Kakao Pay Corp. (A377300) Earnings Call Transcript & Summary

Hello. I'm Eleanor from Kakao's IR team. Let's begin with the First Quarter 2023 Earnings [Conference Call. Today, I'm joined by Simon Hong, the CEO; and Jae Bae, the General Representative of Corporate Investment of Kakao. Please be reminded 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. I will now invite Simon to present on business highlights for Kakao, the parent and major business [ results ] of the platform.

Hello, this is Simon Hong. It has been over 13 years since KakaoTalk connected people through communication as the primary reason users visit KakaoTalk is for communication. The second tab, which is the Chatting tab has grown as well as the central tab generating most of the traffic and revenue within the platform. On the other hand, the other tabs within KakaoTalk have shown somewhat disappointing results compared to the status of the service that the entire nation visits daily. The various feature revamps and reorganization directions for the main tabs of KakaoTalk, which we have been discussing since last year, aimed to further segment communication, which is the essence of KakaoTalk, providing users with services tailored to their needs and context. Through the various Tab-revamp efforts that will continue until the second half of this year, we expect that user experience and satisfaction with the platform will improve by providing more suitable modes of communication. Furthermore, users labeled what specific purposes within the KakaoTalk ecosystem represents an opportunity for advertisers and commerce merchants to easily target at low cost. In addition, we expect that lower customer acquisition costs will be converted into direct benefits for users such as coupons and discounts. In this way, the segmentation of communication that has been underway since last year and this year, will start with improving the user experience, maximizing the efficiency of business partners and structurally be completed with returning added value to users, ultimately serving as the first half towards a new phase of growth driven by a flywheel effect. While the second tab of chatting app has been focused on this conversation with acquaintances by providing one-on-one or group chat functions. The first tab, the friends-list tab is centered around lighter interaction features. As features such as friends with updated profile, the interaction button and the emoji interaction have been added. The traffic and activity of the friends list tabs have been steadily increasing. With sequential revamps continuing into the second half, we expect a number of daily active users of the friends-list tab, which was $22 million at the end of last year to reach $40 million by the end of this year. In addition, the third tab will be revamped as this open-chatting tab in May, strengthening its role as a communication platform based on interest. With the open chatting, which had been difficult to discover, not prominently placed in the third tab, users' accessibility will be significantly improved. And there will be more opportunities to easily find and join rooms that match their interest. Moreover, we plan to introduce a new popular chat feature that allows thousands or even tens of thousands of people to communicate more [ lightly. ] The Open Chat tab will be a hub for content exclusive for KakaoTalk and a space connecting more people based on interest. The third tab aims to increase the number of daily active users by more than twice compared to the existing View tab by the end of the year through these changes. Lastly, communication between users and business partners will be expanded through the Talk Channel. Talk Channel messages have been growing based on excellent reach and conversion rates. This year, we aim to spread more personalized business messages by refining the targeting of messages. Advertisers can achieve their goals more efficiently at a lower cost, and users will receive messages which feel more necessary to them, leading to an improved user experience. As such, hyper personalized messaging ad is considered a very important task this year as [indiscernible] provide added value to users, advertisers and Kakao alike. The essence of KakaoTalk is communication. As mentioned earlier, this year is expected to be an important year for laying this foundation for a strong flywheel that begins with the segmentation of communication. Along with this, Kakao will continue to make communication between people closer and safer, creating user-centric services. Continuing on, I will briefly explain the Kakao Group's AI business strategy led by Kakao Brain and the major achievements and plans for the second half of the year for Kakao Healthcare, both of which are part of Kakao's new initiatives for future growth. It has been only 3 months since we first mentioned Kakao's overall AI strategy, including Kakao Brain in the last quarter's earnings call, and the AI industry seems to be undergoing rapid changes with new models and services emerging every day. Amongst this situation, Kakao's competitive edge lies in its deep understanding of AI technology through its experience in building its own foundation models and securing the largest domestic user base with the chat interface. Leveraging these strengths, Kakao Brain is proactively building AI foundation models while Kakao is pursuing a 2-track strategy of quickly launching vertical services using internal and external AI tech, aiming to seize opportunities in the rapidly changing AI industry. In the first half of the year, Kakao Brain will refine its models by securing real usage data through running a demo version of message-based AI chatbot services and aims to release KoGPT 2.0 with expanded parameters and data tokens in the second half. In addition, the upgraded Karlo 2.0, an image generation foundation model will be unveiled in May, further strengthening the competitiveness of multimodal AI foundation models that encompass both, images and language. Moreover, in the vertical domain, the web demo service of AI CAD, a medical diagnosis draft generation services based on medical images is planned to launch in the third quarter. Kakao Healthcare is accelerating preparation for launching new services to