[Edaily Reporter Lee So-Hyun ] Kakao ( Kakao(035720)) announced that it has no plans to convert Kakao X, the surviving entity following the corporate spin-off, into a holding company. The company stated that since Kakao AI and Kakao X will operate independently, there is no longer a need for a joint organization such as the CA Council, which has coordinated group decision-making.

Jeong Shin-ah, CEO-designate of Kakao AI, and Kim Do-young, CEO-designate of Kakao X, outlined the group’s future governance structure, shareholder returns, and AI investment and business strategies at a press briefing on Kakao’s corporate spin-off held on the 21st.

The following is a Q&A from Kakao’s press briefing on the corporate spin-off.

- When did discussions on the spin-off begin?

△ Kim Do-young, CEO-designate of Kakao X = We’ve been holding both formal and informal discussions at the board level since early this year. We determined that the current structure is best suited for long-term growth and enhancing corporate value.

-What was the basis for dividing the two companies?

△Kim Do-young: It is a structural separation into an AI business company and an investment company. Kakao AI is a business company focused on Talk and AI, while Kakao X is a portfolio management company that holds stakes in affiliates and provides support and investment.

- Will there still be a link for decision-making between the two companies after the split?

△Kim Do-young=They will operate independently as a general rule. However, business collaboration between KakaoTalk and its subsidiaries will continue as before.

- Will Kakao X be converted into a holding company? Will the CA consultative body be maintained?

△Kim Do-young=I can state categorically that we have absolutely no plans to convert Kakao X into a holding company. Joint organizations like the existing CA Council are no longer necessary. Before the spin-off, Kakao was both a business entity operating commerce and advertising businesses based on the KakaoTalk platform and a manager of its subsidiaries, which is why the CA Council existed to oversee the independent operations of those subsidiaries. After the spin-off, the two companies will be managed independently, as their business objectives differ. However, organic collaboration between the KakaoTalk platform and the subsidiaries will continue as it has in the past.

-Why did you choose to spin off the companies again after simplifying governance?

△Kim Do-young=There was a sense of urgency that if we didn’t move quickly now, we might miss a critical window of opportunity to become a leader in B2C AI services. It’s difficult to cite specific examples of decision-making delays.

-Will the shareholdings of founder Kim Beom-su and K-Cube Holdings change?

△Kim Do-young=The ownership stakes will remain the same before and after the spin-off. We expect the founder to continue supporting growth and innovation as the major shareholder in both companies.

-What are the plans for shareholder returns?

△Kim Do-young=Kakao X will return 30% of each of its subsidiary dividend income and investment income to shareholders. It will also use the capital gains from the sale of its Dunamu stake to repurchase and cancel 300 billion won worth of treasury stock. Kakao AI will return 20–35% of its free cash flow and has also prepared a plan to expand this to up to 40% in the future.

-What is the basis for achieving 20 million AI DAUs and 6 trillion won in revenue?

△Jeong Shin-ah, Kakao AI CEO-designate = There are approximately 30 million users who actively engage in conversations on KakaoTalk every day, and the usage rate of KanaNa within KakaoTalk stands at 60–70% of KakaoTalk’s MAU. AI users spend more than 50% longer on the platform than non-users. We plan to expand our revenue model through advertising, recommendations, and partner commissions.

- What is the basis for believing that the value of both companies will increase after the spin-off?

△Kim Do-young = While securities firms have valued Kakao’s assets at 34.2 trillion won, its market capitalization stands at 16.8 trillion won. Kakao AI will be revalued as an AI company, while Kakao X will enhance the value of its growth businesses, such as physical AI, virtual assets, and global fandom.

- Were there any spin-off cases, such as those of KTCorporation or SKSQUARE, that you referenced?

△Kim Do-young=We did not reference any specific company. We comprehensively reviewed cases from domestic and international companies facing similar challenges.

-What will happen to Kakao headquarters employees and their stock options?

△Jeong Shin-ah=Most headquarters employees will transfer to Kakao AI, and their employment conditions will remain unchanged. Stock options will also be divided according to the split ratio.

-Is there a concern that Kakao X might face a holding company discount?

△Kim Do-young=The key KPIs are to increase the net asset value (NAV) of Kakao X’s subsidiaries and reduce the NAV discount rate. We will return a portion of investment returns to shareholders to create a virtuous cycle of corporate value and shareholder value.

-Where will Kakao Enterprise be incorporated?

△Kim Do-young=Immediately after the spin-off, it will start as a subsidiary of Kakao X. We are considering moving it under Kakao AI in the future, taking business relevance into account, but nothing has been finalized.

- Are there any plans for additional listings or mergers of affiliates?

△Kim Do-young=There are currently no plans for additional corporate restructuring or mergers. In the event of future listings, we will comply with dual-listing guidelines to ensure that shareholder value is not compromised.

- The convertible bonds are being transferred to Kakao AI. What is the financial burden?

△Jeon Shin-ah=The amount of convertible bonds is negligible. We will invest based on EBITDA and return on investment (ROI), and rather than unconditionally scaling up large models, we will pursue revenue growth and cost reductions simultaneously through cost-effective models.

- Can Kakao AI handle its AI investments on its own?

△Kim Do-young=At the time of the spin-off, Kakao AI will start with approximately 2.3 trillion won in cash and an annual EBITDA generation capacity of about 700 billion won. Kakao X will also secure 6.4 trillion won in investment funds by combining its own 2.3 trillion won with 4.1 trillion won from its subsidiaries.

-How will costs be settled if the two companies share brands, data, and infrastructure?

△Kim Do-young=Transactions between the two companies will be conducted on terms consistent with market prices. The specific methods of sharing and contractual details will be determined through mutual agreement between the two companies.

- Will you continue developing your own AI models, such as Kanana?

△Jeong Shin-ah=We will continue to independently develop our own AI models tailored to our data and services. We will expand partnerships with external businesses and the Agent AI ecosystem, and focus on securing key talent—both internally and externally—rather than pursuing large-scale mergers and acquisitions.

-Regarding criticism that the 0.36 split ratio for Kakao AI is too low:

△Kim Do-young=This ratio was determined based on net asset value in accordance with relevant regulations. While there may be a discrepancy with the company’s market value, existing shareholders’ ownership stakes will be maintained, and the value of both companies will be reevaluated by the market following the spin-off.