13-02-2025
Kakao Corp (XKRX:035720) Q4 2024 Earnings Call Highlights: Navigating Challenges with AI Innovations
Q4 Consolidated Revenue: CNY 1.96 trillion, down 2% YoY, up 2% QoQ.
Annual Revenue 2024: CNY 7.87 trillion, up 4% YoY.
Platform Revenue Q4: CNY 1.05 trillion, up 10% YoY, 11% QoQ.
Talk Biz Revenue Q4: CNY 562.7 billion, up 5% YoY, 11% QoQ.
Q4 Advertising Revenue: CNY 321.2 billion, up 5% YoY, 10% QoQ.
Commerce GMV Q4: CNY 2.7 trillion, up 3% YoY, 8% QoQ.
Annual Commerce GMV 2024: CNY 10.1 trillion, up 5% YoY.
Portal Revenue Q4: CNY 83.2 billion, down 6% YoY, up 9% QoQ.
Content Revenue Q4: CNY 910.1 billion, down 13% YoY, 7% QoQ.
Operating Profit Q4: CNY 106.7 billion, OP margin 5.4%.
Adjusted Operating Profit Q4: CNY 138.2 billion, OP margin 7.1%.
Annual Operating Profit 2024: CNY 491.5 billion, up 6.6% YoY, OP margin 6.2%.
Net Loss Q4: CNY 276.9 billion.
Annual Net Loss 2024: CNY 43.6 billion.
CapEx Q4: CNY 100.7 billion.
Annual CapEx 2024: CNY 499.4 billion.
Warning! GuruFocus has detected 4 Warning Signs with XKRX:035720.
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Kakao Corp (XKRX:035720) plans to introduce new AI-powered features and services to enhance user engagement and create new business opportunities.
The company is collaborating with OpenAI to integrate advanced AI models, aiming to improve user experiences across its platform.
Kakao's business messaging service posted an 18% year-over-year revenue growth, indicating strong demand and increasing advertiser interest.
The company is focusing on expanding its commerce offerings, with plans to enhance personalized shopping experiences using AI.
Kakao Corp's mobility business showed robust growth, with improvements in taxi services and other mobility offerings contributing to increased revenue.
Kakao Corp's growth has been slowing due to structural limitations in its messaging platform, impacting user engagement and new business opportunities.
The company reported a decline in display ad revenue due to delayed economic recovery, highlighting challenges in the advertising sector.
Content revenue decreased by 13% year-over-year, with specific declines in the story and media businesses, indicating challenges in maintaining content profitability.
Kakao Corp faced a net loss in Q4 2024, partly due to goodwill impairments in its content business, affecting overall financial performance.
The company anticipates a challenging first quarter in 2025, with expected revenue deterioration due to slow seasonality and increased fixed costs.
Q: What is Kakao's growth strategy for its core businesses, particularly in advertising and commerce? A: Shina Chung, CEO, explained that the advertising market in Korea is facing challenges due to conservative GDP growth and economic confidence. Despite this, Kakao aims for double-digit growth in business messaging and plans to revamp Kakao Talk to increase traffic and business opportunities. For commerce, Kakao plans to optimize services to respond to changing consumer spending patterns, aiming for revenue and GMV growth similar to last year.
Q: Can you provide guidance for Kakao's revenue, cost, and profit for the first quarter and the year? A: Jaden Shin, CFO, noted that Q1 revenue might decline due to slow seasonality and a bottoming IP cycle. However, starting Q2, key revenue streams like business messaging and Talk gift are expected to grow, with a positive ad market seasonality. For the year, Kakao expects moderate growth in the first half and stronger financial results in the second half, driven by new services and AI-driven initiatives.
Q: What are Kakao's plans for AI-related new businesses, and how does it plan to enhance AI competitiveness? A: Shina Chung, CEO, stated that Kakao plans to launch a public CBT for its AI service, Kanana, in the first half of the year. The service will offer a differentiated experience by enabling interaction between multiple users and AI in group chat rooms. Kakao plans to invest in GPUs at a similar level to last year and will focus on smaller language models and model orchestration for cost efficiency.
Q: How does Kakao view the trend of open-source AI models, and will it incorporate such technologies? A: Shina Chung, CEO, mentioned that while open-source model enhancements are positive, they do not immediately lead to widespread consumer-facing AI services. Kakao has been using and tuning global open-source models and has developed a model orchestration strategy to efficiently apply these to its B2C AI services.
Q: What is Kakao's CapEx plan for AI and data centers, and how does it align with its strategic priorities? A: Jaden Shin, CFO, indicated that Kakao will continue to invest in AI and data centers to ensure long-term competitiveness and innovation. The company plans to maintain a conservative stance on spending while focusing on strategic investments in AI as a critical growth driver.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