quickly visualize achievements in both, B2B and B2C sectors. In the B2B sector, a product that standardizes and digitizes clinical data and medical records held by healthcare institutions, enabling research institutions and healthcare companies to utilize this data will be introduced to the market this quarter. In the B2C sector, a platform that analyzes data and lifelogs from continuous glucose monitors for diabetic patients or those in need of blood sugar management through AI and provides lifestyle guidance such as dietary recommendations and exercise suggestions is planned to launch in the fourth quarter. Kakao Healthcare aims to contribute to reducing social costs, including medical expenses by lowering the increasing prevalence of diabetes. Last week, Kakao Healthcare participated in the Korea-U.S. Digital biohealth business forum and signed MOUs and term sheet agreements with various global leading companies. In collaboration with Google Cloud in the B2B sector, a solution will be developed using federated learning, which allows AI to learn without collecting individual institution data in one place. In the B2C sector, Kakao Healthcare plans to launch blood sugar management solutions in the global market in collaboration with Dexcom, a global leader in continuous glucose monitoring and ISIS, the first domestic company to develop a continuous glucose monitor. Before discussing the major achievements of each business, I would like to talk about Kakao's ESG management developments in the first quarter. Kakao is continuing its efforts to advance corporate governance. First, we established an ERM, Enterprise Risk Management Committee, to enhance the integrated risk management system across the group. And in March, we appointed an independent director as the Chairman of the Board to strengthen its independence. Importantly, 15% of the CEO's performance evaluation KPIs have been set in relations to ESG management implementation, creating a foundation for ESG responsibilities to be reflected in major management decisions. As part of our social contribution efforts, we established the Kakao Tech Campus in cooperation with Pusan National University and Chungnam National University in March to nurture local technical talent. We plan to expand the scope through various regions and continuously expand the program. As a result of these ongoing ESG-related efforts, Kakao was recently selected as the top 1% in the 2023 Corporate Sustainability distinction announced by S&P Global. Kakao will continue to promote solid ESG activities and strive to create social value, unique to Kakao. Now I will explain the major developments of each business division. The consolidated operating revenue for the first quarter was KRW 1.7 trillion, a 2% decrease from the previous quarter and a 5% increase from the same period last year. Going into details. Talk Biz revenue recorded KRW 516 billion, a 1% Q-on-Q decrease and a 12% Y-o-Y increase. In the case of the advertising business within Talk Biz, the sales of the main display ad product, Bizboard, slightly decreased from the same period last year due to the persistent conservative marketing stance of advertisers as a result of the delayed economic recovery. On the other hand, the messaging ad grew by 17% compared to the same period last year, highlighting the characteristics of cost-effective advertising products despite the conservative advertising execution across the industry. As a result, the advertising revenue in the Talk Biz division increased by 1% on year and decreased by 8% on quarter. To lower the sensitivity to economic fluctuations and secure a stable revenue base, the advertising business has set the expansion of the message business as an important goal this year. In particular, to secure 300,000 Talk Channels with more than 1,000 friends by the end of the year, Kakao launched a new service called Kakao Reservation in Q1 and plans to launch a commerce dedicated Talk Channel message feature and dedicated pricing plan for top-store merchants in the first half. In addition, partnerships with B2B or B2C2C platforms are being considered to greatly expand the Talk Channel advertiser pool. For the first time this quarter, the quarterly revenue of the messaging ad [ surpassed ] that of Bizboard. And it is expected to continue its solid growth and establish itself as a representative advertising product for Kakao. Moving on to commerce. Kakao commerce's total Q1 GMV recorded KRW 2.4 trillion, a 4% increase on year, while revenue increased by 7% on quarter, 25% on year, thanks to the growth of high-margin deliver guest products and strategic operation of 1P products. First, [ the talk ] of GMV increased by 1% on year, reflecting the high base effect of the temporarily surged transaction volume in March last year due to the wide spread of the COVID-19 in addition to the slowdown in the overall e-commerce market. However, the GMV of delivery guests grew by 6% on year, and in particular, the luxury beauty GMV increased by 14% on year, driving the overall growth of the guest GMV. As the culture of exchanging gift through KakaoTalk's [indiscernible], people from weak tie to close an intimate relationship. Luxury beauty products have been received a great response from users. In addition, [ the mix of ] cell purchases to experience exclusive products and special services such as custom engraving offered -- customer grading offered only in Talk Gift has also increased. As a result, Talk Gift has established itself as the #1 luxury beauty e-commerce platform in 2022. In the first half, Talk Gift plans to continue its growth by launching the gift-lux tab, an online luxury specialty store that strengthens the brand lineup and product lineup, including not only luxury beauty but also to fashion, accessories and living. For Talk Store, the plan is to launch a top-store merchant dedicated Talk Channel message feature and pricing plan in the first half of the year, building a flywheel structure that connects marketing to purchase within KakaoTalk. Subsequently, based on the top stores added by users as their interested brands, a more personalized shopping experience will be provided to netting users and brands and strengthening loyalty as Kakao's unique relationship-based commerce.

