Kakao Games reports sharp drop in Q2 earnings as hits dry up

[Courtesy of Kakao Games Corp.]

Kakao Games has reported significantly lower-than-expected earnings for the second quarter of 2024, primarily due to the absence of successful new releases. The company announced on Wednesday that its consolidated operating profit for the April to June period was provisionally estimated at 2.8 billion won ($2.03 million), down by 89.43 percent from a year ago. This figure is 67.4 percent below the market forecast of 8.6 billion won compiled by Yonhap Infomax.

Revenue for the quarter stood at 235.6 billion won, down by 13.1 percent year-on-year. The company also reported a net loss of 11.7 billion won, marking a return to the red.

The mobile game segment saw revenues of 134.5 billion won, down by 21.8 percent year-on-year and 16.6 percent quarter-on-quarter due to the lack of new successful releases and the natural decline of long-service titles. Conversely, the PC game segment performed better, with revenues of 16.3 billion won, a 37.3 percent year-on-year increase and a 4.8 percent quarter-on-quarter rise, thanks to a major collaboration event for “Battlegrounds.”

Other revenues, including those from subsidiaries like Kakao VX and Sena Technologies, totaled 84.8 billion won, a 2.9 percent decrease year-on-year but a 22.2 percent increase quarter-on-quarter, driven by the launch of new screen golf products and seasonal demand.

Operating expenses were 232.8 billion won, down 4.8 percent year-on-year and 0.5 percent quarter-on-quarter, with paid service fees increasing slightly by 2.4 percent to 94.2 billion won. However, personnel expenses and marketing costs were reduced by 3.1 percent and 40.9 percent respectively due to efficient workforce allocation and cost management, the company said.

Kakao Games plans to strengthen its growth by launching various games from overseas developers and its subsidiaries in the second half of the year. The company will launch early access for the new “Stormgate” real-time strategy game for Korean users on Steam on August 14th, 2024. It will also release “Path of Exile 2” in the fourth quarter, a sequel to the popular PC action RPG that recently set a record for concurrent users on Steam.

Additionally, Ocean Drive Studio, a Kakao Games subsidiary, will participate in Gamescom 2024 in Cologne, Germany, later in August 2024. Ocean Drive Studio will showcase three new console platform titles set for release from late 2024 through 2025: “Lost Eidolons: Veil of the Witch,” “Section 13,” and “God Save Birmingham.”

For its part, Kakao Group’s Kakao Bank reported its highest-ever quarterly earnings for the second quarter of 2024. The internet-only bank announced on Wednesday that its net profit for the quarter reached 120.2 billion won, up 46.7 percent from 82 billion won in the same period during the previous year.

Its net profit was 231.4 billion won for the first half of 2024, a 25.9 percent increase from 183.8 billion won in the same period last year, also setting a record for the highest half-year net profit. Operating profit for the first half also marked a new record with a 28.2 percent year-on-year increase to 318.2 billion won.

Deposit balances totaled 53.44 trillion won as of the end of June, up 491 billion won from the previous quarter. Loan balances also grew, rising from 41.33 trillion won to 42.55 trillion won, up by 1.21 trillion won.