Kakao's first quarter results showed even growth in all sectors, but remained flat, falling short of analysts' expectations

Kakao’s first quarter results showed even growth in all sectors, but remained flat, falling short of analysts’ expectations

Kakao announced its first quarter 2022 earnings. Although all business divisions grew evenly compared to the first quarter of last year, they did not meet the market expectations, and the stock price remained flat.

Kakao announced on the morning of May 4 that its consolidated sales for the first quarter of 2022 increased by 31% from the first quarter of last year to 1.65 trillion won and operating profit was 158.7 billion won, up 1% from the same period last year. This is a 49% increase from the previous quarter. However, the level fell short of analysts’ expectations. Kakao’s sales and operating profit growth rates were 38.34% and 2.58%, compared to the same period last year, which was initially expected by the stock market.

Kakao achieved earnings improvement in both the ‘platform’ and ‘contents’ sectors. Except for the ‘Portal Biz’ sector, all grew evenly.

The platform division’s sales increased by 27% compared to the same period last year to 886 billion won. Among them, Talkbiz sales increased 23% to 461 billion won, leading the growth. Talkbiz is a term that encompasses all Kakao Talk advertisements such as biz board, Kakao Talk channel, emoticons, and gift giving. As brands or businesses are organically connected with consumers, demand in the advertising industry is pouring in. In fact, in this earnings announcement, it can be seen that the popularity of advertisements such as Bizboard and KakaoTalk channels increased by 32%, reflecting the popularity.

Sales in the content division recorded 765.7 billion won, up 36% from the same period last year. The sales of stories based on the success of the drama ‘Meet the Guy’, which was serialized on Kakao Page, increased, and the performance of Japanese webtoon and comic platform Kakao Piccoma also increased, updating the highest quarterly sales ever. Kakao Piccoma is a Japanese subsidiary of Kakao, and although it entered the Japanese webtoon market as a latecomer, it ranks first in market share and sales.

In addition, Kakao Music’s sales increased 11% year-on-year to 204.4 billion won, and media sales increased 3% to 75 billion won. Kakao game sales increased by 89% compared to the same period last year to 245.8 billion won. The profit effect of the mobile game ‘Odin’, which was introduced in Taiwan on March 29, is expected to be reflected in the second quarter.

At 11:20 am on May 4, Kakao is trading at 89,200 won, up 0.79% from the previous trading day. As Kakao announced results of uniform growth in almost all sectors, the stock price of Kakao rose more than 2% in the morning to jump to 91,900 won. However, he entered a strong trend as he returned the gains to follow-up reports that it did not meet market expectations.

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