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

[Foreign Language] Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of our fiscal year 2023 Third Quarter Earnings Results by Kakao Pay. This conference will start with the presentation followed by a divisional Q&A session. [Operator Instructions]. Now we shall commence the presentation on the fiscal year 2023, 3rd quarter earnings results by Kakao Pay.

[Interpreted] Hello, I'm Allen Shin, CEO of Kakao Pay. I would like to first extend my gratitude to fund managers and analysts for joining Kakao Pay's Q3 2023 Earnings Call. I will begin with key business metrics followed by TPV, consolidated operating revenue and expense, P&L and then key performance highlights. Let's begin with the key metrics for Q3 '23. [Interpreted] Q3 '23 TPV was KRW 36.2 trillion, up 18% year-over-year. Revenue TPV was up 15% year-on-year, reporting KRW 10.5 trillion, surpassing the KRW 10 trillion mark for the first time. Q3 revenue was KRW 158.9 billion, which is an increase of 12% year-over-year. Net loss for Q3 '23 was KRW 8.2 billion, with EBITDA at minus KRW 1.4 billion. [Interpreted] If we take a look at the business metrics, as of Q3 end '23, MAU count for Kakao Pay was 22.92 million. This is marginally lower than 24 million that we saw in the second quarter, which is due to a temporary impact from a decline in users of e-document services following the increase we saw in June from payment of property taxes. But during the same period, main services of payment, money transfer, asset management as well as Kakao Pay Apps MAU were up versus last quarter. And transaction count per user was up 4% year-over-year, recording 105 transactions. [Interpreted] From this quarter onwards, we will disclose a number of domestic merchants and share with you the uptrend. On the back of sharp rise and overseas merchants, including from China, we onboarded tens of millions of overseas merchants by the end of the third quarter. But this figure may cause some confusion in terms of the growth trajectory of Kakao Pay's merchant base. So we will share with you a more meaningful figure from investors' perspective, which is the number of domestic merchants. As of now, we have cumulative 960,000 domestic merchants coming close to 1 million. This is a 20% rise year-over-year with a clear uptrend seen in offline merchants. Through partnerships with major businesses from each consumer category, Kakao Pay will continue to broaden its on- and offline merchant base to be a step closer to the everyday lives of our users. Next, I will invite Aiden, who is the CFO, and he will walk you through Q3 TPV.

