[Conference Call] Kakao: "This Year We Aim for 10% Revenue Growth and a 10% Operating Margin"

"AI, This Year Is About Laying the Foundation for Monetization"
Talk Biz Ads as the Main Pillar... Business Messages Target Double-Digit Growth
Two-Track Strategy for On-Device and B2C AI
"Full-Fledged Earnings Impact to Show from the Second Quarter"

Kakao has designated this year as "the year of re-entering the growth phase," setting targets of more than 10% year-on-year growth in consolidated revenue and an operating margin of 10%. The company plans to use the structural growth of its advertising business and the establishment of an artificial intelligence (AI) monetization foundation as its two main pillars to boost both profitability and top-line growth.

On the earnings conference call held on February 12 to announce last year's annual results, Kakao CEO Shinah Jung said, "This year will be the starting point when both revenue and profitability begin to improve at the same time."

One of the key growth drivers is Talk Biz Ads. Jung explained that Talk Biz Ads achieved the double-digit growth that had been presented as guidance as early as the third quarter of last year, and then recorded a 16% growth rate in the fourth quarter. In particular, the business messaging segment centered on brand messages is becoming established as a customer relationship management tool by enabling advertisers to use their own customer data to carry out personalized communications on KakaoTalk. The company stressed that, even though business messages have already grown into the largest revenue source within Talk Biz Ads, there is still sufficient internal room to more than double this business.

Display advertising is also continuing its growth trend as inventory expansion and strategies to improve advertising efficiency work in tandem. In addition, the company plans to pursue qualitative growth by officially launching "Moment AI," an AI-based service for analyzing and improving advertising performance.

Starting in the second half of the year, Kakao will convert commerce display ads, which have been sold as guaranteed products, into an open sales structure based on the KakaoTalk advertising platform and add performance-based ads using automated bidding. The strategy is to fully scale up the monetization of commerce inventory and raise the currently low share of advertising revenue relative to transaction volume. In the mid to long term, the company also sees potential to expand into the search advertising domain, leveraging increased in-talk search behavior driven by the spread of AI services.

For the AI division, this year will be the first year of building a monetization foundation. The company plans to continue making efficient investments within a range that does not undermine its existing profitability, while focusing on expanding AI service users and implementing agentic AI. Jung said, "From next year, we expect to gradually reduce the scale of losses."

On the device side, Kakao will work with Google to further advance on-device AI experiences, and on the B2C (business-to-consumer) service side, it will expand collaboration with OpenAI. The company will strengthen the linkage between KakaoTalk conversation context and ChatGPT, and will sequentially introduce ChatGPT-based AI features within KakaoTalk.

The company will also accelerate the establishment of an agentic AI ecosystem. By the end of the year, it aims to connect a wide range of external partners to the Kakao AI platform through "PlayMCP" and "Agent Builder," and to implement the initial service model of "agentic commerce" with a focus on the commerce domain. It is also expecting at least three or more key players to join within the first half of the year.

Jung emphasized, "Structural, platform-centered growth and profitability improvement will begin to be fully reflected in earnings from the second quarter," adding, "This year will be the year in which Kakao re-enters a full-fledged growth phase."