KOSDAQGames293490

Kakao Games

₩10,160▲ 2.11%2026-10-02 close

Market Cap

₩1.1T

Turnover

₩6.6B

Volume

650,000 shares

Shares out.

110M

PER

—

PBR

0.6×

EPS

-₩1,446

Dividend Yield

0.00%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close

Report overview

Losses Persist as Control Changes, New Titles Are the Test

Kakao Games continues to post declining revenue and a seventh straight quarter of operating losses, even as control passed to LY Corporation-backed LAAA Investment and the company aims for a turnaround through new title launches starting in the fourth quarter of 2026.

1
The company posted its first annual operating loss of KRW 39.6 billion in 2025 since listing, and losses continued in both the first and second quarters of 2026.
2
In June 2026, LAAA Investment, funded by LY Corporation (Line Yahoo), acquired shares from Kakao Corp to become the largest shareholder, pushing Kakao Corp down to second-largest shareholder.
3
The company secured roughly KRW 300 billion through a rights offering and convertible bonds, and a new co-CEO system led by Kim Tae-hwan and Lee Si-woo was launched.
4
At least five new titles are scheduled from the fourth quarter of 2026 through the first quarter of 2027, starting with 'Dokkaebi's World' in October, and the company has set a target of returning to profit in the first quarter of 2027.
5
Samsung Securities and IBK Securities both lowered their target prices in reports issued in the first half of 2026, citing earnings uncertainty stemming from repeated title delays.

Business structure

Kakao Games focuses on developing and publishing mobile and PC online games, and in the second quarter of 2026 mobile game revenue of about KRW 52.7 billion exceeded PC online revenue of about KRW 22.3 billion.

Its core cash cow remains 'Odin: Valhalla Rising,' launched in 2021, which topped Google Play revenue rankings following its fifth-anniversary update in July 2026. However, the prolonged absence of a major new revenue driver beyond Odin remains a structural issue.

The PC online segment is centered on domestic publishing of 'PUBG: Battlegrounds' and globally licensed titles such as 'Path of Exile 2.' The company also operates numerous smaller casual titles, including games based on the Kakao Friends IP, through the 'Game Chip' platform inside KakaoTalk, running a traffic-based business alongside its core titles.

Subsidiaries include Lionheart Studio (developer of Odin Q), XLGAMES (the ArcheAge series), Supercat, Ocean Drive Studio, and Metabora.

The competitive landscape overlaps with major publishers such as Nexon, NCsoft, Krafton, and Netmarble, and competition in the global PC/console market has intensified, with Krafton in particular showcasing multiple new titles.

Since June 2026, control passing to LY Corporation (Line Yahoo)-backed LAAA Investment has added a new business variable centered on expanded access to the Japanese and Southeast Asian markets.

Earnings trend

Quarterly revenue · Operating profit

₩115.8B-₩8.6B25Q2₩127.5B-₩5.4B25Q3₩98.9B-₩13.1B25Q4₩82.9B-₩25.5B26Q1₩75B-₩23B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.1T₩175.8B2022₩1T₩74.5B2023₩627.2B₩19.1B2024₩465B-₩39.6B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩115.8B	-₩8.6B	−7.4%
2025Q3	₩127.5B	-₩5.4B	−4.3%
2025Q4	₩98.9B	-₩13.1B	−13.2%
2026Q1	₩82.9B	-₩25.5B	−30.7%
2026Q2	₩75B	-₩23B	−30.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.1T	₩175.8B	-₩233.6B	15.3%	−13.9%	92.3%
2023	₩1T	₩74.5B	-₩228.7B	7.3%	−16.4%	113.5%
2024	₩627.2B	₩19.1B	-₩108.9B	3.1%	−8.1%	114.6%
2025	₩465B	-₩39.6B	-₩100B	−8.5%	−8.4%	123.4%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23

Earnings analysis

Annual revenue fell for four consecutive years, from KRW 1,147.7 billion in 2022 to KRW 1,025.1 billion in 2023, KRW 627.2 billion in 2024, and KRW 465.0 billion in 2025.

Operating profit also shrank from KRW 175.8 billion in 2022 to KRW 74.5 billion in 2023 and KRW 19.1 billion in 2024, before turning to an operating loss of KRW 39.6 billion in 2025—the company's first annual operating loss since its listing.

Net income attributable to owners was negative every year from 2022 through 2025 (KRW -233.6 billion, -228.7 billion, -108.9 billion, and -100.0 billion, respectively), though the loss size gradually narrowed between 2023 and 2025.

On a quarterly basis, the third quarter of 2025 saw an operating loss of KRW 5.4 billion but a positive net income attributable to owners of KRW 34.0 billion, a result that appears linked to a one-off, non-operating gain such as the divestiture of a stake in Neptune.

By contrast, the fourth quarter of 2025 saw losses widen sharply, with an operating loss of KRW 13.1 billion and a net loss attributable to owners of KRW 84.9 billion.

