Kakao Emphasizes Coexistence with "Let's Go Together"... To Spend 300 Billion Won on Coexistence Fund Over 5 Years (Comprehensive)

- 300 Billion KRW Win-Win Fund Raised Over 5 Years... Partner-Centered Win-Win Program Launched
- Foundation Established to Support Creators' Global Expansion
- Accelerating Global Expansion with Goal of 30% Overseas Sales Within 3 Years
- Reducing Number of Affiliates from 134 to 100 Within 3 Years

[Asia Economy Reporter Kang Nahum] Namgoong Hoon, CEO of Kakao, along with the newly appointed board members, emphasized "co-prosperity" and "globalization" as the key messages during their first press briefing since taking office. They plan to activate co-prosperity programs centered on partners that make up the Kakao community and assist creators in expanding globally, aiming to increase overseas sales to 30% within three years.

Namgoong Hoon, CEO of Kakao, Kim Seongsu, Chairman of Kakao's Board of Directors, and Hong Euntaek, Co-Director of the Community Alignment Center (CAC), announced the co-prosperity plan and global business development direction of the Kakao community during an online press briefing on the 6th.

In his opening remarks, CEO Namgoong said, "There is a saying that even if you have a lot of beads, they only become treasures when strung together. Kakao has various service infrastructure users, but I felt that the role of the thread and needle connecting them was somewhat lacking. During my term, I plan to focus on this aspect and organically connect our assets."

He added, "I take becoming the CEO of Kakao so seriously that I consider it my last quest in my career. I will continuously uphold the values demanded of Kakao and take on new challenges for the next ten years."

Following him, Director Hong revealed the direction for utilizing the co-prosperity fund established at the community level. First, Kakao plans to raise a co-prosperity fund of 300 billion KRW over five years to support small business owners, creators, platform workers, social innovators, local communities, and digital underprivileged groups. The 'Sosin Sangin' project, aimed at helping small business owners with digital communication, will also launch within the first half of the year. This program supports small business owners in securing regular customers through KakaoTalk channels and conducting mobile marketing.

The 'Jegabuchi' project, which expands sales channels for domestic agricultural and marine products, will also be expanded. Kakao plans to alleviate difficulties faced by farms and fisheries by purchasing surplus agricultural products in bulk and selling them through Kakao Makers. Kakao Entertainment will invest at least 10 billion KRW over the next five years to establish the 'Kakao Entertainment Creative Support Foundation' (tentative name). The foundation will provide various programs to improve treatment, including creative support, psychological therapy for creators, and legal support for copyright issues.

Support for the future of the mobility market is also being prepared. Measures are being developed for the taxi industry, which faces difficulties transitioning to electric vehicles due to insufficient driving range and charging infrastructure. Additionally, various alternatives to support mobility-vulnerable groups are being considered, and efforts will be made to ensure the mobility industry as a whole can exert a socially positive influence.

Chairman Kim announced plans and goals to realize Kakao's global expansion vision, 'Beyond Korea.' He stated that Kakao aims to increase its overseas sales ratio from 10% to 30% within three years and raise the overseas sales of the Kakao community by more than 40% compared to the previous year.

During the subsequent Q&A session, questions mainly focused on controversies and current issues facing Kakao and its management.

First, CEO Namgoong was asked about the 'plan to sell Kakao Games shares.' He responded, "From the perspective of Kakao Games shareholders, they would prefer that I hold Kakao Games shares, while Kakao shareholders have concerns about conflicts of interest. Internally, it has been decided that I will be excluded from Kakao Games' decision-making. We will follow the opinions of outside directors and the community, and currently, there are no plans to sell shares."

When asked about what he considers the appropriate stock price for the company, he said, "It is difficult to state the appropriate stock price as judged internally by the company. It is more appropriate for the market to decide. Since I have structured various (personal) compensation plans around a target of 150,000 KRW, I hope you see that as my commitment."

He continued, "If fundamental service expansion and user growth lead to increased sales, naturally the stock price will also rise. Recently, we announced a shareholder return policy to enhance shareholder value and are discussing it with CAC heads. We will consider both internal and external measures," he emphasized. CEO Namgoong had previously declared that he would receive the minimum wage until the stock price reaches 150,000 KRW after taking office.

The management's plan regarding criticism about expanding affiliates through 'cultural expansion' was also disclosed. As of the end of last year, Kakao had 134 affiliates. Chairman Kim said regarding this criticism, "We expect the number of affiliates to decrease by about 30 to 40 by the end of the year."

He added, "Among the 134 affiliates, about 80 are content production partners that expand the creative ecosystem in South Korea and were acquired mainly to globally expand K-content such as webtoons, web novels, and games. We are also integrating affiliates to enhance synergy and improve management efficiency."

Chairman Kim said, "The CAC has guidelines for acquiring subsidiaries and consolidating affiliates, continuously organizing inefficient operations and affiliates that are outside core businesses or local markets," but "We are currently working on share adjustments for services like hair salon brokerage, but it may take more time considering various stakeholders including investors."

Regarding the controversy over 'split listings' of subsidiaries, CEO Namgoong said, "Kakao did not spin off businesses with high sales contributions later but established or acquired separate corporations early in the business to attract external funds and expand services, growing them to their current scale. Therefore, it is fundamentally different from the recent controversial split listings. There are no plans for physical spin-offs of well-operated businesses at headquarters."

Regarding the timing of the IPOs for Kakao Mobility and Kakao Entertainment, he said, "We will consider it from the perspective of enhancing shareholder value," but added, "There are no confirmed plans for an IPO at this time."