Kakao Games 1Q 2025 Earnings Release

Key insights

6 takeaways

01
Kakao Games reported a 1Q 2025 revenue of 122.9 billion KRW, a 31.1% year-over-year decline, resulting in an operating loss of 12.4 billion KRW and a net loss of 33.4 billion KRW.See it on page 2
02
The mobile game segment experienced a significant 41% year-over-year revenue drop due to the lack of new title launches and natural decay of legacy products.See it on page 5
03
The PC segment bucked the downward trend with 26.8 billion KRW in revenue, marking a 72% year-over-year increase driven by Battlegrounds updates and Path of Exile deferred revenue.See it on page 5
04
Operating expenses were reduced by 17.5% year-over-year to 135.3 billion KRW, primarily through lower commission fees associated with the lower revenue.See it on page 6
05
Kakao VX has been classified as an asset held for sale, with its associated 'Others' segment now reported as discontinued operations.See it on page 2
06
To address performance stagnation, the company plans to launch new titles including Section 13 and Goddess Order across mobile, PC, and console platforms throughout 2025 and 2026.See it on page 8

Summary

Kakao Games reported a challenging financial performance for the first quarter of 2025, characterized by a significant year-over-year revenue decline and a continued operating deficit. Total revenue for the quarter reached 122.9 billion KRW, representing a 31.1% decrease compared to the same period in 2024 and an 8% decline from the previous quarter. This downturn is primarily attributed to the absence of successful new title launches and the natural revenue decay of legacy mobile games, which saw a 41% year-over-year drop. Conversely, the PC segment demonstrated resilience, growing 72% year-over-year to 26.8 billion KRW, bolstered by updates to Battlegrounds and the recognition of deferred revenue from Path of Exile.

Operating expenses were managed at 135.3 billion KRW, a 17.5% reduction from the prior year, driven largely by lower commission fees linked to decreased revenue. Despite these cost-control measures, the company recorded an operating loss of 12.4 billion KRW and a net loss of 33.4 billion KRW. The operating margin fell to -10.1%, reflecting the impact of the revenue shortfall. The financial results are presented on a consolidated basis under K-IFRS standards, with the "Others" segment now classified as discontinued operations following the designation of Kakao VX as an asset held for sale.

Looking ahead, the company maintains a robust pipeline of new titles scheduled for release throughout the remainder of 2025 and into 2026. Upcoming launches include Section 13, Goddess Order, and various projects utilizing internal intellectual property across mobile, PC, and console platforms. These releases are intended to diversify the company's portfolio and stimulate growth in global markets to offset the current performance stagnation.