Next day, the General Representatives of Corporate Investment of Kakao will brief you on key earnings and business highlights.

[Interpreted] Hello, this is Jae. I will first start with the platform and Other's business performance. Q1 Platform and Other revenue was up by 5% Y-o-Y and 18% Q-o-Q, recording KRW 365.6 billion, driven by evenly spread growth from taxi and designated driver business. An inclusion of KM Park into the parking business last July, Q1 revenue was up by 38% Y-o-Y. On the heels of recession and price hikes, taxi demand was sluggish. While we saw increased number of franchise taxis, including G-Blue and [ Benty ], go up by 44,000 vehicles, which is a testament to service providers preference for sophisticated platforms. And after the adoption of key parking paths, enabling [ at-base ] automatic payment, number of parking lots and partnership increased more than 3x Q-o-Q. And by improving convenience for users and operators alike, we are endeavoring to grow the parking business as critical infrastructure service of Kakao Mobility. We also expect to grow overseas market influence following the acquisition of a global mobility intermediary platforms split, a company equipped with unmatched technology and global network. Kakao's Pay's Q1 TPV was up by 19% Y-o-Y to approximately KRW 32.5 trillion. On the back of off-line merchant expansion and strengthening of cross-border use cases through partnership with global partners, we're sustaining the growth trend. We've also seen meaningful recovery from loan referral services like KakaoPay securities, MTA's trading volume is up on an uptrend. As a result, revenue TPV posted 19% growth Y-o-Y, breaking the KRW 9 trillion mark for the first time this quarter. KakaoPay's Q1 MAU broke historical record. We will continue to strengthen seamless experience across money transfer, payment and financial services to maintain our top-of-mind positioning as an everyday financial platform. Next is on the content business. First is on global story business performance. Store revenue was up by 3% Q-o-Q and down 5% Y-o-Y to KRW 228.6 billion. Underpinned by New Year holiday event and marketing support around key titles, GMV in Japan was up by 12% Y-o-Y, continuing on with the uptrend. Also, by way of matching up with user preference and advancing servicing capabilities, user indicators improved hitting record high quarterly revenue. In terms of content offerings, AAA IPs, such as [ God of Luck ] and Solo Leveling spin-off became big hits. And [indiscernible] Studio under [indiscernible] released in-house developed IP titled [ Restart ] of Bad Girl in Q1, which became a top grossing webtoon, driving the growth of Piccoma platform powered by discovery of competitive content. In North America, we completed the setup of integrated operational structure with HQ at the center, supported by collaborative system between K-content professionals in Korea and local operational people. Since then, daily average GMV in March for [ Topas ] was up by more than 10% year-to-date. And in the second half, on the back of app announcement for better convenience and content curation will have clear visibility on the growth potential. In the domestic market, we are able to demonstrate stronger franchise of IPs, levering core IPs and efficient marketing spend. Solo Leveling spin-off ranked #1 top-grossing title in the domestic webtoon market as it continues to expand the life cycle to introducing a web-novel version in April. In Q2, we plan to enhance user experience and upgrade target marketing according to user behavior to drive up operational efficiency and improve profitability. For the Story business, since we now have strong fundamentals and efficient operational structure, we'll focus on discovering core IPs and maximize the IP leverage to further improve business profitability. Next is Media business. As new title lineup is concentrated in the second half of this year with lower number of titles and first half booked under the production revenue. Media revenue was down 46% Q-o-Q and 10% Y-o-Y to KRW 67.7 billion. However, in Q1, drama Our Blooming Youth was aired, and we produced and sold original entertainment series Love Alarm as we gradually expand the lineup. This year, under our multi-studio system, a total of 30 different dramas and new series are planned and produced, 10 of which will be released. We will solidify our positioning as a global studio with the release of Race, a drama in May and [ Chansung ] creature and The Worst of Evil are [indiscernible] for release in the second half through Netflix and Disney+. Next is on Music. Q1 revenue was flat Q-o-Q and up 13% Y-o-Y to KRW 232 billion. Melon in Q1 sustained its solid subscription base, supported by distribution revenue, leveraging many of our own artists