Daum Kakao Corp., the operator of South Korea's top mobile messenger KakaoTalk, said Thursday its net profit rose 36 percent in the fourth quarter from a year earlier, boosted by robust sales from e-commerce platforms and mobile advertising.
Net profit reached 50.6 billion won ($45.9 million) in the October-December period, compared with 37.2 billion won the previous year, the company said in a regulatory filing.
Operating profit surged 71 percent on-year to 65.7 billion won, with sales coming to 254 billion won, up 21 percent over the cited period.
Daum Kakao's earnings are based on a consolidated basis after its official debut in October following the merger between two South Korean leading IT ventures: Daum Communications Corp. and Kakao Corp.
For all of 2014, the venture firm logged a cumulative 140.3 billion won in net profit, up 10 percent from a year ago.
The annual operating income jumped 42 percent on-year to 209.2 billion won and sales for the whole year also grew 21 percent to 898.4 billion won in the same period.
Its e-commerce platform was the main driver of the upbeat performance. Sales from Gift Store, a key function embedded in KakaoTalk messenger where users can buy gift icons and send them to friends, grew 171 percent from the previous year, the company said.
Advertising revenue from its SNS tool KakaoStory and mobile ad platform "Ad@m" rose 15 percent on-year, while sales of its mobile game platform gained 17 percent over the cited period.
Its mobile content business, including Daum web cartoons, popular among the teens, also saw sales more than double in the fourth quarter from a year ago.
Mobile-related revenue accounted for 53 percent of Daum Kakao's entire sales as of end-December.
The new merged entity, which is now the biggest listed firm on the country's secondary market KOSDAQ, said it will shore up efforts this year to expand its footing to online-to-offline (O2O) service and mobile payment.
It plans to increase the number of affiliated offline stores for its instant payment tool KakaoPay, while it will push for growth of its money transfer app BankWalletKakao that debuted in the market in November.
Daum Kakao is scheduled to launch in the first quarter its O2O app KakaoTaxi, which links customers with the closest available cab in the area, stretching its business models beyond mobile.
Yet, the company remained cautious about integrating the taxi app with its payment platform, as the business is still at a nascent stage and needs time before any further decisions are made, a Daum Kakao official said at the press conference that followed the earnings announcement.
The company cast a bright picture for an expansion into mobile publishing games in China, citing high demand and the market size of the world's most populous country. It plans to roll out its first product in collaboration with local game developers in the second quarter.
Regarding the company's dividend policy, Co-CEO Choi Sae-hoon said the management will propose lowering dividend payouts this year.
"We think that an aggressive approach toward investment, instead of an immediate rise in shareholder reward, will lead to maximizing the benefit for shareholders in the long term," Choi said during the conference call.
Daum Kakao said it plans to double its marketing expenses in 2015, from the 40 billion won it spent in the previous year.
Shares of Daum Kakao closed down 1.63 percent to 145,200 won on Thursday, with the tech-heavy KOSDAQ ending up 0.14 percent. The earnings results came before the market opened. (Yonhap)