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Kakao Q2 operating profit up 133% on Loen acquisition

Kakao, the operator of South Korea’s top mobile messenger KakaoTalk, on Thursday said its operating profit in the second quarter rose 132.8 percent on-year to 26.6 billion won ($24.25 million).

The company’s revenue during the April-June period jumped 66.2 percent on-year to 376.5 billion won, led by the strong performance of its content business division which includes music, games and webtoons, it said.

Kakao’s content division received a major boost from its new subsidiary Loen Entertainment -- the operator of Korea’s top music streaming app MelOn -- which was acquired in January this year. Led by MelOn’s earnings, Kakao’s music business recorded 90.5 billion won in revenue in the second quarter.

During the same period, Kakao’s game business brought in 78.3 billion won in revenue, while the firm’s webtoon and emoticon businesses together recorded a revenue of 21.6 billion.

Meanwhile, Kakao’s advertising revenue fell 12.1 percent on-year to 136.2 billion won, largely due to falling PC traffic, the company said.

Revenue from the firm’s miscellaneous division, which includes sales generated via its commerce platforms and Loen’s record distribution business, reached 49.9 billion won in the second quarter, up 349.1 percent on-year.

Kakao said it spent 350 billion won in operating expenses in the second quarter, as the firm has been expanding investments in new businesses.

In the latter half of the year, Kakao plans to focus on supplying more competitive user content via KakaoTalk. It is scheduled to release its new selfie app KakaoTalk Cheez within this month.

On the mobile games front, Kakao said it would launch more games using Kakao Friends characters and further expand the company’s webtoon business through its two content platforms Kakao Page and Daum Webtoon.

The firm also vowed to continue expanding its character merchandising business as well as its newly established offline-to-online businesses such as Kakao Driver, Kakao Hairshop and Kakao Parking, which is expected to launch within the year.

By Sohn Ji-young (