[Interpreted] Hello, I'm Aiden, the CFO. Q3 TPV was KRW 36.2 trillion, which is up 18% year-over-year. Revenue TPV was KRW 10.5 trillion, accounting for 29% of the total TPV. Q3 TPV recorded a double-digit growth year-over-year across all of the services, including payment, financial and other services as well. Payment Service TPV was up 16% year-over-year. Underpinned by solid online payment growth, both rise in offline cross-border payment by inbound foreign travelers and offline payment of domestic users drove this quarter's TPV growth. [Interpreted] Digital Finance saw 13% TPV growth versus last year on a diversified offering of loan products despite a decline in volume of credit loans. We are also seeing growth in Security Services although the figure does not form part of our Digital Finance TPV. The company's domestic and overseas stock trading volume also reported in year-over-year growth at 274%. On the back of free service on money transferred to one's own account, which we introduced in December, TPV for money transfer and other services recorded a 20% year-over-year growth. We also ran a promo event where for the deposits in the accounts of Kakao Pay Securities, we gave 5% per annum interest up to KRW 300,000 and 2.5% to above that threshold up to KRW 1 million. This was well received among Kakao Pay users, so we decided to adopt this as the standard interest rate policy for Kakao Pay Securities, starting October 16. With higher interest rate benefits given on the deposit and on growing stock trade volume of Kakao Pay Securities, Kakao Pay money balance this quarter also increased Q-over-Q, reporting KRW 1,186.7 billion, which is higher by KRW 119.3 billion versus the end of the second quarter. We expect TPV growth to continue across all of the services in the fourth quarter, easily bringing our total TPV for '23, up 15% year-over-year. [Interpreted] Q3 revenue was up 12.4% year-over-year and 6.7% Q-on-Q, reporting KRW 158.9 billion. Digital team and revenue was up 17.2% year-over-year and 5% Q-on-Q to KRW 113.5 billion, reporting a double-digit growth year-over-year across all of the payment services. On a Y-o-Y basis, growth was driven by online non-captive and cross-border payment, while on Q-on-Q basis, higher online captive and cross-border payment revenue were the main drivers. Digital Finance revenue was up 0.7% on year and 9% on quarter, reporting KRW 37.7 billion. On the back of revenue expansion from Kakao Pay Securities and positive market response for Travelers insurance product from Kakao Pay Insurance, we have seen revenue and top line improvement. Other service revenue was up 9.3% year-over-year and 25.3% Q-on-Q. We booked card brokerage and advertisement revenue at levels that can offset revenue decline from making money transfer service free of charge. And as such, we are seeing a meaningful uptrend. [Interpreted] Q3 operating expense was up 11.5% year-over-year and 4.3% Q-on-Q, recording KRW 168.4 billion. With the digital payment revenue growing and diversified offering of brokerage and financial services, commissions paid increased 18.2% year-over-year. And the business expansion through the subsidiaries, depreciation costs went up 23.7% year-over-year but are still managed within the scope of our annual plan. On Q-on-Q basis, A&P expense was down 0.2%, thanks to strategic spending efforts. For the other expense, it increased 24.2% on the back of insurance service costs following positive sales of Travelers Insurance. Although there was also an impact from growth in deposits held by Kakao Pay Securities and the 5% interest rate impact on the deposits, we believe people will see greater user benefits in the longer run. [Interpreted] Q3 consolidated operating loss was KRW 9.5 billion and EBITDA minus KRW 1.4 billion and net loss reported KRW 8.2 billion, underpinned by steady profit from our core businesses, and realization of earnings from subsidiary companies like Kakao Pay Securities and Kakao Pay Insurance, both consolidated and stand-alone basis, operating loss rate has been on decline for 3 consecutive quarters. We will endeavor to downsize loss driven by top line growth in line with annual guidance and through efficient cost allocation. [Interpreted] Third quarter separate basis revenue was KRW 142 billion, which is up 15.6% on year and 4.5% versus the previous quarter. Third quarter separate basis operating profit was KRW 12 billion and OP margin was 8.5%. Standalone operating profit also was on an uptrend for 3 consecutive quarters as we continue to secure earnings that is profitable. Next, I will invite Jason, who is the Head of Business, and he will present on key business highlights.

[Interpreted] Hello, I am Jason, Head of Business. Payment is Kakao Pay's main service, which are driving robust earnings growth every quarter. And on the back of our competitiveness and online payment, whose growth potential has been proven, both revenue and TPV of off-line payment and cross-border payment continue to show a double-digit growth on both Y-o-Y and Q-on-Q basis. During the fourth quarter conference call last year, we talked about the strategy of enhancing customer benefit, expanding point of usage and cross-border payment and how these will form the main pillars of our earnings strategy going forward. [Interpreted] Since then, we revamped the benefit tab to maximize monetary benefit to users, making it easier for users to find discount coupons, collect points, find discounts at nearby shops, enjoy credit card benefit features, which enable rational and mindful consumptions. And most recently, we partnered up with Korea's major open market, 11th Street, embedding Kakao Pay's Easy Pay feature as we continue to onboard major merchants per category such as shopping and travel and F&B. Spending from kiosks at large fast food chains and cafe brands to personal mobility, including bike and [indiscernible] sharing to affordable transit cards, we are broadening our payments space, spreading the convenience of easy and simple payment in the everyday lives of users. [Interpreted] Next is cross-border payment. Kakao Pay is connecting its payment services across 50 or so countries and regions across Asia, Europe and the Americas. Our goal is to have 60% coverage of 13 million annual inbound tourists as it expands its efforts on linking up with 9 Asian countries' easy payment network. Cross-border payment TPV was up 1.8x year-over-year for 2 consecutive quarters. And as inbound foreign tourists increased following the trends last quarter, we are seeing growing TPV from domestic Kakao Pay merchants. [Interpreted] We are also scaling up a variety of services for Kakao Pay users who travel overseas. Depending on the country the user is visiting, we designed the service feed to show differently on the interface, ranging from cross-border off-line merchants, benefit offerings and pay full news, enabling users to get access and use Kakao Pay's cross-border services without the hassle of having to figure out how to use those services in the country they're visiting. At Kakao Pay, we are working hard to scale up the infrastructure so that the cross-border payment can have a bigger impact on the growth of earnings from our payment services. Next, Jeff, who is the Head of Services, will walk through third quarter highlights for Kakao Pay Securities and Insurance.