and have also diversified music distribution portfolio. IVE first full-length album sold more than 1.1 million copies, ranking #1 in Melon chart in the shortest timeframe becoming a top tier K-Pop group in just 1 year since their debut. Kakao Entertainment is placing fourth [ worse, ] behind taking its artist to the North American market by executing partnership with Columbia records and will focus on building a global management system. And in Q1, Kakao and Kakao Entertainment became majority shareholders of SM Entertainment with a 40% stake. Q1 financial segment reflects SM Entertainment and its subsidiaries as they become part of Kakao's subsidiaries. Starting Q2, the earnings will be incorporated into consolidated P&L. Three companies have full consensus on business corporation going forward and are discussing specific action plan. SM Entertainment will together corporate to distribute SM artists, albums and record. And based on the network of 2 companies, we have started to build out a global management system, combining SM Entertainment strong A&R capabilities and global business experience. Pika Entertainment and SM Entertainment will lay on the basis for cooperation and will place full momentum behind the artists global endeavors. Q1 Game revenue was up by 7% Q-o-Q and flat Y-o-Y coming in at KRW 247.3 billion. In Q1, we launched new titles from different game genre, namely Eversoul, and ArcheAge War that became top grossing titles, further solidifying our position in the domestic mobile game market. In Q2, full quarter earnings from ArcheAge War will be booked, and there is upcoming second anniversary event for Odin and its Japanese market release, which will help sustain steady performance. Kakao Games launch in-house titles from various genre to domestic and global market this year and sustain its status in the most optimal partner to global IP owners. Let me now turn to Q1 consolidated operating expense and operating profit. Q1 consolidated operating expense was flat Q-o-Q and up by 12% Y-o-Y, reaching KRW 1.6692 trillion. To run through each expense item driven by a wage increase following annual salary rise, the base effect from decrease in bonus in Q4, labor cost was up by 9% Q-o-Q and up 6% Y-o-Y on headcount increase, reporting KRW 445.8 billion. Cost of revenue was down 5% Q-o-Q on lower content production and ad agent fee fees, while on Y-o-Y basis was up by 14% to KRW 656.8 billion on higher commission paid following the rise of Talk Biz sales from 1P products and higher payment TPV from KakaoPay. Outsourcing and infrastructure expense was down 1% Q-o-Q on cost control and decline in outsourcing fees while on higher infrastructure investment for data center replication and growth of Mobility's Taxi business driving a higher commission paid was up by 18% Y-o-Y coming in at KRW 242 billion. On the heels of higher marketing spend from Kakao Games and Piccoma, marketing expense was up 6% Q-o-Q and flat Y-o-Y, reporting KRW 114.6 billion. Marketing spend ratio against Q1 revenue was 6.6%. On lower amortization from intangibles that is distribution license for media content following the media revenue decline, depreciation was down by 7% Q-o-Q, but up 15% Y-o-Y to KRW 150.3 billion, driven by server investments required for AI-related GPU investment and service expansion. All in all, Q1 operating profit was KRW 71.1 billion, with OP margin at 4.1%. On Kakao stand-alone basis, comprising ad and commerce business, Q1 revenue reported KRW 640.7 billion with operation profit at KRW 129.0 billion and OP margin of 20%. Next, on nonoperating revenue and expense. Other revenue was KRW 17 billion, comprising of gains from sales of equity-method stock and other miscellaneous items. The other expense was KRW 35.4 billion, comprising of loss of sales of equity-method stock and advisory fees. Equity-method game was KRW 34.1 billion, increasing by KRW 12.9 billion Q-on-Q on the back of higher net profit on KakaoBank while equity-method loss was down KRW 6.5 billion to KRW 39.6 billion on lower losses from equity-method entities. Financial revenue was KRW 79.2 billion, mostly made up of interest and dividend income and valuation gains from financial assets, which are equity held by subsidiaries. Kakao financial expense was KRW 46.4 billion, mostly coming from valuation loss on financial assets related to stock investment by Kakao ventures and interest expense. In Q1, income tax refund was KRW 1 billion due to temporary reversal in deferred tax liability following the revision of corporate tax rate. Consolidated net profit was KRW 87.1 billion. For CapEx, there was a series of investment into data centers driving KRW 64.7 million CapEx investment for tangible assets and KRW 31 billion for intangibles, adding up to a total of KRW 96.4 billion.

