Kakao Corp. (A035720) Earnings Call Transcript & Summary

Good morning. Thank you for joining Kakao's Third Quarter 2021 Earnings Conference Call. We will begin with earnings presentation and then move on to answer your questions from the investors. [Operator Instructions] We will be providing simultaneous interpretation for the earnings presentation and then switch to consecutive for the Q&A.

Good morning. I am Eleanor from the IR team. Let us begin Kakao's third quarter 2021 earnings release conference call. With me today are CEO Min-Soo Yeo and Chief Investment Officer Jae-Hyun Bae. Please note that the earnings results are consolidated estimates under the K-IFRS basis and are subject to change upon the auditor's review. Also, forward-looking estimates are based on assumptions, so actual results may differ from figures included in today's presentation. With that, let me invite Min-Soo to run through key business highlights.

Good morning. This is Min-Soo. Recent controversy around Kakao was an opportunity for us to revisit ourselves and go back to the important basics. I would like to reaffirm our commitment today to making a better world for all together with our partners. And we show that we have commitment to live up to our social responsibility. We will also connect Kakao's content ecosystem with the broader global market, be the frontrunner in next-generation technologies and underpinned by harmony between inclusive growth and innovation will move up to greater heights. We now walk through major services and business results. Kakao Talk Wallet, launched last December, offered convenience of booking for COVID vaccines and storing vaccination certificates, reaching around 26 million subscribers as of end of October, achieving the year-end target ahead of the plan. Meanwhile, Kakao View, launched last August, allows anyone create and curate content with one's own perspective, providing all an opportunity and a venue to develop an influential media outlet. As a result, in just 3 months, more than 20,000 channels and 250,000 content curation boards were made, and we see that the content ecosystem of the top platform has been gradually activated. Next is on the update of the platform business. Q3 Talk Biz ad revenue driven by sustained demand for Bizboard, Talk Channel, Sync and other ad products and business solutions posted a growth of 42% on year. Firstly, for Bizboard, not only advertisers seeking performance ads but branding advertisers seeking to reach the entire population and be the mainstream drove revenue up 53% year-over-year. Kakao Talk Channel saw advertisers who adopted Sync rise 13,000, driving up number of channel friends and outbound messaging, which led to Q3 revenue increasing 64% year-over-year. Best practices of combining the Talk Channel message and the Sync spread, and we expect number of Sync adopting advertisers will expand to [ 15,000 ] until the year-end, which will help to sustain growth of Talk Channel messaging. Next is on the Talk Biz commerce business. Q3 GMV of Kakao Commerce, which includes Gift, Talk Store and Makers, was up 45% year-over-year. For gifting, despite the high base effect, Q3 GMV was up 45% on year. Global luxury brands and other premium delivery-based lineup were very well received by the users, which drove delivery-based gifting GMV up [ 70% ] year-over-year, growing its portion out of the total gift GMV to 40%, bringing meaningful growth in terms of ARPU. Talk Store driven by steep growth from Talk Deal, Q3 GMV was up 49% year-over-year. This quarter, awareness measurement for Talk deal improved with regular station of promotions for each of the same categories, boosting number of first-time buyers, which led to balanced growth of Talk Store GMV, monthly average buyers and ARPU. Next is on the Mobility business. revenue for Kakao Mobility was impacted by rigorous social distancing, which led to 3% Q-on-Q growth. However, with greater user convenience, there was sustained user inflow, which led to around 30 million Kakao T platform users as of Q3. Also, with improved operational efficiency, Kakao T Blue fleet increased to 30,000 vehicles. As users and partners grow, connected to Kakao T platform, Kakao Mobility will improve in efficiencies and entrenched practices of the industry and live up to its social responsibilities to lead the advancement of Korea's mobility market. Next is on Kakao Pay. Q3 Kakao Pay GMV was