[E-Daily Reporter Lee So-Hyun ] Kakao(035720)Kakao is undertaking its largest corporate restructuring since its founding through a spin-off that divides the company into the newly established Kakao AI and the surviving entity, Kakao X. This move stems from a decision to redirect management resources—previously focused on managing subsidiaries—toward core growth businesses such as artificial intelligence (AI).

It was revealed that approximately 85% of Kakao’s board of directors’ major decisions over the past five years were related to subsidiaries, and 84% of internal investment review items over the past year focused on subsidiary issues.

Kim Do-young, CEO-designate of Kakao X, explained the rationale behind the spin-off at Kakao’s spin-off press conference on the 21st, stating, “Under the current business and governance structures, there is a need to streamline decision-making and resource allocation.”

According to Kim, 23 of the major decisions made by Kakao’s board of directors over the past five years—accounting for approximately 85%—were related to subsidiaries. In particular, a significant portion of the board’s and management’s resources was devoted to resolving issues at subsidiaries facing difficulties or requiring capital support or loans. Of the 32 cases handled by the internal investment review committee over the past year, 84% were also related to subsidiaries.

In contrast, over the past two to three years, the capital markets have been pressing Kakao to commercialize its business-to-consumer (B2C) AI services and establish concrete revenue models. Nominee Kim stated, “Because we were so occupied with resolving and managing the many issues at our subsidiaries, a significant portion of Kakao’s core management resources was diverted from important tasks to urgent ones.” He went on to emphasize, “Resolving this issue is, above all, the first step toward maximizing corporate value and enhancing shareholder value.”

Separating

Subsidiary Management from AI… “Restoring Growth Momentum”

Kakao will structurally separate its AI business from its subsidiary management and investment functions through a spin-off. The newly established Kakao AI will focus on the B2C AI business, which integrates AI, advertising, and commerce centered around KakaoTalk, while the surviving entity, Kakao X, will be responsible for supporting the growth of key subsidiaries—such as those in fintech, content, and mobility—identifying new growth engines, and investing in innovative companies.

Kim, the nominee, stated, “Through this spin-off, we will explicitly eliminate the conglomerate discount and restore the growth pace that Kakao has truly wanted to showcase,” adding, “We will maximize corporate value and shareholder value by allocating resources through specialized decision-making for each business segment.”

The corporate value discount cited by Kakao is also a key factor behind the split. The sum-of-the-parts (SOTP) value of Kakao’s individual business segments, as assessed by domestic and international securities firms, totals 34.2 trillion won—roughly double the company’s average market capitalization of 16.8 trillion won over the past three months. It is explained that Kakao’s core business alone is valued at approximately 12.6 trillion won, while the combined value of the remaining subsidiaries is estimated at approximately 21.6 trillion won.

Kim explained that since investors seeking to invest in AI companies and vertical businesses such as mobility and entertainment have different expected rates of return and risk appetites, separating the businesses would allow each to receive a more appropriate valuation in the market. He also presented a plan to clarify Kakao AI’s identity so that it can receive a valuation appropriate for an AI company.

Kakao X’s 6.4 Trillion Investment Fund… Focusing on Techfin, Content, and Mobility

Following the spin-off, the investment funds available to KakaoX—combining the parent company and its subsidiaries—will total approximately 6.4 trillion won. Kim, the nominee, stated, “KakaoX is an investment-focused company dedicated to growing future value,” adding, “We plan to incorporate into our business the spirit of challenge that Kakao has demonstrated in pursuing uncharted paths, as well as our experience in achieving ‘zero-to-one’ breakthroughs across various sectors.”

Kakao X’s core growth pillars are fintech, content, and mobility. In the fintech sector, KakaoX will expand its financial ecosystem centered on KakaoBank Corp., kakaopay, and KakaoPay Securities, while pursuing virtual asset businesses, including stablecoins. Kim said, “With KakaoBank Corp., kakaopay, and KakaoPay Securities working together, we have a growth agenda that will enable us to become the undisputed market leader in the virtual asset and stablecoin sectors.”

In the content sector, the company will expand its global fandom and live entertainment businesses based on Kakao Entertainment, SM Entertainment, and Kakao Piccoma. It will connect Seoul Arena with global fan communities and promote the use of AI to adapt story-based intellectual property (IP) into video content.

Kakao Mobility will leverage robotaxis and logistics as new growth engines. The company plans to expand the paid autonomous taxi service currently operating in Gangnam and broaden its scope to include a robotaxi operator model and a smart logistics business based on autonomous trucks. Kim, the nominee, said, “We have already begun investing in the robotaxi and logistics sectors,” adding, “Robotic logistics presents an additional growth opportunity.”

The company is also moving forward with new core businesses and investments in innovative overseas companies. Building on its experience in increasing corporate value through investments in Dunamu, Karrot, and Korea Credit Data, Kakao plans to expand its investment scope overseas, including to the United States. Kim, the nominee, said, “We have proven that we can increase corporate value—as well as user and shareholder value—through business support, even without holding controlling stakes,” adding, “We plan to continue this approach.”

1

0 Trillion Won in Revenue by 2030… Annual Growth Rate from 8.6% to 13%

Kakao X aims to accelerate its growth through this strategy. Revenue from its major subsidiaries increased from 4.7 trillion won in 2023 to 5.1 trillion won in 2024 and 5.6 trillion won in 2025, marking an average annual growth rate of 8.6% over the past two years.

Based on the business plans of its subsidiaries, Kakao projects that annual average growth of approximately 13% will be achievable going forward. Accordingly, the company aims to grow the revenue of KakaoX’s core businesses to over 10 trillion won by 2030. This projection excludes revenue from KakaoBank Corp., which is not a consolidated subsidiary.

Kim, the nominee, stated, “Based on a collection of moderate, achievable plans, we expect annual growth of about 13%,” adding, “It appears we will generate revenue that is nearly double the 5.6 trillion won recorded in 2025.”