EUGENE INVESTMENT & SECURITIES said on the 10th that after the KakaoTalk revamp, which had triggered user backlash, time spent on the app increased, so there was an effect, and it analyzed that the rebound in the platform growth rate is positive. It maintained a target price of 74,000 won and a "buy" investment opinion. Kakao's closing price on the previous trading day was 62,800 won.
Kakao posted revenue of 2.09 trillion won and operating profit of 208 billion won in the third quarter of this year. Those figures rose 9% and 59%, respectively, from a year earlier. Operating profit beat the market consensus of 163.7 billion won.
Jeong Ui-hun, an analyst at EUGENE INVESTMENT & SECURITIES, said, "Significantly increased business message revenue drove overall growth in the advertising institutional sector," and explained, "It appears the effect of marketing execution reflecting the policy of issuing domestic consumption coupons in the third quarter was included."
Commerce revenue dipped slightly as delivery timing was deferred to the fourth quarter due to the Chuseok holiday period. In the platform other institutional sector, revenue jumped 24% from a year earlier, marking high growth. The impact was significant from Pay, which recorded its highest-ever quarterly operating profit thanks to revenue growth at financial subsidiaries, and from Mobility, which maintained solid growth.
In the content institutional sector, excluding the game institutional sector, which failed to produce a hit with new titles and saw revenue from existing games decline, revenue increased in the music institutional sector, supported by SME's results, and in the media institutional sector, which benefited from recognizing revenue from deferred works.
Jeong said, "After the KakaoTalk revamp, app time spent rose from 24 minutes to 26 minutes, so there was an effect," adding, "Even with the re-revamp scheduled for this year, the Chat tab and Now tab will be maintained, so it should be possible to defend against a decline in time spent."
Jeong noted that as the trend of strengthening content profitability continues, he focused on the point that the platform growth rate is rebounding. He said, "Fourth-quarter results are expected to see operating profit decline from the third quarter as year-end expense execution increases, but a more meaningful indicator for the share price than fourth-quarter results is the artificial intelligence (AI) service metrics."
He added, "The initial metrics of 'ChatGPT for Kakao,' which has surpassed 2 million service users, are not bad, but considering KakaoTalk's monthly active users (MAU), more service users and paid subscriber metrics are needed."