In 2026, revenue continued to decline alongside ongoing losses, with first-quarter revenue of KRW 82.9 billion (operating loss KRW 25.5 billion, net loss KRW 30.0 billion) and second-quarter revenue of KRW 75.0 billion (operating loss KRW 23.0 billion, net loss KRW 49.0 billion).

The combined revenue over the most recent four quarters (Q3 2025 through Q2 2026) was roughly KRW 384.3 billion, below even the full-year 2025 total of KRW 465.0 billion, indicating that the downward revenue trend has yet to reverse.

Owner's equity also declined from KRW 1,681.6 billion in 2022 to KRW 1,184.1 billion in 2025, while the debt ratio rose from 92.3% to 123.4% over the same period, reflecting the cumulative impact of losses on the balance sheet.

Industry analysis

The domestic mobile MMORPG market is in a phase where the hit cycle for major new titles has shortened and existing IPs are settling into lower revenue levels, meaning Kakao Games and the broader industry alike are experiencing a gap in new releases.

As a result, major domestic publishers are commonly shifting their strategic focus from mobile-centric portfolios toward PC/console and global markets, and at Gamescom 2026 in Cologne, Germany in August, NCsoft, Krafton, and Kakao Games all unveiled new title lineups side by side.

Krafton showcased five new titles, the most among Korean participants, demonstrating an aggressive portfolio expansion, while Kakao Games focused on a demo of its subsidiary Ocean Drive Studio's 'God Save Birmingham.' With overseas markets having become a key profit center for the gaming industry, competition among global new titles aimed at driving an earnings rebound is intensifying.

Within this competitive landscape, Kakao Games' strength lies in holding a proven IP in Odin, but its relative position has weakened somewhat since its major new titles have not yet been validated in the market.

The shift of the largest shareholder to LY Corporation (Line Yahoo) has introduced a new variable in the form of potential access to distribution channels in Japan and Southeast Asia, a point of differentiation versus competitors.

Outlook

In the second-quarter 2026 earnings call, CFO Shin Kwon-ho stated that the company views the second and third quarters as the revenue trough, and expects a meaningful response in revenue as the effects of new title launches are reflected starting in the fourth quarter.

He added that a return to profit is expected to be possible in the first quarter of next year as most of the major new title lineup reaches the market.

The concrete lineup includes Supercat-developed 'Dokkaebi's World' in October, followed by XLGAMES' 'ArcheAge Chronicle' and Tiny Fun's 'Dungeon Arise' within the fourth quarter.

The key anticipated title, Lionheart Studio's 'Odin Q: Valkyrie's Call,' has had its schedule adjusted to target a January 2027 launch, to be followed by 'God Save Birmingham' in the first quarter of 2027 and 'Chrono Odyssey' and 'ArcheAge S: Strait of Freedom' in the second quarter of 2027.

Grinding Gear Games' 'Path of Exile 2' has a confirmed official launch date of December 12, 2026, with pre-registration already open.

Co-CEO Kim Tae-hwan said the company is reviewing more than ten domestic and international investment and M&A opportunities, prioritizing games or studios with proven performance over early-stage development projects, and plans to start with smaller deals in the tens of billions of won range before scaling up within limits that do not harm financial stability. However, he ruled out any plans for a merger or comprehensive share swap with Line Games.

Valuation

PER

—

PBR

0.6×

ROE

-9.9%

EPS

-₩1,446

BPS

₩14,736

Dividend per share

₩0

Kakao Games has posted net losses in recent years, putting it in a range where calculating a price-to-earnings ratio has limited meaning. Its price-to-book ratio tends to trade at a discount to net asset value, which can be interpreted as reflecting repeated new title delays and earnings uncertainty.

With no recently confirmed per-share cash dividend, a dividend-yield comparison is not meaningful at this time. Over a multi-year view, the operating trend shifted from profit to loss, and while the scale of net losses had shown a gradual narrowing trend since 2023, it widened again in the first half of 2026.

Samsung Securities, in a report issued in June 2026, said operating losses were widening due to delayed new title launches and declining revenue from existing games, and lowered its target price from KRW 13,000 to KRW 10,000 while maintaining a 'Neutral' rating.

IBK Securities, in a report issued in May 2026, said first-quarter results had missed consensus and lowered its target price from KRW 22,000 to KRW 16,000, while maintaining a 'Buy' rating.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23

Bull factors

Pipeline of Five or More New Titles

The company has said it plans to sequentially launch at least five new titles from the fourth quarter of 2026 through the first quarter of 2027, including 'Dokkaebi's World,' 'ArcheAge Chronicle,' 'Dungeon Arise,' and 'Odin Q: Valkyrie's Call.' Management has set this lineup as the basis for a fourth-quarter revenue recovery and a targeted return to profit in the first quarter of next year.

The presence of multiple titles queued up simultaneously could cushion the impact if any single release underperforms.

Capital and Network Inflow from LY Corporation

When LY Corporation-backed LAAA Investment became the largest shareholder in June 2026, roughly KRW 300 billion flowed into the company through a rights offering and convertible bonds. This capital is intended for future use in strengthening global business competitiveness and pursuing strategic investments.

