Kakao to drive growth with AI-powered chat app in 2024
- inspirelabltd
- Feb 16, 2024
- 2 min read
Revenue grew 14% to $6 bil. in 2023
Kakao plans to achieve new growth this year by integrating its generative AI into its popular mobile messenger app KakaoTalk, its CEO said on Thursday.
"We are experimenting with the integration of KakaoTalk and AI so that all people can experience AI in their daily lives,” Kakao CEO Hong Eun-taek told investors during a 2023 fourth-quarter conference call. “Last December, we launched features such as summarizing unread messages and changing the tone of messages in chat rooms based on a lightweight language model developed by Kakao Brain, and 1.5 million people experienced it in just a month.”
Based on the achievements they have made, the CEO explained that Kakao is currently conducting internal tests to integrate their large language model KoGPT 2.0 into KakaoTalk.
"The fact that young users in their 20s and 30s actively use AI tools is even more positive. We will take the lead in spreading AI services into the daily lives of all people just as we contributed to the popularization of mobile services through KakaoTalk,” he said.
In its earnings announcement, Kakao disclosed it recorded sales as standing at 8.1058 trillion won ($6.08 billion) in 2023, surpassing the 8 trillion won mark for the first time. This is a 14 percent increase from 2022. Operating profit was 501.9 billion won, down 11 percent from the previous year.
In the fourth quarter, Kakao recorded an operating profit of 189.2 billion won, up 109 percent from the same period last year.
Regarding the better-than-expected earnings, the Kakao CEO said that it was possible thanks to Kakao's core businesses such as advertising and e-commerce.
"The significant increase in operating profit is thanks to the growth of Kakao's core businesses, advertising and commerce," the CEO said.
KakaoTalk recorded an average of 48 million monthly active users during the fourth quarter. As a result, sales of Talkbiz, a business linked to KakaoTalk offering services including advertising, sending gifts and e-commerce, recorded 581.5 billion won, an increase of 14 percent from the same period in 2022.
As for the impact on its commerce business by Chinese e-commerce companies, which are increasing their presence with ultra-low prices, the CEO said there is no direct impact.
"China's AliExpress and Temu are active in Korea, and e-commerce platforms that focus on price consumption will be affected. Kakao’s e-commerce is focused more on value consumption rather than price consumption, so there is no direct impact," he said.
"Rather, with new players entering the market, it will increase marketing demand and lead to increased ad spending. Even on Kakao, players are releasing ads."
Kakao said it will continue to reduce operating losses and strengthen profitability from what it calls new initiatives — Kakao Enterprise, a cloud service subsidiary; Kakao Brain, an AI research unit and Kakao Healthcare — that are identified as key growth drivers going forward.
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