Kakao Games Q3 2022 Earnings Results

Key insights

6 takeaways

01
Kakao Games reported Q3 2022 revenue of 306.9 billion KRW, marking a 34.2% year-over-year decline and a 9.4% quarter-over-quarter decrease.See it on page 4
02
Net income for the quarter plummeted to 11.3 billion KRW, representing an 82.4% drop from Q2 2022 and a 74.6% decrease year-over-year.See it on page 4
03
Operating profit fell to 43.7 billion KRW, a 46% decline compared to the previous quarter, despite a 2.3% year-over-year increase.See it on page 7
04
Revenue contraction was primarily driven by mobile gaming performance, which fell to 197 billion KRW, and PC gaming revenue, which declined to 13.3 billion KRW.See it on page 5
05
Operating expenses rose to 263.2 billion KRW, a 2.1% quarter-over-quarter increase attributed largely to rising commission costs.See it on page 6
06
The company is pivoting toward a growth strategy featuring a pipeline of new titles through 2023, including EverSoul, ArcheAge War, and Ares: Rise of Guardians.See it on page 11

Summary

Kakao Games reported its financial results for the third quarter of 2022, detailing a period of contraction in revenue and profitability compared to previous quarters. The company generated 306.9 billion KRW in total revenue, representing a 34.2% decrease year-over-year and a 9.4% decline quarter-over-quarter. This downturn was driven primarily by a significant drop in mobile gaming revenue, which fell to 197 billion KRW, alongside a decline in PC gaming revenue to 13.3 billion KRW.

Operating expenses for the quarter reached 263.2 billion KRW, a slight increase of 2.1% from the previous quarter, largely influenced by rising commission costs. Consequently, the company recorded an operating profit of 43.7 billion KRW, reflecting a 46% decrease quarter-over-quarter and a 2.3% increase year-over-year. Net income saw a sharper decline, falling to 11.3 billion KRW, which represents a 74.6% decrease compared to the same period in the previous year and an 82.4% drop from the second quarter of 2022.

The report outlines a strategic focus on future growth through a robust pipeline of new titles scheduled for release between the fourth quarter of 2022 and the end of 2023. Key upcoming projects include the global launch of the collection RPG EverSoul, the domestic release of the MMORPG ArcheAge War, and the introduction of the AAA-rated title Ares: Rise of Guardians. These initiatives underscore a transition toward expanding the company’s portfolio across mobile and PC platforms, with specific plans to target both domestic and international markets, including Japan, North America, and Europe.