Kakao's planned corporate split has elicited mixed reactions from the financial sector. While some analysts believe the split clarifies the company's growth trajectory, others question the tangible benefits of the division. The focus has shifted to whether the company's artificial intelligence (AI) services can effectively convert into revenue before the extraordinary general meeting in December.
On August 24, major securities firms released reports on Kakao's restructuring direction. Hanwha Investment & Securities provided a positive assessment, stating that the company has clarified its growth direction by moving away from a complex governance structure.
Previously, Kakao operated as a conglomerate with various businesses, including platforms, finance, and content. However, Kakao AI is expected to focus on B2C AI services based on KakaoTalk, allowing for a separate evaluation of its growth potential.
Kim So-hye, a researcher at Hanwha Investment & Securities, noted, "Kakao AI's integration of stable cash-generating businesses like messaging, advertising, and commerce with AI is expected to simplify the company into a platform and AI agent enterprise, moving away from its previous complex structure."
Conversely, firms such as Kiwoom Securities, Samsung Securities, and Meritz Securities raised concerns about the benefits of the split. Kiwoom Securities suggested that the division could undermine the overall customer value that Kakao possesses, arguing that the synergies from the current integrated structure might diminish due to the split.
Samsung Securities emphasized that the newly established Kakao X would serve as a holding company, which could lead to a 'holding company discount.' They also highlighted the need for Kakao AI to prove its revenue generation capabilities.
Meritz Securities acknowledged the positive aspect of simplifying the complex structure but stressed that securing profitability in the AI business is more critical than the restructuring itself. Hana Securities noted that while the direction of the governance restructuring has become clearer, risks related to governance remain a challenge ahead of the December extraordinary general meeting.
Kakao AI has set ambitious targets, aiming for 6 trillion won in revenue by 2030, with an annual growth rate of over 20% and an operating profit margin of 30%. The company plans to expand its new AI revenue to account for a double-digit percentage of total sales by 2028, reaching 1 trillion won by 2030. Jeong Sin-a, the incoming CEO of Kakao, expects the number of monthly active users (MAUs) utilizing AI services on KakaoTalk to exceed 10 million by the end of this year, with plans to begin monetization next year.
However, the speed at which the AI business translates into actual revenue remains to be seen. B2C AI may take longer to monetize compared to B2B AI. If the company fails to secure differentiated features that users can perceive, the expansion of B2C AI services may be delayed beyond expectations.
Kakao X also faces challenges. In its projected revenue for 2026, content is expected to account for 64%, followed by tech finance at 21% and mobility at 15%. Kakao X aims to utilize its cash reserves of approximately 2.3 trillion won to secure new growth engines and achieve 10 trillion won in revenue by 2030. However, the ongoing struggles in content may be difficult to resolve in the short term, making the growth of Kakao Pay and Kakao Mobility crucial to offsetting these challenges.
Convincing shareholders is another variable. Kakao plans to seek approval for the split at an extraordinary general meeting on December 17, with the split expected to be completed by January 1, followed by the relisting of Kakao AI and the change in listing for Kakao X on January 27.
For the split proposal to pass, it requires a two-thirds majority of the voting rights of attending shareholders and more than one-third of the total issued shares, as stipulated by corporate law. The largest shareholders, including founder Kim Beom-soo and related parties, hold 24.08% of the shares, which is insufficient to meet the requirements on their own. Kakao is expected to explain the necessity of the split and its growth strategy post-split to persuade key shareholders ahead of the extraordinary general meeting.
* This article has been translated by AI.
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