up 41% year-on-year to KRW 25.2 trillion. Q3 payment GMV was up 85% year-on-year with growth evening from on and off-line cross-border and bill payment. For financial services, with Financial Consumer Protection Act taking effect in September, some of these services underwent changes. With such proactive countering, Kakao Pay solidified itself as a comprehensive financial platform. And with more than 127 partners, GMV was up 12% on year. Also, in subsidiaries, Kakao Pay Securities, launched innovative MTS, mobile trading services and licensing process for the digital insurance company is also well underway. And just yesterday, Kakao Pay successfully listed on Korea Stock Exchange. We ask for your continued interest as Kakao Pay, which began its journey with a value proposition of comfortable finance develop into a company that brings financial innovation and protect consumers. Kakao and its affiliates will also cooperate along the way. Next is on the storey business. Q3 GMV from the story platform, both domestic and global, was up 47% year-on-year to KRW 327.7 billion. Firstly, Kakao Japan Piccoma ranked global top 6 grossing app in Q3 and its GMV was up 52% year-on-year to KRW 197.1 billion, solidifying its position as a #1 digital provider of comics in Japan. On top of active marketing to expand the user base, there were service enhancements spanning the mobile app to the web base. And as we focused on sourcing for the content library, there were double-digit growth from major indicators, including daily average number of readers and ARPUs. Kakao Japan will now take Piccoma's formula for success onto the global stage. Starting with France in November, Kakao Japan will showcase a new platform to the European market, so as to broaden its ecosystem. We expect Kakao Japan will secure another springboard for the growth of the story business with its European launch since it will be backed by Kakao Entertainment's original IP, which have been already proven in Japan. Meanwhile, Kakao Entertainment's combined GMV of both the story platform and IP distribution reported 232.5 billion, up 56% year-over-year. In North America, we saw growth around Kakao Entertainment original IPs with combined basis GMV for North America on a daily basis up 77% Q-on-Q. In August, in just 3 months after launching Thailand, Kakao Webtoon gained market-leading position in the local webtoon market quickly building its influence. In Korea, Kakao Webtoon underwent renewal and, together with the growth of Kakao Page, drove a rebound in the domestic platform GMV. This year, we've seen story business shifted pivot towards the global market with a strong underpinning in Asia and North America as we look forward to a more pronounced performance from global content business next year. Our capabilities in planning and production of content were fully proven with back-to-back release of popular media content that carried sufficient scale and quality. And by actively engaging top-tier creators and producers, we are broadening our reach for our business. With growing global interest on K content, we expect Kakao Entertainment to further broaden its synergies by leveraging our in-house production capabilities as well as our high-caliber creators and talent IP. Last point I wish to mention is on Kakao's ESG update. Kakao in January set up Environmental Management Group under the CEO and was tasked with developing various strategies on environment. In September, we installed recycled machine in the office so that the Kakao crew can experience firsthand the circular cycle of reuse of resources, and we plan to expand on it to make an eco-friendly office. Also from May to August, we offered Kakao Class, which was a class on how to operate and develop Talk Store for businesses on the platform, which helps small businesses grow their top line. Kakao Class is a training program for one to be entrepreneurs, small merchants, creators, which we've been running for the past 6 years. With more than 1,500 cumulative participants in the program, we plan to expand the program from 2022 as well. In August, we set up an ESG fund, raising KRW 20 billion together with SK Telecom, and the fund will be a bedrock to many ESG innovators, creating a virtual cycle, whereby these companies may grow and have positive social influence. We will continue to endeavor in many ways to attain symbiotic growth with many different stakeholders.

