Kakao Games reports sharp drop in Q2 operating profit

Kakao Games Corp., a game publishing unit of South Korean tech giant Kakao Corp., reported a sharp decline in second-quarter earnings on Wednesday due to the absence of new hit games.

Its operating profit plummeted 89.4% to 2.8 billion won ($2.03 million) in the second quarter from a year earlier, sharply missing market expectations of 8.6 billion won. The earnings are on a preliminary and consolidated basis.

Revenue at the gaming company fell 13.1% to 235.6 billion won. It swung to a net loss of 11.7 billion won.

The company's mobile game revenue was 134.5 billion won, a decrease of 21.8% compared to the same period last year and a 16.6% fall compared to the previous quarter.

The decline was blamed on the lack of new popular titles and a drop in long-term subscribers for its games.

In contrast, the PC gaming segment, buoyed by the continued success of "Battlegrounds," saw a 37.3% surge in revenue to 16.3 billion won. Kakao is a co-publisher of the battle royale game developed by Krafton Inc.

To revitalize its business, Kakao Games is expanding its game pipeline, with a particular focus on console titles.

The company plans to unveil three new console games later this month, including "Lost Eidolons: Veil of the Witch," "Section 13," and "God Save Birmingham." These titles are expected to be released between the second half of this year and next year.

Additionally, it plans to launch AAA titles, or high-budget, high-profile games, such as "Chrono Odyssey," "ArcheAge 2" and "Swordmaster's Youngest Son" from next year through 2026.

Write to Han-Gyeol Seon at always@hankyung.com