Kakao Games (293490) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 14.3% year-over-year to KRW 193.9 billion, with a 5% sequential increase, driven by core PC and mobile titles despite no major new releases.

• Operating profit dropped 80.1% year-over-year to KRW 5.7 billion, with net income at -7.3 billion Won, reflecting lower high-margin in-house title contributions and non-operating losses.

• Strategic focus is shifting from mobile-centric to global PC, console, and blockchain platform expansion, with major AAA and Web 3.0 titles planned for 2025 and beyond.

• Asset securitization, sale of Sena Technologies, and withdrawal from non-core businesses, including golf and NFT operations, are underway to improve financial position.

• Operates as a comprehensive game company with a diversified portfolio, including major titles like Odin, ArcheAge, and Path of Exile, and expansion into blockchain gaming via BORA.

Financial highlights

• Q3 2024 consolidated revenue was KRW 193.9 billion, down 14.3% year-over-year and up 5% sequentially; PC game revenue surged 196.3% year-over-year to KRW 34.2 billion, while mobile game revenue fell 31.1% year-over-year to KRW 126.6 billion.

• Operating profit was KRW 5.7 billion, down 80.1% year-over-year; operating margin improved to 2.9% from -1.2% in Q2.

• Net loss attributable to controlling interests was -₩12.5B for Q3 2024.

• Marketing spend increased 32% year-over-year and 48% sequentially to KRW 15.2 billion, driven by global expansion and events.

• Cash and cash equivalents at Q3-end were ₩554.9B, with total equity at ₩1,635.7B and total assets at ₩3,372.2B.

Outlook and guidance

• Major new titles, including Path of Exile 2 (early access in December 2024), Chrono Odyssey, ArcheAge Chronicles, and a mobile MMO (Project Q), are planned for release through 2025 and 2026.

• Strategic marketing for new and legacy titles is planned for Q4, with labor and outsourcing costs expected to be maintained at current levels.

• Focus on expanding global publishing, blockchain-based games, and further globalization of the BORA platform.

• Ongoing investment in R&D, AI, and game technology to support future growth.