[Interpreted] Hello. I'm Jeff, in charge of services. Next, I will talk about Kakao Pay Securities. Total deposited assets under management at Kakao Pay Securities, including fund, stocks and deposits surpassed KRW 2 trillion in August of 2023. We see user activities go up every quarter as people check stock news through the MTS service, join discussion groups and trade stocks based on what they learned. As a result, Kakao Pay Securities' Q3 TPV was record high at KRW 9.7 trillion since its launch back in October of '22. Worth noting is that Q3 TPV for Kakao Pay Securities increased 44% Q-on-Q, widening the gap with the market trend of 12% growth over the same period. [Interpreted] We also started with a stock backed loan service under the brand name of stock selling proceeds in advance last August, and introduced Trading Journal in September, providing intuitive visibility into investment returns on a daily and monthly basis. [Interpreted] Gamification features unique to Kakao Pay securities have enriched its stock service offering. We most recently began Greatest of All Traders tournament designed to help broaden investors' experience and overseas stock investment based on sharing and communicating various investment tips between the users and to make it fun while growing their investment assets. Kakao Pay Securities will create an investment culture on the basis of communication and exchange and closely monitor user demand to offer services that investors consider to be essential. This will be the tenet of our strategy in going after the mobile-based stock trading market. [Interpreted] Next is Kakao Pay Insurance. Since its release last June, overseas travelers insurance was taken out by 200,000 people on a cumulative basis. This was an innovative and user-friendly product breaking the convention of legacy insurance products and Kakao Pay Insurance is gaining the reputation as a top-tier brand of travelers insurance. Also, Kakao Pay Insurance was the first to adopt a service whereby insurance claims is paid almost immediately. By leveraging digital innovation, we developed a system, enabling claims to be paid within a minute after a claim is submitted via Kakao Talk. Through the upcoming daily insurance services, Kakao Pay Insurance will offer enjoyable experience from buying an insurance product to claims payment and leverage off of such positive user experience to continue the growth in the new segments of the insurance market. Next, Allen will talk about ESG and our future plans before we end the presentation.

[Interpreted] This is Allen again. According to 2023 ESG assessment published by [indiscernible] Governance service, Kakao Pay was rated A. We will take heed of what external stakeholders, including the investors have to say and set out a more sophisticated ESG management framework to be a company that creates a beneficial financial flow. [Interpreted] So far, we've walked through business highlights for Q3 of '23. In offline payment, we've seen significant increase in number of transactions and TPV, and with the rebound in traveling, following the restrictions seen during the COVID pandemic, there is clear quarterly performance growth driven by expansion in off-line cross-border payment infrastructure. Kakao Pay Services include payment, finance, securities and insurance, all started with the purpose of providing easy access to financial services and providing monetary benefits to everyone, and in so doing drove enhancements to unique attempts to enable 40 million Kakao Pay users to enjoy that benefit with ease of use. Worth noting hence, is the travelers insurance, a bold and innovative approach taken on by Kakao Pay Insurance, which drove tangible top line results. We, therefore, expect Kakao Pay Insurance's revenue contribution to continue to grow going forward. Revenue guidance, which we communicated beginning of the year is the very target all of Kakao Pay crew are working to achieve. We will endeavor to bring that effort to fruition during the upcoming fourth quarter earnings call. Thank you.

