Payments drive growth, insurance adds momentum: Kakao Pay doubles Q3 operating profit

[Financial News] Kakao Pay grew both its business and profitability year on year in the third quarter of this year. Payment and financial services grew steadily, while the insurance business also provided a boost. Its subsidiary, Kakaopay Insurance Corp., posted record quarterly revenue, and Kakao Pay’s own revenue topped 200 billion won for the first time.
According to the Financial Supervisory Service’s Data Analysis, Retrieval and Transfer System (DART) on the 3rd, Kakao Pay’s consolidated revenue for the third quarter of this year totaled 302.1 billion won. It was down 9.9% from the previous quarter (335.1 billion won), but up 26.7% from the same quarter a year earlier (238.4 billion won). Revenue for the year to date through this quarter came to 937.4 billion won, up 36.1% from 688.5 billion won in the same period last year.
Core businesses, including payments and financial services, drove growth. Revenue from payment services rose 19% year on year to 154.7 billion won. Financial services revenue increased 41% over the same period to 133.4 billion won. Platform services revenue edged down to 13.9 billion won.
A Kakao Pay representative explained, "The revenue contribution from investment services declined from the previous quarter due to market volatility, but grew 32% year on year on the back of an increase in stock trading value." The representative added, "Insurance services rose 80% from a year earlier, setting a new quarterly revenue record, while revenue from lending services increased 18%."
Operating profit in the third quarter was 32.5 billion won. It fell 44.6% from the previous quarter (58.6 billion won), but at least doubled from the same quarter a year earlier (15.8 billion won). Net income followed a similar pattern: it declined 33.7% from the previous quarter (49.6 billion won) to 32.9 billion won, but rose 71.7% from the same period last year (19.1 billion won).
Operating and net profit margins were 10.7% and 10.9%, respectively. Consolidated operating expenses were 269.6 billion won. 
Kakao Pay’s standalone revenue rose 20% year on year to 204.9 billion won, topping 200 billion won for the first time on a quarterly basis. Standalone operating profit increased 160% year on year to 24.9 billion won, while net income was 26.1 billion won. The operating and net profit margins remained in double digits at 12.2% and 12.7%, respectively.
Consolidated transaction value in the third quarter of this year reached 53.7 trillion won, up 14% year on year. Revenue-generating transaction value (Revenue TPV) rose 22% over the same period to 16.5 trillion won, accounting for at least 30% of total transaction value.
Payment services led the way by growing 25% year on year. Online payments, which performed well at both Kakao-affiliated (captive) and external (non-captive) merchants, increased 18%, while offline payments rose 44%. Overseas payments also grew 28%.
Remittance services increased 11% over the same period, driven by growth in stock trading value. The balance of funds added to Kakao Pay Money was 2.8077 trillion won.
Daily active users (DAU) topped 7 million for the first time. Average transactions per user (ATPU) rose 15% year on year to 87, while average revenue per user (ARPU) increased 23% over the same period to 12,388 won.
Kakaopay Insurance Corp. posted record quarterly revenue. Its third-quarter revenue was 32.2 billion won, up 93% year on year. Gross premiums written and regular-premium payments increased 79% and 122%, respectively, from a year earlier.
A Kakaopay Insurance Corp. representative noted, "New products such as pet insurance, as well as mobile phone insurance, contributed to growth, with the number of new policyholders for the latter rising 127% following the launch of new smartphones." The representative added, "New health insurance policyholders also increased 160% from the previous quarter, helping strengthen the long-term regular-premium portfolio."

[email protected] Kim Tae-il Reporter