This ends the earnings presentation for Q1 2023, we will now begin the Q&A. [Operator Instructions]. [Foreign Language] The first question will be provided by Jae-min Ahn from NH Investment & Securities.

[Interpreted] I am Ahn Jae-min from NH Investment & Securities. My first question is regarding your operating profit. You seem to have underperformed your -- the market expectation. Will you be able to bring and drive improvement in operating profit going forward? Second question relates to your advertisement business. I think what would be key for Kakao would be to be able to rebound and recover your advertisement revenue, and that will have an impact -- a positive impact on your share price going forward. So can you provide some color as to what your Q2 outlook is? And if you are seeing any data regarding April and May trend, that would also be quite helpful. And regarding your Talk Biz, I understand that your annual guidance is about similar to what we've seen previous year. At this point, would you be able to achieve this annual guidance?

[Interpreted] Responding to your question on the underperformance of our Q1 results. Why don't I break that into 2 parts? I will first talk about the Q1 revenue and then talk about operating profit. If you look at our Q1 revenue on the back of slow seasonality and also overall economic slump, we have seen growth muted. And also, if you look at Kakao Games, there has been decline in domestic revenue from Odin and the impact from the release of ArcheAge War in Q1 has not yet been fully reflected across the full quarter. There was a limited impact on the revenue. And as a result, on a Q-on-Q basis, we saw a 2% decline and only about a 5% increase growth on a year-over-year basis in terms of our top line revenue. And because of the uncertainties that are quite rampant in the macro backdrop, advertisers have been quite conservative in implementing their marketing spend. And hence, we've seen some sluggish downturn in the display ad revenue, including the Bizboard, which is considered Kakao's core product. However, there is one noteworthy point that I would like to emphasize is that we've continuously seen increase in the onboarding of small- to medium-sized advertisers onto the Talk Channel which has a characteristics of high advertisement efficiency and low economic sensitivity. And as a result of that, messaging business now currently takes up a bigger portion of our top line revenue, which consists of Talk Channel and notification talk. So going forward in the second half of the year, we will -- trying to expand on driving top line growth, mostly focusing on the message business, so that we may be able to attain our target. On the operating profit side, we have seen significant increase in the infrastructure investment because of the redundancy work we're doing on our data centers and also higher depreciation cost on the back of rise in CapEx. And also, we've spent more than we had originally expected around our new initiative businesses, which include AI, cloud and health care. And as a result of that, we have reported a lower operating profit compared to our expectations. At this point, across all of Kakao and its affiliates, we are putting an effort to achieve cost efficiencies and are planning to wind down on some of the businesses and projects where we think we don't have competitiveness. And through these efforts, we believe that we will be able to see some improvement on our P&L. However, we expect to continuously focus more investment behind the so-called new growth engine areas which include AI, cloud and healthcare. Especially in order to gain a strong positioning in the AI industry, we will continue to make investments as we have done in the past. We believe that it is important timing for us to increase strategic investments in order for us to build out an AI foundational model. And as a result of that, we believe that this year per annum operating loss from our new initiatives will actually rise higher than what we've seen previous year to around KRW 300 billion level. However, we think that this is going to be the peak for -- in terms of the AI investment. And come second half or early next year, we will be able to see a significant decline in that loss. Now from a mid- to long-term perspective, I believe what is important for us in terms of improving our top line revenue and operating profit is to build a positive and uptrending cycle that actually brings a very good match between the service and the business that is offered through KakaoTalk platform. So for the time being, we believe that its revenue contribution will not be as high, but we'll be able to see after next year, more contribution made to the top line revenue. We've already been -- we've already demonstrated the impact the friends tab and open chatting had on our advertisement and overall commerce business. So come the second half of the year and early next year, we will see some indications to its top line contribution.