[Foreign Language] [Operator Instructions] The first question will be presented by Sinyoung Park from Goldman Sachs.

[Interpreted] I am Sinyoung Park from Goldman Sachs. I would like to ask you 2 questions. First is on your securities business. We've seen some meaningful improvement in terms of the user activity metrics as well as the total balance. Would like to understand, and I just want to check whether this is a correct understanding whether come next year, your Securities business is going to be 1 of the biggest growth drivers for you? And also, can you provide a little more color on each of the KPIs that you are monitoring in terms of the amount of assets that's been deposited by the customers and also the market share and the outstanding balance when it comes to your credit or margin loans. And also, is it right for us to assess that at the revenue top line level, it's actually the interest income or interest revenue that's going to play a bigger role versus your commissions and fee revenue? Second question relates to the payment business and the strategic alliance that you mentioned that you entered into with the 11th Street. Can you provide a little more elaboration as to that partnership arrangement seeks? And also, what does the company expect out of such strategic partnership?

[Interpreted] This is Allen. Responding to your first question. At this point in time, we are in the process of developing and devising our business plan. So I believe that we will be able to share with you a more specific guidance come next earnings conference call. As you have mentioned, if you look at some of the activity indicators for our customers of security services, for instance, in terms of the overseas stock trading volume and balance of deposit, all of these indicators are showing an up trend. And so I can tell you that our securities business is going to be 1 of the very critical drivers for our growth in next year. Just to delve into a little more detail on each of the measures. If you look at the trading volume, both domestic and overseas stock, it amounted to KRW 9.7 trillion, which is a growth of 279% on-year and 44% Q-on-Q growth. And also, if you look at the number of transactions compared to the end of '22, we've seen a 144% growth, out of which 158% is for overseas stock and 131% is domestic. Now looking at the assets under management, which includes the fund, the stock and the deposit we've seen a continuous increase, and it has now surpassed above KRW 2 trillion level. Also, looking at some of the user-related metrics, TPV, for instance, have gone up on a YTD basis, 3x and also monthly active user count at this point had also gone up by about 40% on a YTD basis. And if you look at the number of users who are making overseas stock trade compared to end of '22, we've seen a double-fold growth. And at this point, the total amount of margin or credit loans out of the entire domestic stock trading volume, it now accounts for about 15% and the outstanding balance within Kakao Pay Securities have gone up by 208%. So we're seeing a very solid growth. Also, we have implemented across 4 instances, some of the gamification programs, which really helped with the overall transaction volume. In the first half of the year, we also gave a new facelift to our stock homepage and provided aftermarket transaction support and renewed the order screen. Also on top of that, we introduced a stock backed loan as well as journal entry services, which all brought up an enhanced overall service offerings under the MTS that really improved of the user satisfaction and hence, we are seeing improvement in retention measures.

[Interpreted] Regarding the second question about the interest revenue. You are correct that from a shorter-term perspective, it is more salient. The interest revenue growth is more salient compared to the commissions and fee income growth. As I've mentioned previously, the 5% interest rate we had applied to the deposited amount which was done as part of the promotion. As of October 16, we've changed that into a standard policy. And that -- after seeing how positive the user responses were when we applied this interest rate. Going forward, with the increase of the AUM and the assets that the users deposit with us, that's going to drive up interest income and at the same time, we will have to pay out more benefits to the -- to our customers. But however, we are seeing improvement in the overall profit as the top line growth is high enough to offset that increase in expenses. On top of the improvement in the overall size of the asset that is deposited with us, basically, we are offering real benefits to the users, which really helps us to facilitate the users to start using other Kakao Pay services. And also it's making a contribution in the sense that we are able to save on the firm banking cost and is contributing to increasing the application's MAU with the launch of, for instance, receiving interest on a daily basis type of a scheme. So aside from the interest revenue, fee income is also a very important indicator that we monitor and follow. This year, we focused on giving certain fee promotions so that people could actually try out these different types of functions and features. Going forward, as we now have all of these value-added features well in place, we will adjust our business approach so that we can appropriately book the right level of fee income. So going forward, I do look forward to seeing an uptrending fee and commission income.

