[Park Yong-hoo / Perspective Designer] Earnings Are Back. But Restoring Trust Is Still a Work in Progress

If we were to summarize #Kakao’s recent situation in a single sentence, it would be this: Kakao is not a company in decline. On the contrary, it is a company that has started making money again. However, it is still too early to conclude that it has fully regained its status as a respected company. While the earnings figures point to a recovery, the incidents that repeatedly made headlines during the same period show that the process of restoring trust is still ongoing.

On a consolidated basis, Kakao reported revenue of 1.9421 trillion won and operating profit of 211.4 billion won for the first quarter of 2026. Compared to the same period last year, revenue increased by 11% and operating profit by 66%. Both revenue and operating profit reached all-time highs for a first quarter. Judging by the numbers alone, Kakao is clearly improving. In particular, the 16% year-over-year increase in revenue from the platform segment demonstrates that Kakao’s fundamental competitiveness remains strong.

Kakao: A Company That Has Become a Habit

So, what kind of company is Kakao? First and foremost, Kakao is “the company that owns KakaoTalk.” This is not just a simple description. KakaoTalk is a messenger, but it is also an advertising platform, an e-commerce store, a payment gateway, and a customer management tool. Companies send messages to customers via KakaoTalk Channels, consumers make purchases through the “Send Gifts” and “TalkDeal” features, and small business owners handle reservations and consultations right within Kakao. Kakao’s strength stems not from the flashiness of its technology, but from the depth of its integration into daily life.

In this regard, Kakao is fundamentally different from Naver. While Naver is also expanding its reach into shopping, payments, and AI, its starting point is the “act of searching.” In contrast, Kakao’s starting point is the “state of being connected.” People open a search bar when they want to find something, but they open KakaoTalk when they want to connect with others. Search is an intent-based action taken when needed, while a messenger is a relationship-based habit that remains open all day long. This is precisely why Kakao is so strong. Kakao is not just an app; it is a company that has become a habit.

Stricter Standards for Infrastructure Companies

However,

it is

precisely for this reason

that

Kakao faces stricter scrutiny. For a company that has become a fundamental part of people’s daily lives, simply making a lot of money is not enough. If a service outage occurs, it becomes a social issue; if labor-management conflicts escalate, they become a matter of national concern; and if a problem arises at an affiliate, Kakao’s overall image is immediately shaken. Although Kakao is already a private company, it has reached a point where it cannot act solely as a private company.

Questions Raised by the First Strike Since the Company’s Founding

The event that most clearly illustrated this was the strike that took place on June 10. Labor unions at five entities—including Kakao’s headquarters, Kakao Pay, Kakao Enterprise, DK Techin, and XL Games—simultaneously launched a four-hour partial strike. Although Kakao Mobility had staged a two-hour partial strike last year, this was the first time in the company’s history that five subsidiaries, including the headquarters, had halted operations simultaneously.

The surface-level issue is performance-based bonuses. While management and labor had agreed to allocate approximately 10% of last year’s operating profit as funding for performance bonuses, they were at odds over whether to include the restricted stock units (RSUs) worth 5 million won—which were distributed last April—in the bonus calculation. The company maintains that RSUs are already a form of compensation included in the performance bonus, while the union argues that RSUs and performance bonuses are separate and that a separate performance bonus—amounting to 13–14% of operating profit, or approximately 10 million won per employee—should be paid. The union has warned that it will launch a full-scale general strike on June 29 if no agreement is reached.

However, this strike goes beyond the mere issue of compensation; it highlights the question being raised among employees: “The company has improved, but are the benefits of that success being sufficiently shared?” The company is emphasizing its improved performance, while some employees are demanding more convincing explanations regarding compensation and communication. This gap also illustrates the organizational challenges Kakao currently faces.

Corporate crises do not usually first manifest in the income statement. Rather, even as financial results improve, a crisis can begin with a breakdown in internal trust. When employees do not find the company’s explanations convincing, question compensation criteria, and employees at affiliate companies begin to worry about job security, the company faces burdens separate from its financial figures. The challenge Kakao currently faces can be seen as one of persuasiveness, no less significant than profitability.

Affiliate Risks and the Decision to Expand to the U.S.

The risks associated with affiliates are also significant. While Kakao may appear to be a single company, it is actually a platform group intertwined with numerous affiliates and services. Issues at each affiliate—such as Kakao Pay, Kakao Mobility, Kakao Enterprise, DK Techin, and XL Games—are all grouped together under the Kakao name. While headquarters may explain these as “issues specific to each legal entity,” public opinion does not see it that way. To consumers, Kakao is Kakao. Conflicts among affiliates, service inconveniences, and employment instability are all perceived as Kakao’s problems.

Reports of Kakao Mobility’s push for a U.S. ADR offering can be viewed in the same context. Kakao Mobility has selected Bank of America Merrill Lynch, UBS, and Morgan Stanley as advisors and is even conducting a re-audit in preparation for a U.S. stock market listing, aiming for a Nasdaq listing within the year. This goes beyond a simple consideration of an overseas listing; it is an issue entangled with various stakeholders. TPG, the second-largest shareholder that has been investing since 2017, has been seeking ways to recoup its investment for nine years, and the U.S. market is being discussed as a new option amid South Korea’s regulatory environment restricting dual listings. The market estimates Kakao Mobility’s total enterprise value at 10 trillion won, with the ADR offering expected to raise between 3 trillion and 4 trillion won.