[Interpreted] This is Simon, responding to Mr. Ahn. The second part of your question, you asked whether we would need to adjust our top business growth target, which we've communicated previously. But if you look at the trend that we are seeing in the second quarter, advertisers are gradually increasing their marketing spend, but not yet to the extent that will warrant me to say that this is a trend that's taking place with speed. So we need to still be quite cautious in looking at and observing how this trend actually plays out. Having said that, we stand by our previous target of year-on-year, 16% growth from our Talk Biz.

[Foreign Language] The following question will be presented by Jingu Kim from Kiwoom Securities.

[Interpreted] I would like to ask 2 questions. First, what is your take on the financial upside in terms of your ad business and commerce business on the heels of the revamp of the Talk that you've mentioned? Second question is, can you provide a little more detail with regards to the release of the AI-related services and more specific timeline in terms of when you would be actually adopting these different AI models and solutions to your platform? And also compared to other global, big tech companies, how would you define Kakao's competitive edge in the AI domain?

[Interpreted] Thank you, Mr. Kim, for your question. Regarding the positive upside to our revenue from the Talk revamp and its impact on advertisement and commerce business, now Open Chat is going to be replacing the View tab. And compared to the revenue that we've been driving from the View tab, we are seeing 2.5x to 3x higher revenue from the Open Chat space. And of course, this is a direct impact. And in terms of the indirect effects, we will have to see longer term to see how they materialize. In terms of the Friends tab, not necessarily with regards to the higher -- driving higher activity rate of the Bizboard. Now the Friends tab in itself is not serving the purpose as an advertisement surface, but it is actually a way in which through this feature, this is an interface where the users will be able to use various different types of vertical services that we offer. So it's going to be a bigger business impact compared to just serving additional advertisement space. So this -- the impact that we're going to see from the Friends tab is going to be more structural rather than being a direct impact. And right now, on the Friends tab, we only have a list of friends who's having their birthdays, but we will add on other features with other anniversary friends. For instance, friends who will have graduation or admission to universities or people taking new jobs, which will then increase the various other gifting occasions, and that will also have revenue upside implications. So once again, to sum it up, the Friends tab is going to use as an effective interface for users to come in contact with various different types of vertical services that we offer. Regarding your question on KakaoBrain, KoGPT and to when we will be able to release this and when we'll be able to apply that to our -- adopt that to our platform. And your second part of the question was what competitive edge do we have vis-a-vis the global players. We are, at this point, working very hard in developing KoGPT. And we'll probably be able to release and showcase KoGPT 2.0 in the second half of the year and start servicing it. In terms of the number of parameters and the scale of the data set compared to global players, would have to admit that we may lag behind. But the ones that we are developing is the best fit and foundation model for Korean language. Just to be a little cautious in painting the picture for AI direction forward, I do not believe that there's going to be a one AGI, a general-purpose AI, that's going to conquer the entire world. I believe this is going to be a multi-polar landscape, whereby there will be multiple number of AI players providing generative AI models. Also, at this point, I mean you must have used ChatGPT. So you probably know the current version of ChatGPT and GPT-4 that is being used and that is being applied to different vertical services. If you use it, you will know that the response time is slow. And the reason is because the specific characteristics of the Korean language has not yet been reflected or incorporated in these models. So it requires a significant number of tokens. And hence, these models cannot be used for applications where it requires very fast response time because of that constraint on the scale of the tokens. So I believe that Kakao has a specialized capability when it comes to Korean language-based models. And global players, as they are also focusing on generative AI, we at Kakao, are also open to possible collaborations. So from one perspective, we will develop our own KoGPT, Korean language-based GPT, but at the same time, we'll collaborate with global players. And also because Kakao has expertise and technological capabilities regarding the chatting interface, we believe that we will be able to gain a competitive edge in AI.

[Foreign Language] The following question will be presented by [indiscernible] from DS Investment & Securities.