Kakao's Profit Plunges on Higher Costs; Revenue Rises

By Kwanwoo Jun

South Korean mobile-internet platform giant Kakao's profit plunged due to higher operating costs for the July-September period despite solid revenue growth.

Kakao's third-quarter net profit fell 64% from a year earlier to 49.49 billion won ($37.8 million), it said Thursday. That missed a FactSet-compiled consensus forecast of KRW96.60 billion.

Revenue during the quarter rose 16% from a year earlier, while operating profit edged down 6.7% year-over-year, said the company, which operates South Korea's top mobile messaging app Kakao Talk.

Kakao attributed the net profit drop to increased business costs to cover artificial-intelligence investments, one-off labor expenses and higher corporate taxes.

Operating costs increased 18% from a year earlier in the September quarter, it said.

Sales of paid content rose sharply and platform-based advertisements sustained steady growth though advertising markets remained sluggish in South Korea, it added.

Kakao's shares were 0.6% higher in morning trade after the quarterly results.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

November 08, 2023 21:54 ET (02:54 GMT)

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