[Interpreted] This is Jason. I will respond to your question about the strategic partnerships. As part of our focus to further strengthen the overall Kakao Pay payment ecosystem, we've entered into as of October 25, an MoU with the 11th Street. And so during the grand Double 11 period, which is the biggest shopping season at the 11th Street, Kakao Pay payment service will be provided, will be enabled, and we will be doing -- running various different promotions during that period of time. We will be offering an actual benefit to our user base and provide very stable and convenient shopping experience. And we will be looking forward to generating synergies based upon the collaboration between the 2 companies. And supported by our partnerships in this online payment service we will expand our discussions to include other efforts, including partnering up on the insurance side, providing reward promotions and providing promotional discounts. We will also be making use of my data, which is owned by Kakao Pay to further scale up the targeting-based marketing. So we're looking at various different collaborative models that we can tap into. In terms of the Kakao Pay online payment, not just we will be -- Kakao Pay will be used in many other places not just on Kakao Pay ecosystem or on Kakao Pay platform, but other specialized malls, including fashion, accessories, cosmetic beauty mall and travel ticket and cultural events and digital content. So in all of the domestic merchants, Kakao Pay is currently being supported, and in order to provide a more enhanced payment experience to our user base, we will continue to diversify into other strategic partnerships going forward.

[Interpreted] Next question, please.

[Foreign Language] The next question will be presented [indiscernible] from Citi Securities.

[Interpreted] [indiscernible] from Citi. I would like to ask you 2 questions. First is on the take rate. Because you provided us with the higher revenue growth versus TPV growth, we believe that you would have assumed that the take rate -- the average take rate will improve going forward. But if you look at the current trend, the TPV growth rate is aligned with the guidance that you shared. However, your revenue growth TPV -- revenue growth, excuse me, projection is falling short of the guidance. So it seems like the take rate has been undermined in across all of your businesses. So how has your strategy shifted to 1 that focuses more on user acquisition and retention even at the expense of growing the take rate? Or has there been some unexpected factors that had negatively impacted the take rate trend? And also, what is your outlook on next year's TPV and revenue growth rate? And also, do you think that your revenue growth can outperform the growth rate of TPV? Or do you think that this current will continue for the time being? So that's my first question. Second question is, since we're at the end of the year, we'd like to understand what your plan is on capital allocation. Even if you acquired Siebert this year, I'm sure that you still do have some ample capacity in terms of the proceeds that you got from the IPO? Are you also looking at other M&A opportunities? Or in light of the deficit or the loss-making structure at this point, would you just hold on to the amount of funds as a buffer? Would like to get your take on this.

