1. What Happened? Q1 2025 Earnings Overview

Kakao Games exceeded Q1 2025 operating profit consensus by +29.5%. However, revenue decreased by 31.3%, and both operating and net income turned negative.

2. Why Did This Happen? Analyzing the Decline

Slowing mobile game performance and the launch of new PC games contributed to the shift in revenue structure. While PC game revenue increased, it wasn’t enough to offset the decline in mobile game revenue, their primary source. Discontinued operations in golf and wireless communication devices also played a role.

3. What’s Next? Future Outlook and Key Factors

While the earnings surprise may create short-term momentum, sustained growth will depend on fundamental improvements. Future performance hinges on new game releases, live service performance of existing games, marketing effectiveness, and improvements in financial health.

  • Key Factors: New game success, mobile game recovery, and improved financial health.

4. What Should Investors Do? Investment Strategies

Investors should look beyond short-term fluctuations and focus on long-term growth potential and core competencies. Carefully assess the company’s new game pipeline, IP strength, and global publishing capabilities before making investment decisions.

  • Investment Strategies: Maintain a long-term perspective, analyze core competencies, and consider macroeconomic conditions.