South Korean online payment service Kakao Pay turns profitable in first quarter of the year

Kakao Pay announces a turnaround, reporting a net profit of 167 million won in Q1, fueled by strong sales growth and subsidiary performance.

Kakao Pay Corp., the online payment arm of South Korean tech giant Kakao Corp., announced a turnaround in its financial performance for the first quarter, propelled by robust growth in its subsidiary ventures.

In a regulatory filing on Tuesday, Kakao Pay revealed a net profit of 167 million won (approximately U.S.$122,948) for the January-March period, marking a significant shift from the 2.4 billion won loss recorded in the same period last year.

The company reported a 24.7 per cent increase in sales, reaching 176.3 billion won, attributed to heightened activity in overseas payments and offline transactions, surging by 14 per year-on-year to 120 billion won. Kakao Pay’s subsidiaries also contributed to the positive momentum with strong performance.

Despite the encouraging revenue growth, Kakao Pay continued to incur an operating loss of 9.7 billion won. The company attributed this to a 20 per cent rise in operating expenses compared to the previous year, driven by the expansion of its financial services portfolio.

Noteworthy achievements within Kakao Pay’s subsidiaries include its financial investment unit witnessing an 80 per cent surge in clients’ deposit assets, reaching 2.7 trillion won. Furthermore, its insurance unit garnered over 1 million subscribers for its travellers insurance, indicating a successful uptake of its offerings.

As a subsidiary of Kakao Corp., a leading player in the country’s social media and technology sector, Kakao Pay benefits from a large user base and extensive market reach.

The company’s strategic focus on expanding its financial services ecosystem, despite the associated operational costs, reflects its commitment to diversifying revenue streams and enhancing its competitive position in the fintech industry.