Kakao Games (293490) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated revenue fell 13% year-on-year and 4% quarter-on-quarter to KRW 235.6 billion, mainly due to underperformance of new game titles and continued losses from Kakao VX, with net income turning to a deficit of -11.7 billion Won.

• Operating profit dropped 89% year-on-year and 77% quarter-on-quarter to KRW 2.8 billion, reflecting sluggish new title launches and ongoing losses.

• Operates as a comprehensive game company, developing and publishing PC, mobile, and blockchain games, with additional business in golf and wireless communication devices.

Financial highlights

• Q2 2024 revenue: KRW 235.6 billion (YoY -13.1%, QoQ -4.3%); operating profit: KRW 2.8 billion (YoY -89.4%, QoQ -77.2%); net income: -KRW 11.7 billion.

• PC game revenue rose 37% year-on-year and 5% quarter-on-quarter to KRW 16.3 billion, driven by successful PUBG collaborations.

• Mobile game revenue declined 22% year-on-year and 17% quarter-on-quarter to KRW 134.5 billion, as focus shifted to user retention.

• Other revenue increased 22% quarter-on-quarter but fell 3% year-on-year to KRW 84.8 billion, with Kakao VX contributing KRW 36 billion and Sena Technologies KRW 48.8 billion.

• Operating expenses decreased 5% year-on-year and 1% quarter-on-quarter to KRW 232.8 billion; labor costs fell 3% year-on-year and 5% quarter-on-quarter to KRW 52 billion.

Outlook and guidance

• Multiple new titles scheduled for release from Q3 2024 through FY2026, including Chrono Odyssey, ArcheAge 2, and Path of Exile 2, targeting global expansion and genre crossover appeal.

• Focus on expanding global publishing, especially for blockchain and Web 3.0 games, and ongoing investment in R&D, AI, and new business areas.

• Marketing costs to remain controlled at around 6% of revenue for the year.