Given the overseas user base of the Line messenger platform, there is also potential for new distribution channels in Japan and Southeast Asia.

Ongoing Shareholder Return Measures

Kakao Games has established and is implementing mid- to long-term shareholder return measures, starting with the cancellation of 500,000 treasury shares, the introduction of a restricted stock unit (RSU) program for employees, the transfer of capital reserves to retained earnings to fund shareholder returns, and share purchases by management.

These measures can be interpreted as a signal of the company's intent to enhance shareholder value even amid an earnings downturn.

Bear factors

Seven Straight Quarters of Losses, Repeated Title Delays

Kakao Games recorded a seventh consecutive quarter of operating losses through the second quarter of 2026, during which repeated delays to multiple new title launches weakened market trust. Management itself acknowledged taking seriously the erosion of market confidence caused by delayed title launches.

The case of Odin Q's launch date being pushed again to January 2027 leaves open questions about whether future schedules will be kept.

Reliance on Odin, No Proven Successor IP

'Odin: Valhalla Rising' remains the core revenue source, still ranking near the top of Google Play revenue charts even past its fifth anniversary, but a new major revenue driver to replace or supplement it has not yet been validated in the market.

Mobile game revenue fell about 48% year over year in the second quarter of 2026, showing a clear downward trend. A structure heavily reliant on a single IP carries the risk that overall earnings can swing with fluctuations in that title's traffic.

Weakening Balance Sheet and Burden of Simultaneous Launches

Equity attributable to owners fell from KRW 1,681.6 billion in 2022 to KRW 1,184.1 billion in 2025, while the debt ratio rose from 92.3% to 123.4% over the same period.

A strategy of sequentially launching multiple large-scale PC/console titles within a short period could simultaneously increase development and marketing cost burdens.

Industry observers have also flagged the risk that if initial commercial performance falls short of expectations, the resulting profit-and-loss pressure could deepen further.

Risk factors

New Title Execution and Schedule Risk

Several new titles, including Odin Q, have already had their schedules adjusted at least once, so the possibility of further delays to the launch plans set for the fourth quarter of 2026 through the first quarter of 2027 cannot be ruled out.

There is also a risk that development, QA, and marketing resources could become stretched thin while sequentially launching multiple titles within a short period.

Governance Restructuring Risk

With the largest shareholder changing to LY Corporation-affiliated LAAA Investment and Kakao Corp stepping down to second-largest shareholder, some in the industry have speculated about a potential combination with Line Games, in which LY Corporation is also the largest shareholder.

While the company has denied any plans for a merger or comprehensive share swap, it remains difficult to predict the impact on minority shareholders should the governance or business structure change in the future.

Industry Competition and Cost Risk

As major domestic and international publishers simultaneously enter a phase of releasing global PC/console titles, launch costs, including marketing spend, could rise broadly across the industry.

With numerous competing titles queued up, failing to achieve sufficient polish, live operations, and monetization design could make it difficult to win user adoption.

What to watch next

October 2026
Check the official launch and initial revenue/ranking performance of Supercat-developed 'Dokkaebi's World'—the first test of the fourth-quarter rebound scenario.
Fourth quarter of 2026
Confirm the launches and revenue contribution of 'ArcheAge Chronicle' and 'Dungeon Arise,' and whether actual results match the company's guidance for a fourth-quarter revenue recovery.
December 12, 2026
The official launch of Grinding Gear Games' 'Path of Exile 2'—a gauge of Kakao Games' global publishing capability.
January 2027
The launch of Lionheart Studio's 'Odin Q: Valkyrie's Call'—check the initial commercial performance of the title that management has cited as the key basis for its targeted return to profit in the first quarter of 2027.
Around November 2026 (expected Q3 earnings release)
Verify in the third-quarter 2026 results whether the company's forecast 'revenue trough' scenario is actually confirmed, and check for any updates to guidance on the fourth-quarter new title impact.

Overall view

Kakao Games recorded its first annual operating loss in 2025 amid a multi-year decline in revenue and operating profit, and both losses and revenue declines continued through the first half of 2026.

At the same time, major changes occurred on both the governance and financial fronts, including the change of largest shareholder to LY Corporation-affiliated LAAA Investment in June 2026 and an inflow of roughly KRW 300 billion in capital.

The company has set a goal of recovering revenue and returning to profit by the first quarter of 2027 through the sequential launch of at least five new titles from the fourth quarter of 2026, with Odin Q, ArcheAge Chronicle, and Path of Exile 2 among the key tests.

However, since several title schedules have already been adjusted before, the possibility of further delays and the cost burden of near-simultaneous launches remain points to watch.

The relationship with Line Games and the potential for further business restructuring amid the governance overhaul are also variables that warrant continued attention.

Ultimately, the actual market performance of the new titles and the pace of balance sheet improvement are likely to be the key factors shaping the company's future earnings trajectory.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.