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Internet giant Kakao to spend surging profits on 'AI ecosystem'

Content and ad sales jump, mini-speaker sells out in nine minutes

Display of KakaoTalk (Photo by Ken Kobayashi)

SEOUL -- Robust sales of content and advertising pushed up Kakao's earnings in the third quarter, helping the internet company invest more in artificial intelligence technology.

The South Korean company said its operating profit jumped 57% year-on-year to 47.3 billion won ($42.5 million) in the July-September period, with revenue soaring 32% to 515.4 billion won and net profit increasing 193% to 39.9 billion won.

On a quarter-on-quarter basis, its operating profit rose 6% and revenue increased 10%. Net profit spiked 219% in the third quarter from the previous three months.

"New advertisements on [chat app] KakaoTalk increased and those on [search engine] Daum's mobile platform also continued to rise," said company CFO Choi Yong-seok in a conference call. 

"Content sales of music and games also rose strongly on the back of increasing numbers of paid customers using Melon," he added, referring to Kakao's affiliate online music store.

Kakao CEO Rim Ji-hoon said that the company is aiming to set up an AI-driven ecosystem in which people can connect with each other and enjoy services at home, in the office or on the go. 

"Kakao is cooperating with Samsung Electronics' Bixby, Hyundai Motor and GS E&C. It is part of our plan to launch our AI Kakao-i in homes, cars and physical stores," said Rim.

The company is also planning to soon release additional units of its AI speaker, dubbed the Kakao Mini, after the first 15,000 sold out in nine minutes upon launch on Tuesday. 

Rim stressed the competitive advantages of the speaker lay in the convenience of its connection to KakaoTalk and Melon.

"Kakao Mini's services are extraordinary, helping customers listen to music through Melon and send messages through KakaoTalk. It will let people communicate with machines more smoothly," he said.

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