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Odin Valhalla Rising was released last June by Kakao Games South Korea’s tech giant Kakao Corp. reported 4Q revenue of 1.78 trillion won ($1.5 billion,) a 45% jump on-year in 2021. The figure is slightly lower than its rival Naver Corp.’s Q4 revenue of 1.93 trillion won. The operator of the uber popular KakaoTalk messenger app announced its quarterly earnings report on Friday. Kakao’s operating profit for the October-December period fell 28% on-year to 108.5 billion won, hit by rise in labor cost.“The cost of labor surged 98% on-year on the back of a jump in wages, followed by the cost of four main insurances including severance pay,” the company’s CIO Bae Jae-hyun said.The slide is also due to the lackluster performance by Kakao Games Corp. The revenue from the Kakao Corp. subsidiary’s latest game dubbed Odin Valhalla Rising, released last June, plunged. Revenue from the game publisher slid from 463.1 billion won posted in Q3 to 276.8 billion won the next quarter. The other sectors saw better performances. Revenue from BizTalk rose 30% on-year to 475 billion won during the fourth quarter, which are sales from in-app purchases on the messenger platform. “Gifting through the messenger app was considered to be a generational preference but the spending pattern now transcends generations,” the outgoing Kakao co-CEO Yeo Minsoo said. The company’s content platforms also fared well.Revenue from paid contents such as webtoons jumped 29% on-year to 211.3 billion won. Sales of game content also skyrocketed 97 percent on-year, thanks to robust interest at home and abroad. “Coupled with original content, customized algorithms, and aggressive marketing, we will expand our market share in the Japanese digital cartoon industry,” said Yeo.The co-CEO emphasized the company will make concerted efforts to enter the European market, starting with France. Looking at the bigger picture, the tech company's annual revenue surged 48% to record 6.14 trillion won. Annual operating profit rose 31% to 596.9 billion won. Naver also enjoyed a successful 2021, with a record high annual revenue. The figure rose 29% to 6.72 trillion won on-year while the operating profit climbed 9%.The hike in sales is thanks to the rapid growths in the contents and e-commerce sectors. Digital cartoon platform Naver Webtoon, photo editing app SNOW, and metaversr platform Zepeto saw meaningful expansions in 2021. EARNING BACK TRUST Despite the widespread adoption of its messenger app, Kakao is struggling to rebrand its image and win back the trust of investors. For the first time ever, Kakao announced a shareholder return policy on Friday.During the next three years, up to 30% of what the company has designated as surplus cash flow will be allocated to investors. In detail, 5% of the surplus will be used as cash dividends and the rest 10 to 25% will be used for either buying back and retiring its shares. In line with this plan, the board of directors will discuss the cancellation of a total of 300 billion won worth of Kakao shares sometime this year. Just a day prior, Kakao’s CEO appointee Namkoong Whon wrote about the target stock price on Facebook.“My salaries and incentives will be on hold and I will only receive the legal minimum wage until Kakao’s stock price reaches 150,000 won,” he wrote.During Friday’s conference call, the current co-CEO Yeo said, “Kakao has enjoyed rapid growth. But in the process, we have suffered growing pains and lost the society’s trust, to which I feel heavily responsible for.”Yeo is expected to wrap up his term next month.By Minki Kookook@hankyung.comJee Abbey Lee edited this article.
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