SEOUL, Naver Corp. and Kakao Corp., South Korea's two leading technology firms, reported record sales last year, but Kakao lagged far behind Naver in terms of profitability, according to their statements Thursday. Naver, the operator of the country's biggest internet portal, reported all-time yearly sales of 9.67 trillion won (US$7.25 billion) in 2023, up 17.6 percent on-year, according to the company's regulatory filing. Kakao, the operator of the country's top mobile messenger, KakaoTalk, said earlier in the day that it also posted a record high of 8.1 trillion won in sales last year. The two companies' stellar performances can be attributed to the growth of their content and e-commerce businesses rather than the performance of their mainstay platform businesses, according to market watchers. Naver saw the revenue of its commerce division jump 41.4 percent on-year to 2.54 trillion won and revenue of its content division soar 37.4 percent. Kakao saw its content sales advance 20.2 percent on-year to 4.01 trillion won, largely thanks to a 92.9 percent increase in revenue from its music unit. Kakao's music business showed a strong performance last year driven by the company's acquisition of K-pop powerhouse SM Entertainment, higher demand for its music streaming platform, Melon, and the popularity of its artists, such as girl group Ive. Naver posted a record operating profit of 1.49 trillion won last year, up 14.1 percent from a year earlier, and its EBITDA also hit the highest ever of 2.13 trillion won, up 18.4 percent on-year. But Kakao's operating profit sank for the second consecutive year to 501.9 billion won. The figure was about one-third of its rival Naver's 2023 operating profit. Kakao said its operating profit decreased as it funneled money into building its own data centers after it suffered massive service disruptions in 2022 due to a fire at a data center operated by SK CandC, which had hosted Kakao's data servers at the time. Following the incident, the company opened its first independent d ata center in Ansan, about 30 kilometers south of Seoul, in September last year and plans to build one more by 2026. Kakao has also been at the center of criticism in recent months over stock manipulation allegations involving its executives and suspected unfair business practices of its taxi-hailing service affiliate, Kakao Mobility Corp. But the messaging app operator said its fourth-quarter operating profit surged 108.6 percent on-year to 189.2 billion won and expects its profitability to keep improving this year. "We expect to see more profit from our content and intellectual property divisions this year," a company official said. "The company has built a foundation to increase its operating profit across all business units by sharply reducing the operating loss deriving from our new initiatives." Source: Yonhap News Agency
