Kakao Enterprise, the cloud service provider spun off from Kakao’s AI Lab, recorded a net loss of 1.613 trillion won last year, up 70.5% from the previous year. Despite a 71% increase in sales, the company’s operating loss was 1.406 trillion won, with a deficit of 505 billion won. The industry attributes the losses to Kakao Enterprise’s late entry into the CSP industry and the costs associated with investing in R&D, infrastructure, and talent.
Kakao Enterprise’s flagship products, Kakao Work and Kakao i Cloud, are struggling to generate cash flow, with high internal transaction rates being the main source of sales growth. Although the company lowered its internal transaction rate to 49.8% last year, it still generates more than half of its sales through its affiliates.
In addition to its financial struggles, Kakao Work is lagging behind Naver’s ‘Naver Works’ and Gabia’s ‘Hi Works’ in terms of user numbers. Poor sales are being attributed to frequent server errors. Despite these challenges, Kakao Enterprise is continuing to develop its comprehensive work platform, enterprise-integrated cloud platform, AI-based logistics platform, and AI customer center platform.
Analysts predict that Kakao Enterprise will continue to be a drag on Kakao’s performance in the first quarter of this year, with an expected deficit of around 30 billion won. However, the company remains optimistic about its long-term growth prospects and is dedicated to improving its products and services to meet the needs of its customers.