Toss, operated by Viva Republica, is accelerating its platform expansion, leveraging its large user base. However, as the company expands its business, the challenge lies in how quickly it can convert the increased user traffic into revenue.
As of the end of June, Toss reported 26.6 million monthly active users (MAU), with an average monthly usage time of 155 minutes per user, ranking among the top in the banking and finance app sector.
Toss is enhancing the integration of its financial services through a 'one app' strategy, which consolidates offerings from its key financial subsidiaries, including Toss Bank and Toss Securities.
To broaden user engagement, Toss is also expanding into new business areas. The number of subscribers to its facial recognition payment service, FacePay, has surpassed 6 million, and the company is extending its reach into the offline payment market through Toss Place.
Despite this growth, profitability has not kept pace with the expansion. Toss's operating profit for the first quarter of this year was 37.1 billion won, down from 70.8 billion won in the same period last year. On a standalone basis, the company reported an operating loss of 62.1 billion won.
Increased costs associated with service enhancement, employee salaries, transaction fees, and IT infrastructure, along with higher marketing expenditures to attract users, have contributed to this decline.
Cash flow has also worsened. For the first quarter, standalone operating cash flow and free cash flow were recorded at -7.9 billion won and -25.7 billion won, respectively, indicating a shift to negative figures.
The pressure on profitability is likely to continue in the near term due to ongoing investments in new services and user acquisition. Toss has injected significant funds into its subsidiaries, including a 50 billion won capital increase for Toss Place last year.
Experts suggest that for Toss to rebound, it must create a virtuous cycle where user growth translates into increased revenue and profits. The ability to convert user traffic into actual revenue through advertising, payments, and financial product brokerage will be crucial for Toss's future growth.
Yook Seong-hoon, a senior researcher at NICE Credit Rating, stated, "Toss is expected to continue facing operating losses and poor free cash flow in the short term due to its strategy of upfront investment in sales costs for user acquisition. We plan to monitor whether the invested costs lead to improvements in user metrics and whether profitability can recover based on that."
A Toss representative commented, "We are making proactive investments to create synergies with new businesses such as service enhancement, offline payments, and FacePay. Based on our large user base and high app engagement time, we aim to strengthen the growth structure of key revenue sources such as advertising, payments, and financial brokerage in the future."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.