South Korea’s Kakao Invests $57 Million In Emerging Technologies Like Blockchain
Even though Korean messaging giant reported a plunge in their profit in the year 2018, it did not prevent them to spend a considerable amount of money in new technology, including Blockchain.
The South Korean company recorded a US$3.8 million operating profit from October to December, down 87.7 percent from the same period in 2017. As a whole, Kakao’s 2018 operating profit hit US$64 million, down 65 percent year-on-year from 2017. Simultaneously, they spent 65 billion won ($57.5 million) in upcoming technology like AI and Blockchain.
It is speculated that this was the chief contributing factor to their losses in the quarter. Additionally, Kakao attributed the drop to increased costs, including year-end compensations for employees, marketing expenses to strengthen new businesses, and expanded fee payment due to rising transactions of its various services.
Kakao is a mobile lifestyle platform company with services spanning messaging, mail, search, news, advertising, gaming, e-commerce, music, maps and more. Based in South Korea, Kakao reaches consumers, businesses, and others via services such as: KakaoTalk, KakaoGame, Daum Mail and Daum Cafe, among others.
A platform connecting finances with technology, with payment solutions that allow users to make payments with just a few clicks and a 6 digit password, or transfer cash to friends based on the Kakao Talk social network.
Bae Jae-Hyun, vice president of management strategy said at an earnings call:
“If we look at operating profits in a comprehensive manner, we have achieved a steep sales growth with a new profit model. In the fourth quarter, sales grew more than expected due to the peak season of the year, but overall operating profit fell sharply YoY due to operating expenses of W65bn due to investments in new businesses such as mobility, AI, and block chains. We will continue to grow our existing business and aggressively pursue new businesses to drive sales growth and improve our operating profit rapidly.”
The company’s venture with blockchain had been reported by BitcoinExchangeGuide in November 2018. Kakao Corp had decided to establish a subsidiary of its main company in the country of Singapore. This was part of a move from the messaging giant to attract foreign investments with cryptocurrencies.
The company had also considering to establish a special corporation in Singapore to manage these investments that it is making there. The testnet of this blockchain will be released in the first quarter of 2019.