.8% sequentially, with platform and content segments contributing 48% and 52% respectively.

• Operating profit was KRW 134 billion, up 19% year-over-year and 11% quarter-over-quarter, with an operating margin of 6.7%.

• Net profit attributable to controlling interests for Q2 2024 was KRW 87 billion, up 59% year-over-year and 29% sequentially.

• Monthly active users in Korea reached 48.93 million, increasing by 725K year-over-year.

• Business reforms, AI innovation, and a focus on core businesses are prioritized for sustainable long-term growth.

Financial highlights

• Platform revenue was KRW 955 billion, up 10% year-over-year; TalkBiz revenue was KRW 514 billion, up 7% year-over-year but down 2% sequentially.

• Content revenue was KRW 1,050 billion, flat year-over-year and up 2% sequentially; music revenue increased 6% year-over-year and 9% sequentially.

• Commerce GMV was KRW 2.4 trillion, up 6% year-over-year; luxury brand GMV up 12% year-over-year.

• Ad revenue grew 9% year-over-year and 10% quarter-over-quarter; business messaging posted 16% year-over-year growth.

• Operating expenses increased 3% year-over-year, with notable rises in marketing and depreciation/amortization.

Outlook and guidance

• TalkBiz expected to maintain solid growth in business messaging and gifting, despite Q3 advertising seasonality.

• Continued investment in AI, data centers, and server networks to support future growth.

• Content profit contribution from Kakao Entertainment to improve, but Kakao Games to remain impacted by lack of new releases.

• Labor costs to remain stable; marketing spend flat; CapEx and infrastructure costs to rise in H2 due to AI and data center investments.

• Operating loss for Kakao Enterprise expected to improve; healthcare business operating loss may widen.