Kakao Games Q2 2021 Earnings Results

Key insights

6 takeaways

01
Kakao Games reported Q2 2021 revenue of 129.5 billion KRW, a 21.5% year-over-year increase driven by an 86.3% surge in mobile gaming revenue.See it on page 5
02
Operating profit fell 49.5% year-over-year to 8.1 billion KRW, primarily due to a 34.1% rise in operating expenses and a 310.9% increase in marketing spend for the launch of Odin: Valhalla Rising.See it on page 3
03
PC gaming revenue declined by 58.6% year-over-year, signaling a strategic shift in platform focus toward mobile titles.See it on page 5
04
The company plans to launch over ten new titles by the first half of 2022, including World Flipper, Elyon, and Dysterra, to expand its global and domestic market presence.See it on page 10
05
Profitability was further impacted by rising labor costs resulting from business expansion and the integration of new subsidiaries.See it on page 6
06
The company is diversifying its portfolio across MMORPG, action RPG, and casual genres by combining internal development with external strategic partnerships.See it on page 10

Summary

Kakao Games reported its financial results for the second quarter of 2021, highlighting a period of strategic transition characterized by significant growth in mobile gaming revenue alongside a contraction in overall profitability. The company generated 129.5 billion KRW in total revenue, representing a 21.5% increase year-over-year. While mobile gaming revenue surged by 86.3% compared to the same period in 2020, PC gaming revenue experienced a sharp decline of 58.6%, reflecting a shift in the company’s platform focus.

Operating profit for the quarter stood at 8.1 billion KRW, a 49.5% decrease year-over-year, while net profit fell to 400 million KRW. This decline in profitability was primarily driven by a 34.1% increase in operating expenses, which totaled 121.4 billion KRW. Key cost drivers included rising labor costs associated with business expansion and subsidiary integration, as well as a substantial 310.9% year-over-year increase in marketing expenditures, largely attributed to the launch of the high-profile title Odin: Valhalla Rising.

The company’s strategic outlook remains focused on aggressive expansion through a robust pipeline of new releases. Following the successful launch of Odin: Valhalla Rising, which achieved the top spot in major mobile market rankings, the company outlined plans to launch over ten new titles through the first half of 2022. These include upcoming mobile and PC games such as World Flipper, Elyon, and Dysterra, targeting both domestic and global markets. The company continues to leverage both internal development capabilities and strategic partnerships with external developers to diversify its portfolio across various genres, including MMORPGs, action RPGs, and casual titles.