Good morning. This is Jae. Let me brief you on Q3 financial results. Q3 consolidated operating revenue was KRW 1.740.8 trillion, up 29% on quarter and 58% and year-on-year. First, platform revenue was up 2% on quarter and 35% on year to KRW 778.7 billion. Talk Biz revenue was up 4% on quarter and 38% on year to KRW 404.9 billion, of which, for the advertising revenue, even though there was decline in accounting-based revenue on free promotion of Emoji Plus offered to the entire population, thanks to greater synergies from Bizboard, Talk Channel and Notification Talk, there was steady growth. For the commerce revenue, a new COVID wave, there was a decline in exhibition and experience related revenue from the makers. However, on growth in Talk Store and gift users and product lineup, there was a top line growth. For the port of this revenue, display ad revenue was solid, but with a new search ad platform launch and discontinuation of some of the existing ad products, revenue was down 5% Q-on-Q and 2% year-on-year to KRW 119.2 billion. For platform and other revenue as Kakao Mobility saw a decline in demand and Kakao Pay made changes following the investment of the consumer protection net, there was 3% Q-on-Q growth. And then growth in franchise taxi fleet of Kakao Mobility and Kakao Pay's payment and financial services growth, that was 54% year-on-year growth with revenue reporting KRW 254.7 billion. Content revenue was up 63% Q-on-Q and 84% year-on-year to KRW 962.1 billion. Thanks to record high-performance of Odin, the mobile game, game revenue was up 260% Q-o-Q and 208% year-on-year to KRW 463.1 billion. On solid growth from platform and IP distribution GMV as well as consolidation effect of Tapas and Radish, story revenue was up 17% Q-on-Q and 47% year-on-year to KRW 218.7 billion. Supported by a robust paid subscriber base for Mellon and success of our own artists, The Boys, broader lineup for distribution and growth in performance revenue, music revenue was up 5% on quarter and 8% on year to [ KRW 197.1 billion ]. Lastly, media revenue reported KRW 83.1 billion, with the talent management business continuing its quarterly growth as artists scope of activities broaden. While a reduced lineup of movies and dramas in Q3, total revenue was down 5% Q-on-Q but up 102% year-over-year. Next is on a consolidated basis, operating expense and profit. Q3 consolidated operating profit expense was up 32% on quarter and 60% year-on-year to report KRW 1.572.6 trillion. If you look at expenses breakdown for labor cost on new hires for Kakao's key affiliates and consolidation effect of subsidiaries, Q3 head count was up by 1,038 Q-on-Q and 3,349 year-on-year, reaching 13,174 people, significantly driving up salary and [indiscernible] benefits. But the one-off effect of stock-based compensation last quarter suppressed the rise in labor cost to 2% Q-on-Q. While year-on-year, there was 28% increase with labor cost reporting KRW 307.2 billion. Odin Smashinghead and GMV growth for the story, this drove up commissions paid, leading to 52% Q-on-Q and 74% year-on-year rise for the revenue expense at KRW 805.8 billion. On the back of higher commissions for Mobility business and infrastructure expense, outsourcing infrastructure expense was up 20% on quarter and 74% on year to KRW 197.8 billion. Driven by global marketing investment for the store business and aggressive promotion for Odin, the mobile game, marketing expense was up 62% on quarter and 94% on year, reporting KRW 148.1 billion. Also, please note that percent of marketing spend against the revenue for Q3 was 8.5%, with cumulative as of Q3, reporting 7%. All in all, Q3 operating profit was up 3% on quarter and 40% on year to KRW 168.2 billion with op margin at 9.7%. Next is on nonoperating revenues and expenses. With Kakao Bank's IPO and inclusion of Tapas and Radish in the consolidated statement, significantly pushed up disposition gains from equity vested shares, leading to a total of KRW 799.6 billion of other revenues. Other expense came in at KRW 20.7 billion on rise in due diligence and outsourcing advisory fees, for Mobility, Entertainment and Pay required for the new business expansion. This was an increase of 8% Q-on-Q and 17% year-on-year. On profit generation from companies, example, for example, Dunam, Kakao Bank and Lionheart Studio, which is Odin's developer, there were equity methods gain of KRW 176.6 billion, equity method loss of KRW 5.4 billion. For financial revenue and expense, key factors that came into play were fluctuations in foreign currency, deposit translations on the back of strong dollar. In terms of expense, there was higher valuation loss from derivatives relating to ICPS conversion to common shares issued by certain subsidiaries. As a result, Q3 financial revenue booked KRW 43.9 billion, while financial expense was KRW 90.4 billion. Q3 corporate income tax reported KRW 205.5 billion, while consolidated net profit came in at KRW 866.3 billion. Last, but not least, Q3 Capex. Investments with tangible assets, including servers, was KRW 52.1 billion and tangible assets, including IP, was KRW 17.5 billion, with total investment amounting to KRW 69.6 billion. This ends the earnings highlight for Q3 2021. We will now move on to questions. [Operator Instructions]

