Kakao (035720) Q4 2023 earnings summary

Executive summary

• Q4 revenue reached KRW 2,171bn, up 23.0% YoY; operating profit rose 108.6% to KRW 189bn, while net loss was KRW 1,658bn.

• FY23 revenue grew 14.2% to KRW 8,106bn, while operating profit fell 10.9% to KRW 502bn and net loss was KRW 1,497bn.

Financial highlights

• Q4 operating margin was 8.7%, up 3.6 percentage points YoY; operating expenses rose 18.4% to KRW 1,982bn.

• FY23 operating expenses increased 16.3% to KRW 7,604bn; annual operating margin was 6.2%, down 1.7 percentage points.

• Q4 net loss included KRW 2.0tn of other expenses, including KRW 1.4tn goodwill impairment and KRW 270bn PPA impairment.

• Q4 consolidated adjusted EBITDAR was KRW 400bn, versus reported EBITDAR of KRW 393bn; adjusted EBITDAR includes equity compensation expense.

Segment performance

• Platform revenue was KRW 1,122bn in Q4, up 17.1% YoY; FY23 revenue rose 8.8% to KRW 4,096bn.

• Talk Biz Q4 revenue rose 13.8% YoY to KRW 582bn, with advertising growth from Bizboard and Talk Channel demand; Commerce GMV was KRW 2.6tn, up 9%.

• Content revenue was KRW 1,049bn in Q4, up 30.0% YoY; FY23 revenue grew 20.2% to KRW 4,010bn, including SM consolidation.

• Music revenue rose 116.7% YoY to KRW 499bn in Q4 and 92.9% to KRW 1,725bn for FY23; excluding SM, growth was 16.8% and 11.8%, respectively.

• Q4 Game revenue was flat YoY at KRW 231bn; Story fell 3.7% and Media fell 14.6% YoY.