Daum Kakao announced on May 14 that its net profits dropped 40.4 percent in the first quarter from the previous one, which was largely due to falling advertisement revenue amid increasing marketing costs.
The consolidated net profits came to 30.8 billion won (US$28.1 million) in the first quarter, a significant drop compared with the 51.7 billion won (US$47.4 million) of a quarter earlier.
The operating profit also declined 38.3 percent quarter-on-quarter to 40.3 billion won (US$37.0 million), with sales falling 7.7 percent to 234 billion won (US$214 million).
Daum Kakao did not reveal year-on-year comparisons in its regulatory filing, as the company was set up through a merger between Daum Communications and Kakao in October last year.
Its revenue from advertisements in the first quarter dropped 14 percent quarter-on-quarter to 141.7 billion won (US$130.0 million). Its expenditures for marketing, however, increased 3 percent to 194 billion won (US$177.9 million) following the launch of new services.
Daum Kakao said that mobile-related revenue accounted for 55 percent of its entire sales during the first quarter. Its free mobile messenger KakaoTalk has 35 million local users, the most popular one in Korea with a population of 50 million.
The company has rolled out various services in recent months to solidify its revenue base, including its mobile payment service KakaoPay and a cab-hailing mobile application KakaoTaxi.