[Interpreted] This the CFO, Aiden. I will respond to your first question. As you've mentioned, on a year-over-year basis, if you look at the TPV growth rate versus the revenue growth rate, TPV growth rate has been higher. However, on a Q-on-Q basis, if you take out the impact from changes in the accounting treatment that we applied to derivatives in the fourth quarter of last year, which significantly drove down the securities revenue top line. If you take that into consideration and carve that out, revenue growth rate has actually been higher compared to the TPV growth rate. So in Q4, we believe that on a Q-on-Q basis, such growth is expected to continue. And on Y-o-Y basis, there's going to be an impact from previous year's revenue -- Securities revenue. So there will be a base effect. If you consider the quarterly growth rate as well as the Q4 seasonal impact, I believe that there is no reason for us to expect that the revenue growth will be lower compared to TPV growth. And also in terms of achieving the high rate of revenue growth versus TPV growth, strong pillars of both our payment business, but also a solid growth of our financial service business is extremely critical. So I think it will be helpful for me to just provide you with the overall backdrop as to what the business environment would look like for us. does look like for us in 2023 and going forward. Now despite the constraints in the online payment market that we experienced from the endemic, we had really focused on gaining both the expansion of the merchant and monetization and thanks to those pillars, we were able to sustain an elevated level of growth rate. So we installed Kakao Pay payment features across large franchise kiosks including that of Burger King and McDonald's and also implemented various different types of promotions. And for the financial services, it seems like the top line revenue growth is quite slow because of the headwind that we are seeing in the macro backdrop as well as cut in the fees that we provide to gain a solid footing in the market. But we believe that going forward, in terms of the loan product, we will be able to see contributions from different types of loans on top of the margin loans as well as rollover loans. And I believe that once we are able to expand our market share, we will be able to further accelerate the speed at which we are able to monetize. Also, we entered into the 11th Street as a payment method in month of November, and we introduced off-line new services. And we think that hence, we are -- we will be able to sustain the growth that we see in our payment business. In the financial -- Digital Finance services, through our frame of insurance products and loan products, we will be able to increase our market share through Kakao Pay Securities. And based upon the bigger size of the AUM that we are able to acquire, we think that this will help us further drive up top line revenue. And if you look at Kakao Pay Insurance, with the release of travelers insurance, we will see realization of top line revenue come through. And in Q4, we will go into a full-fledged new product releases. And hence, in year 2024, we are making preparation for 2024, so that we can achieve bigger revenue growth versus TPV. So hence, in 2024, we will be expanding our product offerings as well as our market positioning, which will help us generate earnings for us. Based upon the customers that we are able to acquire through the TPVs and through TRXs transaction, we will offer various different services, including financial services as well as other services, which will help us further increase the service revenue and other revenue, which will then make contribution for us in growing the revenue growth versus TPV growth.

[Interpreted] This is Eddie. Responding to your second question, when we as a company look at different M&A opportunities and investment potential, we first prioritize whether we are able to generate synergies. We want to make sure that, that acquired business actually helps with our core business growth or it may open up a broader market for us, especially to adjacent business domain. So at this point, yes, we are quite proactively tapping into and looking at various different investment opportunities, and we are always open to acquiring overseas companies, just like we did with Siebert Financial. For the payment business, we are interested in identifying submarkets that will provide us with some supplementary capabilities, and we are also interested in gaining next-generation payment solutions in terms of technology and also finding ways for us to further make our cost more efficient across the value chain. In terms of the financial business, we are interested in businesses that will give us a bigger volume of transaction and business across, for instance, loan referral securities and insurance business and also our finding ways upon which we could really internalize various capabilities in both the upstream and downstream value chain. Now having said that, at this point, we are facing a quite unstable global geopolitical situation, and there are a lot of uncertainties that's embedded in this economic cycle, and we are in a very high rate environment. So we are, at this point, most prudent in approaching these different investment opportunities.

[Interpreted] Next question, please.

[Foreign Language] The next question will be presented by Dong Woo Kim from Kyobo Securities.

[Interpreted] I have 2 questions. First has to do with your loan business. There is a concern that this high rate environment is going to extend for some time into the future. I would like to understand whether this market because the downstream market, the lending market is somewhat going to slow. What impact that will have on your business. So what countermeasures do you have at Kakao Pay since you're in the business of referring these loans? And also, are there any ways or strategies that you are considering to employ to outperform the market compared to the overall loan market growth? Second question is on your advertisement business. I see that you ran advertisement on very popular luxury brands like Chanel, Trip.com and Sneakers back in Q2. And also, we've seen advertisement of Disney, Tiffany's and Bright Link through the big brands. I would like to understand what your advertisement performance looked like in the third quarter? And what is your mid- to longer-term advertisement business direction?

