Kakao Accelerates AI Race with Dual Engines...Seeks New Growth Pillars through Future Investments
Why is Kakao Spinning Off Kakao AI and Kakao X?
Kakao is creating a structure in which two entities—Kakao AI and Kakao X—can each focus on their respective growth challenges by separating the business units through a human capital split. Although Kakao possesses the powerful KakaoTalk platform, it has often been evaluated as lagging behind other platform companies in the AI race. As the company grew in size and the number of affiliates increased, its decision-making structure became more complex.
On August 21, Kakao explained the background for the human capital split, stating, “As the scale of our business expanded and became increasingly complex, operating under a single decision-making framework reached a structural limit that made it difficult to execute agile and tailored strategies for each business segment.”
Kakao AI will focus on transforming KakaoTalk into an agentic AI-centered platform. When a user sends a request via message, a personalized AI agent will connect the user to the necessary services and specialist agents, handling tasks ranging from search and recommendations to purchases and payments. Through this, Kakao AI aims to provide users with personalized AI agents.
Kakao X has set a goal to expand in growth areas such as virtual assets, physical AI, and global fandoms. Last year, Kakao and its affiliates including Kakao Pay and Kakao Bank established a won-based stablecoin task force. Early this year, CEO Jin Sungha also identified a global fandom operating system (OS) as a new engine of growth in his New Year’s address.
To achieve these goals, Kakao X will utilize approximately 2.3 trillion won raised by liquidating assets, as well as 4.1 trillion won in investment capital held by its subsidiaries. The aim is to achieve an average annual growth rate of 13.3% in revenue from core businesses through 2030, and to establish a growth foundation targeting annual revenues exceeding 10 trillion won.
Kakao also anticipates that the value of each business will be more clearly assessed after the human capital split. According to the sum-of-the-parts (SOTP) consensus average from domestic and global securities firm research centers, the potential value of the Kakao Group is estimated at around 34.2 trillion won. This figure is about 17.4 trillion won higher than Kakao’s recent three-month average market cap of roughly 16.8 trillion won.
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After the split, Kakao AI and Kakao X plan to regularly disclose key indicators and capital allocation principles, including revenue, profitability, investments, and shareholder returns. They will also expand domestic and overseas investor presentations and communication programs with shareholders. Several shareholder value enhancement plans have also been presented. Kakao AI will allocate 20–35% of its separate adjusted free cash flow (FCF) as the primary resource for shareholder returns. Kakao X will use 30% of its subsidiary dividends and 30% of investment gains as shareholder return resources. The 300 billion won gained from the recent sale of Dunamu shares is scheduled to be used for share buybacks and cancellations.
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