South Korea’s biggest mobile platform operator Kakao Corp. reported stellar earnings for 2016 with its operating profit rising more than 30 percent year on year, thanks to brisk sales of its mobile game and music services.

The company announced on Thursday that its operating profit on a consolidated basis for full 2016 rose 31.1 percent to 116.1 billion won ($101 million) from the previous year, on sales of 1.46 trillion won, soaring 57.1 percent. It is also the first time for the company to see its annual revenue surpass 1 trillion won since its foundation. Net income, however, fell 14.7 percent to 67.1 billion won due to increased interest costs on loans borrowed to buy Loen Entertainment Inc. last year.

Strong sales from its contents platform business, which made up the largest share of 47.9 percent of its total revenue last year, largely contributed to the company’s overall earnings, according to the company. Sales of its mobile games, music and other contents surged 156.5 percent on year to 701.8 billion won last year on the rising popularity of its mobile games such as Friends Popcorn for Kakao and Black Desert, as well as the country’s top music streaming service Melon, music streaming label of Loen Entertainment.

Advertising revenue, however, fell 11.1 percent on year to 533.9 billion won, accounting for 36.5 percent of its total revenue. This is a stark contrast to Naver, the country’s leading online portal operator, which earned 2.96 trillion won in advertising sales last year, making up 73.8 percent of its total revenue. Naver has seized a dominant market share in the country’s search advertisement market.

Kakao raked in 228.3 billion won in revenue from other sources including sales of KakaoTalk’s characters and KakaoTalk Gift service, jumping 294.6 percent on year.

During the fourth quarter of 2016 ended December, the company’s operating profit surged 85.1 percent on year to 38.1 billion won while net profit skyrocketed nearly 150 percent to 29.3 billion won. Sales advanced 87.8 percent to 453.8 billion won over the same period.

Its advertising sales for the quarter were also down 7.9 percent on year. However, advertising revenue last year grew 5.9 percent on year when ads cut by Kakao on its own are excluded.

On Thursday, shares of Kosdaq-listed Kakao rose 7 percent or 5,600 won from the previous session to end at 85,400 won.

By Oh Chan-jong

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]