[Interpreted] Hello. I'm Jason. I'm the Head of business. Responding to your first question. Looking back last year, it was less likely for Kakao Pay users to take out credit loans because starting October of last year, there was an upper cap that was applied to the overall household loans into the system. And that had an impact on the loan business performance of Kakao Pay as well. This year, we are not seeing the same type of regulation being applied. But as we go into the second half of the year, people are concerned regarding the mortgage loans and household loans, have heightened. So some of the financial institutions are, at this point, controlling the amount of new loan originations in line of the delinquency rate as well as the asset quality related concerns. And at this point, the government also had guided that in order to manage the overall household loan exposure, when the institutions actually lend out 50-year maturity loans, basically the maturity to be used in calculation should be limited to 40 years rather than 50 years when they calculate the debt servicing ratio. And also, they have asked the financial institutions to stay away from or will be less active in extending loans with 50-year maturity to borrowers who own more than 1 houses. And also it will apply to a collective loans as well. So we are currently in a situation where the lending market could actually freeze up. [Interpreted] And at this point, because of the delinquency ratio and asset quality issues, savings bank and capital banks are at this point under some pressure. However, from a longer-term perspective, we see some of the second tier financial institutions actually increase the amount of loans that they originate. So we see difference and variance across different types of financial institutions. In the first year, our financial market, basically loan origination from Internet-based banks, there is a certain requirement that they have to comply with and with regards to extending loans to mid- to lower rated borrowers. And so we see that on that segment, we see loans being originated. So overall, compared to last year, whether it was a very hard upper cap that was placed on household lending. The overall top line trend, we think, is going to start to improve as we enter into the fourth quarter. And at this point, there are different segments of the market that try -- they are working to expand different types of loan products. So we will also come up with a strategy, whereby we diversify the portfolio of loans that were being provided and finding the right soft spot for us to be able to drive further top line growth in specific areas where we can refer more of such credit loans. Because if you look at savings banks, they are, at this point, increasing the lending based upon -- the lending loans which is guaranteed -- which is backed by guaranteed letters. Then for capital companies, they are expanding their auto loan product lineup. So we have an opportunity to really identify some of the borrowers who have rollover demand. So that will be a key area for us in wanting to expand the top line revenue for us going forward. So we will find ways and we solidify the basis so that we can outperform the overall loan market growth.

[Interpreted] This is Jeff. Responding to your question about advertisement. Kakao Pay advertisement has been reporting a double-digit growth in terms of the top line. And if you look at Q3 on a Q-on-Q basis, we reported a 16% growth. And also in terms of number of brands where we ran advertisement and the actual number of advertisement campaigns, there was a triple-digit growth versus previous period. And also, we are diversifying into various different categories, including insurance, telecom, credit card to diversify the types of advertisement categories that we run advertisements like in Q2, it was mostly in luxury, transportation and OTT. Lastly, I would like to also share with you a mid- to longer-term advertisement direction. First is we want to further maximize and increase the advertisement slots that we can operate. At this point, the advertisement slots are mostly used to promote our own services for better discovery. So we believe that there is an upside potential for us to leverage the third-party advertisement. Looking at the amount of ad slots that is currently booked once again, there is a quite good upside potential. And so within the scope that doesn't undermine our service value, we will continuously and gradually expand the advertisement services. Second, we will seek to generate synergies with the merchants that we work with. We currently have our internal data, which we have built over the years, and we are -- we can make use of that data to provide insight to the merchants and these merchants can also become our advertisers. We are, at this point, building out the internal processes so that we can further strengthen cross-selling opportunities. Third is we will actively leverage targeting logic in order to maximize advertisement efficiency. We have MyData, which is underpinned by more than 10 million subscribers of Kakao Pay's payment and money transfer and we could leverage off of that data in providing the right benefit to our user base. And also, we have started using this data to provide timely recommendations. We will continue to further refine these recommendation logic and also by integrating the advertisement platform, we will also be able to further improve the efficiency of ad products going forward.

