Kakao, the operator of Korea’s most popular mobile messenger, saw its operating income plummet 56 percent year over year to 73 billion won (US$64.9 million) in 2018, according to a regulatory filing on Feb. 14.
The firm attributed the decline to marketing costs for new businesses and year-end bonuses. Despite the plunge, the company logged record revenue of 2.42 trillion won in the year.
In the fourth quarter of last year, Kakao’s operating profit dropped 88 percent on-year to 4.3 billion won, while revenue stood at 673 billion won, up 12 percent on-year.
Some market watchers said the currently stalled carpooling service Kakao Carpool also undermined the bottom line. Kakao runs a mobility platform encompassing a taxi-hailing service, a navigation app, and a chauffeur service. Late last year, its subsidiary Kakao Mobility conducted a test run of a carpooling service in Seoul, but faced strong backlash from taxi companies and cab drivers. Following tragic incidents, including the deaths of two cab drivers by suicide, the firm suspended the test run of the carpooling service.
“Kakao Mobility is currently participating in a committee for resolving the standoff between Kakao and taxi industry,” said Kakao CEO Yeo Min-soo on a conference call with analysts on Thursday, adding “It is not appropriate to mention whether to resume the carpooling service or not since the negotiations are underway.
Kakao said operating profit would rebound from the second quarter this year with new advertising models being introduced on its mobile platform.
By Kim Young-won (firstname.lastname@example.org)