The reorganization and investors' doubts
Kakao is highlighting the results of subsidiaries active in content, mobility and financial technology ahead of the separation into two companies, scheduled for February 1, 2027. The Korea Herald reports. The stated goal is to strengthen investor confidence in Kakao X's growth prospects, the entity that after the spin-off will manage holdings and investments in subsidiaries. The new Kakao AI will take over KakaoTalk, advertising, commerce and artificial intelligence services.
The restructuring, according to the source, is intended to improve capital allocation and enable each business to pursue appropriate strategies. However, the material also reports investor concerns: a possible holding company discount for Kakao X and uncertainty about the profitability of artificial intelligence operations. Kakao has also moved the spin-off date by one month, from January to February, citing a longer-than-expected preliminary listing review by the Korea Exchange, and has accelerated a plan to buy back and cancel 150 billion won, approximately $110 million, in shares.
Content and mobility seek new revenue streams
In the third quarter, content sector revenue fell 6% year on year to 851.7 billion won, with music down 10% to 508.3 billion, while media revenue grew 49% to 142.8 billion. Kakao sees Seoul Arena, a concert venue for up to 28,000 people whose completion is scheduled for the first half of 2027, as a lever to connect music and intellectual property to live performances, merchandising and fan engagement. Kakao Entertainment is expanding its intellectual property business through Melon, the fan platform Berriz and Melon Ticket; SM Entertainment is aiming for additional revenue from concerts, merchandising and licensing, while Japanese Kakao Piccoma, after annual operating profit of more than 10 billion yen, is expanding into AI-generated animation and merchandising.
On the mobility front, revenue from the other platforms, which include Kakao Mobility and Kakao Pay, rose 21% year on year to 602.1 billion won. Kakao Mobility has expanded its autonomous car service in Seoul's Gangnam district to six vehicles, and is developing AI-assisted traffic management, 3D mapping and digital twin technologies. The company is also exploring defense applications, including AI-based vehicle assignment, autonomous driving and integrated control systems for drones, robots and unmanned vehicles.
Fintech as a pillar, and the checks still open
The financial subsidiaries delivered the strongest results. KakaoBank reported a record cumulative net profit of 469.8 billion won in the first nine months of the year, up 25.2% year on year, with 20.57 million monthly active users. Kakao Pay recorded quarterly revenue up 27% to 302.1 billion won and operating profit more than doubled, with a transaction volume of 53.7 trillion won and a stock trading volume at Kakao Pay Securities up 139% to 81.6 trillion. Both are investing in AI-based financial services: KakaoBank is aiming for an "AI-native" banking model, while Kakao Pay's AI Coach assistant surpassed 450,000 cumulative visitors at the end of October. A Kakao official said that content, fintech and mobility are the core businesses of Kakao X and that the spin-off will enable more targeted investment and capital allocation. According to the source, it remains to be seen whether these initiatives will translate into sustained profits: this is the main test of Kakao X's attractiveness as an entity separate from the platform business.
