Kakao posts record quarterly revenue and operating profit

Kakao posted its highest quarterly revenue and operating profit on record in the second quarter, driven by advertising and commerce on messaging app KakaoTalk, its core business, the local tech giant announced on Thursday.

The company also stated that it will not invest in any AI infrastructure — a contrast from its rival Naver, which is partnering with Nvidia to build large-scale AI data centers. Instead, Kakao plans to spend on consumer AI services built into its app.

Its revenue rose 9.4 percent from a year earlier to 2.1 trillion won ($1.5 billion), and its operating profit jumped 35.9 percent to 277 billion won. Both figures were quarterly records.

Its net profit for the quarter fell 89.5 percent from a year earlier to 18 billion won.

The comparison is based on Kakao’s continuing operations. Kakao Games left the consolidated group this year after Japan’s LY became its largest shareholder, so it is now considered a discontinued operation.

Platform revenue — the larger of Kakao’s two segments, platform and content — rose 17 percent to 1.2 trillion won. TalkBiz, the unit that sells advertising on KakaoTalk and runs the messenger’s store and gifting services, brought in 643.2 billion won of that total, marking a 12 percent on-year increase.

Within TalkBiz, advertising and subscription revenue climbed 14 percent, business messaging revenue 20 percent and display advertising revenue 28 percent.

Combined transaction value across the gifting service and Talk Deal reached 2.7 trillion won, up 9 percent. Purchases that shoppers made for themselves rather than sending as gifts rose 39 percent, the fastest growth in the commerce business. Commerce revenue, which is Kakao’s cut rather than the full value of the goods, rose 10 percent to 243.2 billion won.

Other platform revenue, which covers Kakao Mobility and Kakao Pay, rose 22 percent to 587 billion won. Kakao Pay reported its own record quarterly revenue and operating profit on Tuesday.

Kakao also said that it does not plan to expand into AI infrastructure such as data centers and GPU cloud services.

“We concluded that infrastructure is not the area in which Kakao would be most competitive in the AI era,” CEO Chung Shin-a said. “The return on investment that we could expect in the future is not enough to justify the short-term financial burden.”

The company will instead center its AI business on consumers and agentic AI, or systems that judge and perform tasks on their own without a user giving instructions at each step.

“Building AI services that people use every day is what Kakao can do best,” Chung said.

This is a different course from Naver, which operates Korea’s most-used search engine. Naver has been concentrating its spending on infrastructure with an “AI factory” project with Nvidia in the works.

Kakao also said that it signed a partnership with Coupang Eats to launch a service that allows users to receive food recommendations from an AI agent in a KakaoTalk chat room, then order and pay for the meal without switching apps. The company plans to extend this model to commerce, reservations and travel.

The market response since Kakao’s quarterly announcement, however, has been muted. Kakao shares were down about 2 percent as of 11 a.m., which is after the results were released.

“It’s positive that we could confirm [Kakao’s] earnings growth, but its AI strategy has not yet taken shape at the level that investors hoped for,” said Oh Dong-hwan, an analyst at Samsung Securities.

“Market interest in data centers that supply infrastructure has grown, as have forecasts of falling chip prices. The strategy of staying out of the infrastructure business is also feeding into [the market reaction].”

BY SUNG JI-WON [[email protected]]