What Happened? Q2 Earnings Breakdown

Innocean reported Q2 2025 revenue of ₩519 billion, operating profit of ₩36.4 billion, and net income of ₩19.6 billion. These figures missed market consensus by -6%, -5%, and a significant -33%, respectively. While operating profit and net income saw a slight year-over-year increase, a concerning trend of declining profitability compared to Q1 is evident.

Why the Disappointment? Analyzing the Factors

Key factors contributing to the underperformance include increased selling, general, and administrative expenses (SG&A), higher financial costs, and foreign exchange losses. Currency volatility, in particular, appears to have significantly impacted profitability. Additionally, a potential decrease in market advertising spending or the absence of major campaigns may have played a role.

What Now? Investment Strategies

In the short term, investors should be wary of potential downward pressure on the stock price. Increased volatility following the earnings announcement warrants a cautious approach, with short-term profit-taking as a viable strategy. For long-term investors, close monitoring of Innocean’s business portfolio diversification efforts, digital transformation progress, and identification of new growth drivers is crucial.

Action Plan for Investors

  • • Listen to management’s explanations during the Q2 earnings conference call.
  • • Track key advertising campaigns, new order wins, and overseas market performance in the second half of the year.
  • • Analyze domestic and international advertising market trends and competitor performance to inform investment decisions.