This demonstrates that Kakao has evolved from a fast-growing startup in its early days into a large corporate group that must balance the demands of various stakeholders. Financial investors want to recoup their investments; the company must articulate its growth strategy; the market evaluates its corporate value; and users and partners question the public nature of its services. Kakao is no longer a company that simply needs to grow rapidly. It is now a company that must coordinate, explain, and take responsibility.

Kim Beom-soo’s Appeal Trial: Another Cloud on the Horizon

The trial involving founder Kim Beom-soo is also a significant source of pressure for Kakao. Kim, who was indicted on allegations of market manipulation involving SM Entertainment, was acquitted in the first-instance trial last October. However, the prosecution appealed, and the case has been transferred to the Seoul High Court; the first hearing of the appeal trial is scheduled for June 24. Hearings are scheduled every month through July, August, September, and October.

The fact that he was acquitted in the first trial is certainly important. However, for the time being, Kakao must contend with the possibility that the progress of the related trial will affect its corporate reputation. A company’s reputation is not determined solely by a legal verdict of guilt or innocence. The market is asking: Are Kakao’s decision-making processes sufficiently transparent? Are the lines of responsibility clearly defined in the processes of acquisitions, investments, and the management of affiliates? Is there a healthy balance between the founder’s influence and the professional management system?

Kakao finds itself in a situation where it must continue to address the market’s questions regarding its governance and decision-making systems.

The Challenge of AI Transformation and Resource Allocation

Of course, Kakao has declared its commitment to change. In particular, the transition to AI is the future strategy Kakao has been emphasizing most strongly recently. The direction it is taking—AI models and services, ChatGPT for Kakao,

and

the Agent-based AI platform—is certainly intriguing. If Kakao leverages AI effectively, KakaoTalk could evolve beyond a simple messaging tool to become a personal assistant, shopping advisor, booking assistant, and customer management platform. Lifestyle AI—which reads the context of a conversation and translates it into necessary actions—is an area where Kakao excels.

However, there are challenges to overcome. The company has stated that the union’s compensation demands represent “a burden that is difficult to bear in order to secure future growth engines and enhance shareholder value.” Consequently, the company faces the challenge of striking a balance between investing in future growth and compensating its employees. It must maintain the pace of its AI transformation while simultaneously building trust among its internal staff. This could become one of Kakao’s key tests moving forward.

If AI is used solely to increase ad click-through rates and boost e-commerce conversion rates, users may become fatigued. Conversely, if AI is used to save users time, lighten the workload for small business owners, make customer service more convenient, and reduce information asymmetry, Kakao could once again be recognized as a company that the public needs. The direction of technology is ultimately a matter of philosophy.

Kakao is currently facing the challenge of restoring trust

Here is one perspective on Kakao today: Kakao has entered a phase of financial recovery. However, restoring trust remains a critical management challenge.

Kakao is a daily life infrastructure company. However, it must further refine its accountability framework to match its role as such. Kakao is a company that has declared its transition to AI. However, to be recognized as an AI innovation leader, it must demonstrate tangible changes in the actual user experience. Kakao remains a powerful company deeply embedded in the daily lives of Koreans. However, the mere fact that it is a powerful company does not automatically mean it is regarded as a good company.

Kakao’s Three Key Battlegrounds

Going forward, Kakao faces three

key battlegrounds

.

First, Kakao must further enhance the economic value of KakaoTalk. KakaoTalk remains Kakao’s most powerful asset. Kakao is virtually the only company in Korea with a platform capable of seamlessly integrating advertising, e-commerce, payments, reservations, and AI-powered customer service. This asset must not be squandered.

Second, it must not treat issues at its affiliates as merely “matters for each individual corporation.” The moment they share the Kakao name, they also share responsibility. If risks at affiliates recur, the parent company’s brand credibility could also be affected. Kakao needs a more sophisticated group governance and accountability structure.

Third, Kakao must restore trust among its employees. A company doesn’t just sell its brand to external customers; it must also sell a vision of the future to its employees. If employees don’t believe in the company’s future, it will be difficult to survive in the long run, no matter how advanced its technology may be. What matters more than earnings announcements is providing explanations that employees can understand and accept.

A return to profitability is just the beginning

. Kakao is a company that has transformed people’s daily lives. Most of the activities—sending messages, giving gifts, hailing taxis, making payments, and consuming content—still go through Kakao today. That fact cannot be denied. However, a company that has transformed daily life must also take responsibility for that daily life. As the platform grows, so do the questions. “How” the company has grown is becoming more important than “how much” it has grown. “With whom” the profits were shared is becoming more important than “how much” was earned. “Who benefits from the technology” is becoming more important than “what technology was adopted.”

Kakao has started making money again. Now, there is only one question left: Can Kakao become a trustworthy company once more? Kakao’s image in the media over the past three months stands in the face of this question. The recovery in earnings is just the beginning. True recovery will only be complete when trust is restored.