[Operator Instructions] The first question will be provided by Jingu Kim from KTB Investment & Securities.

I would like to ask 2 questions. Can you provide some more color on what your detailed strategies are relating to your NFT-based business and metaverse? Second question, ex Japan, can you give us some of the performance indicators such as GMV and MAU with respect to webtoon and web novels? And what is your global strategy with regards to secondary or derivative content.

This is Jay responding to your question. Currently, Kakao is in the process of really focusing all of its capabilities so that we may fully prepare for the upcoming metaverse age. Within ground ex of Kakao, we have a very strong technological capabilities, and we have very strong content-based assets. So we are, as we speak, in the process of developing a detailed strategy. Once that plan gets confirmed and is finalized, we will come back to the market and provide you with more information. Regarding your question about Kakao Entertainment, global performance, first of all, if you look at Thailand, Kakao Webtoon by leveraging the original IPs of Kakao Entertainment is now shoulder to shoulder with the incumbent #1 player in that market. So in just 1 quarter since we launched into that market, we really rise to and have a very solid positioning as top 2 player. If you look at North America, we have finalized the acquisition process last July for the platforms Tapas and Radish. Kakao Entertainment for the North American market will be offering original webtoon and web novels. Kakao Entertainment's original webtoon and web novels will be provided to North America. We are, at this point, at the initial stage of learning about the characteristics of the users with respect to the content. But going forward, we expect that there will be a quite significant growth from this market as we are at this point observing uptrend in terms of GMV and the number of users for the content that leverage the original IPs of Kakao Entertainment. So we do have high hopes for that market. Regarding the MAU indicators, basically, we are seeing a quite balanced growth with regards to the targets that we've set in terms of the number of users as well as GMV. And also, we have seen the traffic uptrend quite solidly from the markets. And if you look at the MAU compared to the free content platform, the absolute size may be small, but we are seeing that GMV per user as of today is much higher. Going forward, we will continue to expand on our global platform so that we can really grow the number of user base who enjoy the story content that we offer, and we want to be able to provide highly immersive experience to these user base, thereby driving both qualitative and quantitative growth at the same time. And aside from North America and Southeast Asian market, last September, Kakao Japan completed the establishment of Piccoma Europe entity in the European market and is currently planning to launch its Piccoma services in France. Based on our analysis, France has high level of familiarity when it comes to Japanese manga, but its digitalization process is only just beginning. So we believe that the French market is quite similar compared to Japanese content market when we first entered with Piccoma back in 2016. Therefore, we think the French market is going to be a very effective test bed for us to tap the market and see the potential of the market. Basically, we will be equipped with a comprehensive content library of Korea webtoon content from Kakao Entertainment and Japanese manga, and we will be able to provide a very high level of services to the French market, and we will implant the formula of success for Piccoma that it had gained in the Japanese market, and we'll be able to apply that in France as well. So when the time comes for us to launch e-commerce services in France, we will come back to you with a more detailed business strategies and plans for service. Lastly, regarding our global expansion plan for feature films and dramas, as you know, with the global OTTs now really removing all the national boundaries, we see a very accelerated trend towards content consumption. Recently, we've seen raving responses all over the world on K content, and we now have an easier environment for us to actually access the global base of users. Based on a very competitive media IP value chain that Kakao Entertainment already has, we will be able to provide digital content, entertainment, drama and motion picture across various different genre, and we're in the process of really building our capabilities in content production. Kakao Entertainment's original IP is making a leeway into the global stage not just in Asia or North America. Leveraging these very competitive content offerings, we will be showcasing not just webtoons, web novels but also motion pictures and dramas through which we want to further enhance the value of the IP that we have. Just to share with you some of the upcoming lineup after Q4. At this point, Business Proposal, which is a drama that uses Kakao Pages' IP is currently under production. And although we don't have the specific schedule yet currently, Director Yun Jung Bin is working on Suri Nam as well as some other titles such as Sung Bu and [indiscernible], who's recently gained a lot of popularity worldwide, is going to debut as a director with his first film, Hunt. And also Money Heist, which has a Netflix remake, is under production as well. And there are multiple other titles that are currently being worked on, but which we cannot disclose at this point in time. Regarding Kakao TV's original content, currently, there's production ongoing. Toy Soldiers, Money Game and Fight Club was actually introduced or announced in early October. And Kakao Pages' IP-based drama, Shadow Beauty and Coffee With Me and [indiscernible] are some of the dramas that are currently slated to be added going forward.

The following question will be presented by Stanley Yang from JPMorgan.

I will be asking 2 questions as well. You've shared with us your strategies for webtoon and your entertainment. With respect to distribution of these titles, what is your eventual strategy? Through [indiscernible] and Kakao Page in terms of distributing feature films or motion pictures and dramas, do you think that it has potential to grow into something like Netflix, the global distribution platform? Or do you have a strategy to actually grow it into such a global platform? Or is your strategy just focusing on production? And would that provide you with ample revenue stream? We've seen very steep growth of your advertising and commerce business over the years. So we expect that there will be some slowing down of that pace of growth. Min-Soo, I would like to understand what your take is on future prospects for growth in this business segment.

