Kakao’s Q4 profits drop due to higher costs

Kakao’s Q4 profits drop due to higher costs

Concerns over Kakao’s profitability are on the rise in the market as the profits of the mobile messenger operator nosedived in the October-December period last year.

The company said in a regulatory filing on Friday that its net income over the three-month period plunged more than 80 percent year-on-year to 10.2 billion won ($8.5 million) while the firm’s operating income in the same period stood at 20.4 billion won, down 68.8 percent from a year earlier. The quarterly revenue came in at 241.7 billion won, down 4.9 percent year on year.

“Increased marketing costs and investments for services launched last year and those currently in the pipeline attributed to the profit drops,” a Kakao public relations representative said.

For the full fiscal year of 2015, the company saw its net income decrease 45.3 percent year-on-year to 77.2 billion while the firm’s operating income dropped to 88.4 billion won, down 57.7 percent from year earlier.

The annual revenue stood at 932.1 billion won, up 3.75 from a year earlier.

The company said its mobile businesses, which accounted for 55 percent of its entire sales last year, were attributable to the sales increase.

Since taking the helm of the company in August last year, Kakao CEO Rim Ji-hoon has been focusing on growing mobile businesses more than before.

The firm has been ramping up its marketing efforts for offline-to-online businesses including mobile payment solution KakaoPay, and taxi hailing services KakaoTaxi and KakaoTaxi Black, which were launched in March and November, respectively.

As expenses have gone up due to labor costs, advertising and content fees for online-to-offline businesses, Kakao spent 221.3 billion won in operating cost in the fourth quarter, according to the firm.

The company said it would continue to make investments in a range of sectors, including games, commerce, and financial technology, or fintech, to secure new growth engines.

Most recently, it took over streaming music services platform operator Loen earlier this month by purchasing a 76.4 percent stake in the platform.

To further grow the mobile game businesses, the company will adopt a new advertisement model, and launch Kakao Friends IP games, which are developed based on mobile messenger emoticons Kakao Friends, the company said.

Kakao also plans to launch Kakao Driver, a chauffeur service, in the first half of this year.

Source : http://www.koreaherald.com/view.php?ud=20160205000570

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