1. Kakao’s Q1 Performance: A Disappointing Reality

Kakao’s Q1 2025 revenue plummeted by 67% year-over-year to ₩654.6 billion, operating profit fell by 15% to ₩107.8 billion, and net income plunged a staggering 85% to ₩17.1 billion. These results significantly missed market projections across the board.

2. Why the Underperformance? Unpacking the Key Drivers

The primary drivers behind the revenue decline are the underperformance of both the platform and content segments. A combination of factors, including a weakened advertising market for Talk Biz and Portal Biz, increased competition, and evolving user behavior, contributed to this downturn. The content segment also suffered from a general market slowdown and intensified competition across games, music, and stories.

  • Platform Segment: Weakening ad market, increased competition
  • Content Segment: Market slowdown, intensified competition

3. What’s the Outlook for Kakao?

The short-term outlook suggests a potential decline in stock price, coupled with concerns about declining profitability across business segments. While investments in AI and new technologies hold promise for long-term growth, they may contribute to increased costs in the short term. The future remains uncertain, and investors need to proceed with caution.

4. What Should Investors Do?

Investors should closely monitor Kakao’s future earnings announcements and any strategic shifts by management. Rather than reacting to short-term price fluctuations, it’s crucial to carefully assess the company’s long-term business direction and its potential for recovery before making any investment decisions. While shareholder return policies are positive, their effectiveness will be limited without tangible performance improvements.