[Interpreted] So we've spent a little more than an hour, so we will be taking the final question. Any questions?

[Foreign Language]. The last question will be presented by Myung Jung from DB Financial Investment.

[Interpreted] I have 2 questions. You mentioned previously that your cross-border payment accounted for about more than 10% of your total payment during Q2, I would like to know what's the percentage like? How much was there an increase in Q3? And also, you said that there is more increases in the Chinese tourists visiting Korea? What is the percent of the foreigners out of repayments that is taking place within Korea? Second question is, what are the upcoming product lineup for Kakao Pay Insurance? According to a news report in just 100 days after the release of a travelers insurance, the number of people who took out these insurance actually surpassed 150,000 and that brought you, the Kakao Pay Insurance is #2 in the market. When can we expect to see another new product? And also what type of new products are you at this point developing?

[Interpreted] This is Jason. Responding to your question on cross-border payment. In Q3, as you've mentioned, cross-border payment actually showed an increase of the growth of 75% year-over-year and 18% Q-on-Q. And so starting Q2, we've seen cross-border payment TPV more than 10% of the total figure. And we are seeing that growth continue in the third quarter of this year as well. And as we see more inbound travelers coming in from China, the offline inbound cross-border payment compared to second quarter of last year had gone up by a multiple fold and compared to the second quarter of this year, it actually went up by 82%. But at this point, the level that we are seeing is only about 30% compared to pre-COVID, we believe that the more solid growth will start to feed through after the Q4 of this year as well as into next year. In the first half of the year, the most of these inbound travelers were group tourists and starting the second half of the year, we see more demand from FIT tourists, and we are expecting a steeper growth from that segment. For outbound payment as well, since the end of the COVID pandemic, we've seen heightened demand for overseas travels. So there's been a significant gradual and continuous increase in the TPV, not just in Japan, but other countries, including Italy, Thailand and China. And at this point, we are expanding our network connections to many other countries aside from Asia, even into Europe, U.S. and Oceanian countries.

[Interpreted] This is Eddie responding to your question about the upcoming product lineup of Kakao Pay Insurance. Second half of last year, we started with the release of finance insurance and then expanded to overseas travelers insurance and also whole in 1 insurance in connection with Kakao VX platform and have launched and sold these group insurances. Of all of these products, as you've mentioned, the overseas travelers insurance, we've seen a significant increase in the number of policyholders above and beyond the market average. So it was about a month -- on a monthly basis, 10,000 people and then come July, August, it increased to 50,000. And in September, 60,000, even after the peak season had passed. So there has been a continuous upward trend. And then in month of October, we've seen an outperformance versus that of September. On top of that, we, at this point -- and also at this point, what we are planning to do is that in December, we want to release and launch a group travelers insurance, whereby people can easily take out and subscribe to these insurance products through a simplified sign-up process.

[Interpreted] So another new product that is upcoming is an insurance for mobile firms. In line with our vision of being able to -- providing insurance coverage for daily risk that people can actually experience, we will differentiate the type of insurance features that we provide through this insurance for mobile phone. And in November, together with LG U+, we have already released an insurance for covering damages and losses regarding mobile phones. And within the end of the year, we will also expand and release a B2C type of a mobile phone insurance. So going forward, not just the travelers insurance and mobile phone insurance, we will also further expand into 4 other categories, including leisure and life and digital and embedded to really play upon and leverage the differentiating points that only Kakao Pay Insurance can offer and really provide an insurance coverage that people could actually -- regarding the daily risks that people could actually experience.

[Interpreted] Well thank you very much. This brings us to the end of the earnings conference call for Q3 of '23. If you have any further questions, please feel free to contact us at the IR team. Thank you very much.