I believe your question regards to the SVOD services in the global market. First, if you look at the domestic market, we are trying at this -- and we are taking our attempt at distribution of such content to Kakao TV and also to Kakao Page as well. For the global market, looking at Piccoma and in North America [indiscernible], we are tapping into business feasibility of this distribution business. So once we have some more clearer, I guess, details, we will communicate that to you.

So this is Min-Soo. Responding to your question about what might take us in terms of the growth potential of the advertisement business. If you look at Talk Biz and its growth you could actually break that down into Bizboard element as well as Talk Channel, basically, the business messaging that arises out of the business account under that Talk Channel. So basically, what they do is they send out very tailored and very well formulated messages to their targeted segment. On top of that, there is Kakao Commerce's gifting feature in Kakao Store, which leverages all of these different aspects in serving the right person at the right time, the right products that they desire. So we are definitely, therefore, in the process of really developing this business-based platform, the core of which is a complete connection across all of these elements. And the key is, if you look at Talk Channel, and the indicator that we very closely monitor is the growth trend of the number of business partners on both the year-on-year and Q-on-Q basis. And we see that trend is actually going up much higher than we had expected. And one element that I would like to also emphasize and ask you to also keep in your mind is the Sync. Basically, what Sync allows business partners to do is for them to actually open up an account and provide a process with the users to very easily sign on to that account, to log in, out and do all of those things. And if we look at some of the indicators, what we see is that if a message is actually sent through this thing, then we see a higher level of conversion. So the performance that we are getting out of this product is actually quite good and it has high potential. So basically, for all of the partners who are online and who are in the mobile platform who seek to bring about higher purchase conversion, I believe all of those partners, there is potential to turn them into our Talk Channel partners. And with that, I think that since we are only at the beginning phase of this initiative and in this process, we think that there is greater potential for that number to actually grow going forward.

The following question will be presented by Dong-ryun Lee from KB Securities.

You've mentioned that -- I mean, if you look at the platforms, you have webtoon and other content types, Piccoma and [indiscernible], you basically operate 5 different platforms. With your strategy to divide up geographies, for instance, for Southeast Asia, it would be Kakao Entertainment, for Europe, Kakao Japan since Kakao Japan has an entity there. Do you have a separate strategy for different geographies? And is your strategy to take different branding, depending on which global market you're in? And can you provide also some marketing expense-related guidance for your webtoon business and the content business. Second, with the recent initiatives by the company to really focus on inclusive growth together with the small mom-and-pops and small business merchants, do you think that, that will have any impact on your -- on the businesses' performance? And also, aside from the game, the webtoons and web novels, what are some of the other types of content that you plan to take global.

Yes, you asked about if there is any different geography-based roles of Kakao Entertainment and Piccoma. First, if you look at Kakao Entertainment, the growth was very much domestic focused at the very beginning supported by the Korean content. And for the Japanese market, we saw a quite big potential there with respect to the mangas and the cartoon, so we decided to independently enter into Japanese market by taking Piccoma. Worldwide, however, recently, we've seen a wide recognition of K content on the global stage. So in terms of our global launch, basically, launched Kakao Webtoon, and we did that first off in the Southeast Asian region. But we're already also in markets like China and India as well, and the numbers that we are seeing from these markets are also quite positive. So these are different elements that will come into play as we think about our global expansion. In the U.S., after acquiring Radish and Tapas, yes, in North America, we are laying certain bases. But in North America, it's not just Kakao Entertainment, and we will not just end there. We have seen that there existed demand for Japanese content as well. Piccoma and Kakao Entertainment will be collaborating and is expected to collaborate and cooperate together and further tapping into the North American market. For Europe, since we were able to identify that there is demand for Japanese-based content, that's why we are taking Piccoma first into that European market. But we will also be bringing in Kakao Entertainment as well. So the 2 entities will collaborate, cooperate at the same time, compete as well. And aside from the webtoons, first, if you look at the game business, basically, we -- all the new titles that is upcoming has global market in mind from the very onset of development of those games. And this will be a quite ambitious objective and goal of our game business so that it could establish itself as a global top-tier game provider. The game business already has local infrastructure in North America and Europe, and it has a lot of success and best practice experiences under its belt. Hence, we expect there to be quite a big opportunity going forward. Lastly, aside from content, in order to broaden our business reach into other areas on the global stage, Kakao is planning to leverage its service and technological capabilities and is trying new attempt. To that end, Kakao has set up a new entity in Singapore called Crust in August, and this entity is going to play the role of a base camp. They will first look at ways to create synergies with, for instance, Clayton's blockchain platform. So there are new business initiatives that are currently being developed. And also, we plan to implement our global new businesses through collaborating with other innovative services as well as AI. So starting next year, on top of content offerings, we will do our best to make sure we give back to you some good news in other areas of our global business.

