Kakao set record quarterly revenue and operating profit in the third quarter this year, powered by "Talk Biz," which runs advertising and commerce on KakaoTalk, and the "platform" revenue that includes Kakao Pay. It surpassed both revenue and operating profit from the previous second quarter, which had been a record high. The "music" institutional sector, which includes SM Entertainment, and the "media" institutional sector, which handles video production and management, also grew significantly, further boosting results.
Kakao said in a filing on the 7th that consolidated revenue for the third quarter this year was 2.08658 trillion won and operating profit was 208.048 billion won. Those figures were up 8.6% and 59.4%, respectively, from a year earlier. Net profit for the period jumped 145.6% from a year earlier to 192.863 billion won.
Kakao's third-quarter results beat securities industry forecasts. According to FnGuide, securities analysts expected Kakao to post third-quarter revenue of 2.0215 trillion won and operating profit of 163.7 billion won this year. Those figures would have been up 5.21% and 25.38%, respectively, from a year earlier. Net profit for the period was projected at 136.3 billion won, up 73.63% from a year earlier.
Revenue in the platform institutional sector, which includes KakaoTalk, Gifts, and Kakao Pay, came to 1.0598 trillion won, up 12% from a year earlier.
Within the platform institutional sector, Talk Biz revenue rose 7% from a year earlier to 534.4 billion won. In particular, Talk Biz advertising revenue was 325.4 billion won, up 11% year over year. That was thanks to business message revenue rising 22% from a year earlier, resetting the all-time quarterly high after the previous quarter. Talk Biz commerce revenue, including Gifts and Talk Deal, was 208.7 billion won, holding at a similar level to a year earlier. Transaction value for Gifts grew 1% from a year earlier. That is because the Chuseok holiday fell in October this year, pushing the seasonal peak effect into the fourth quarter. Self-purchase transaction value within Gifts increased 40% from a year earlier, and commerce gross merchandise value also rose 4% year over year to 2.5 trillion won.
Other platform revenue, which includes Kakao Mobility and Kakao Pay, rose 24% from a year earlier to 452.7 billion won. In particular, Kakao Pay accelerated its year-over-year revenue growth, as revenue at financial subsidiaries including securities and insurance increased and data-based platform services performed well. Quarterly operating profit also hit a record high.
Portal Biz revenue, which includes Daum and KakaoStory, fell 5% from a year earlier to 73 billion won.
Revenue in the content institutional sector, another pillar of Kakao's business, was 1.0267 trillion won in the third quarter, up 5% from a year earlier. Revenue from music, which includes SM Entertainment and Melon, and media, which conducts video production and management, rose 20% and 75% year over year to 565.2 billion won and 95.8 billion won, respectively. In music, major artists continued solid performances, while in media, revenue recognition from deferred titles and higher production progress were reflected.
However, in the story business, which includes games and Piccoma, third-quarter revenue this year fell 34% and 3% year over year to 154 billion won and 211 billion won, respectively.
Kakao is building an "agentic AI" ecosystem that allows users to achieve their goals and carry out actions through conversation with artificial intelligence (AI). To that end, it launched the "ChatGPT for Kakao" service, applying "Kanana in KakaoTalk," which can identify user intent within conversational context, and the AI agent "Kakao Tools," which integrates with Kakao Map, Gifts, Melon, and more.
To expand the AI ecosystem, Kakao plans to link major business-to-consumer (B2C) services within the group, such as finance and mobility, to "Kakao Tools." The company also said it plans to build a foundation that allows anyone to participate in Kakao's AI ecosystem through "Play MCP" and "AI Agent Builder."
For KakaoTalk, the plan is to complete the revamp of the Friends tab during the fourth quarter. In September, Kakao carried out a sweeping overhaul of Kakao, changing the friends list to an Instagram-like feed format. As user complaints continued, the company said it will reflect that feedback and revert the friends list to a list format. The company added that, beyond this, it will enhance customized folder functions and expand the AI summarization service, among other convenience features, to progressively elevate the KakaoTalk messaging experience.
Kakao CEO Chung Shin-a said, "This year, we completed the work of making Kakao's group governance more efficient while solidifying the existing business portfolio," and added, "Starting next year, we aim to show AI evolving into the most important new revenue source that secures sustainable growth."