Daum Kakao profit down 6%

Daum Kakao posted 31 billion won in operating profit in the third quarter, down 6 percent from a year earlier, the company said Friday.

Its sales came in at 222 billion won for the July-September period, up 20.7 percent from a year earlier.

It marks the first combined quarterly earnings report following the Oct. 1 merger between Internet portal Daum Communications and Kakao, the operator of the nation’s dominant messaging app.

Daum Kakao said the fall in operating profit reflects one-time expenses totaling 20.3 billion won, incurred in their recent merger process, including bonus payments and other merger-related costs.

Company spokeswoman Sonia Im said the sales growth reflects increases in mobile ads, game-related income and mobile commerce.

Mobile commerce represented the biggest growth among the company’s revenue sources, up 91 percent from a year ago to 7.8 billion won, which entirely came from Kakao.

In a breakdown, Kakao reported 88.3 billion won in sales, up 63.5 percent, and 30.1 billion won in operating profit, up 142.3 percent.

Daum posted a 630 million won operating profit, and 124 billion won in sales.

Daum Kakao and market analysts were positive over the company’s business outlook for the remainder of this year.

“In the fourth quarter, we plan to focus our energy on setting the foundation for a solid mobile lifestyle platform by maximizing synergy. We expect these efforts will lead to tangible results,” Kwon Ki-su, head of the company’s business planning part, said in the statement.

KDB Daewoo Securities analyst Kim Chang-kwon said Daum Kakao is well-positioned to further booth revenue and profit as Kakao’s mobile messaging service is seeing steady updates focusing on ads and games.

“Daum Kakao is expected to report 950 billion won in revenue for the full year, up 28 percent, with operating profit reaching 273 billion won, up 85 percent,” Kim said.

Last month, it introduced a new mobile payment service called KakaoPay, allowing all users on Kakao’s chat platform to buy things by linking their credit cards with their smartphones. It said 1.2 million users have signed up for the mobile payment service since the launch.

Daum Kakao is in the process of developing new growth engines as a mobile lifestyle platform through its vision to “Connect Everything.”

Daum Kakao is collaborating with 16 major local financial institutes to boost its brand-new mobile banking service — Bank Wallet Kakao.

But some critics say Daum Kakao’s business strategies are too much focused on the local market, raising questions over corporate sustainability.

KakaoTalk has 48.4 million registered users as of the third quarter, from 48.9 million a year earlier. As the number of users is the key point for further growth in its own ecosystem, market analysts say Daum Kakao needs to spend more to expand its overseas businesses.