The following question will be presented by Dong Hwan Oh from Samsung Securities.

I would like to ask your questions. There has been a significant drop in your operating profit margin quite significantly. Considering that the OP margin was -- the operating profit was quite high for Kakao Games, it seems like the margin from other businesses must have plummeted quite significantly. Can you provide some color there? And second, under the regulatory backdrop, you've made an announcement with respect to the coexistence plan or the inclusive growth plan with the smaller businesses. Would that not impact your new business initiatives?

If you look at our Q3 top line sales revenue, it actually reported [ KRW 1,740.8 billion ], which was a quite sizable Q-on-Q increase. If you look at the breakdown, platform revenue was up 2% Q-on-Q, content revenue of 63%. So we've seen quite a bit of content, especially game contribution on the top line growth. As a result, the size of the profit this quarter did actually go up, but relatively speaking, from the game where there is a higher level of revenue-linked expenses, as well as if you think of the global investments that we have been putting into under Kakao Entertainment, Southeast Asia and North America, expansion and Piccoma, Japan and European business expansion, there were increases in the relevant investment. So operating profit on a Q-on-Q basis posted a single-digit growth, while OP margin slightly dipped Q-on-Q, reporting around 10% level. In respect to the fourth quarter, this is traditionally a high season for revenue and sales. So we think that come Q4, we will be recording historical high top line for Talk Biz, Pay and Mobility. So as a result of the platform revenue, we expect it's going to post a double-digit growth compared to Q3. Also for the content business, we expect that our story business is going to continue to show good global performance. But for the mobile game revenue, which had a big launching effect in Q3, it will downward stabilize. So the overall total content revenue, we show a slight Q-on-Q decline. Now in Q4, we will continue to focus on more aggressive global investment rather than focusing on maximizing our bottom line. We will also endeavor and really focus on that the coexistence plan so that we may bring about a better performance in a long-term perspective. In Q4, we will continue to be, once again, aggressive in global marketing and investment for our games and stories. So we expect about a similar level of marketing spend as compared to the third quarter. In terms of some of our affiliates that have posted good performance this year, in Q4, there's going to be an additional recognition and booking of incentive pay, especially for Kakao Ventures, they're going to be liquidating their K-Q #1 fund. So we expect there to be a rise in one-off expense. At this point, we have not yet decided on the size of that incentive performance payment. Once that is determined, we will inform you on that.

Regarding your question, basically, Kakao and its affiliates are currently engaged in a very in-depth discussion as to discover and identify many different ways that we could coexist with smaller businesses and merchants. And we are in the process of devising the specific plan. So once that is all ready, we will definitely inform you of that. So from a short-term perspective, it's inevitable that there would be some financial impact where we think that this is a positive opportunity for us to actually set a very stable and cooperative relationship and the structure, whereby from a long-term we will be able to bring more long-term growth.

The last question will be presented by Soyun Shin from Credit Suisse.

Regarding your advertising business, you've mentioned that there was impact from the emoji business, the accounting and the free provision of emoji services, that's having an impact on your advertising revenue. So if you were to take that away, what is your normalized advertising revenue growth trends look like? And for the Talk Channel business, what is the percentage that Talk Channel-based messaging account for out of your total general messaging? I would think that, that percentage is low at this point. And do you think that it has potential to actually become bigger than the Talk Biz?

On the Emoji Plus products, the impact from that product was not all that significant stand-alone basis. It's just that for the whole quarter, we provided a free promotion for this new product, and that had an impact at a revenue discount, it's had an impact of revenue discount. But the growth rate, basically, therefore, there was some offsetting effect on the growth rate because the revenue was discounted. In terms of your second question on Talk Channel messaging growth, we are still at an early stage. And you asked about the percentage. But if you look at the total amount of inbound and outbound messaging from Kakao Talk, that itself is so large that, actually, calculating a percentage of Biz message against that total is not really meaningful. But having said that, in terms of the biz channel, we are seeing both year-on-year and Q-on-Q growth of the number of friends on the business channel. And so the growth potential is quite solid for us. So I can definitely say that the potential for growth for this business is quite big.

So this brings us to the end of the third quarter 2021 earnings. Thank you very much for joining us this morning.