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

[Interpreted] Good morning, and good evening. Thank you all for joining the conference call for the Kakao Pay earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we will begin the presentation on Kakao Pay's Fourth Quarter of Fiscal Year 2024 Earnings results.

[Interpreted] Good morning. This is Allen. Thank you all for joining Kakao Pay's Fourth Quarter 2024 Earnings Call. We begin with key metrics for the quarter, starting with TPV, consolidated revenue expense and P&L followed by business highlights for Q4 of 2024, ending with 2025 strategies. First, on key metrics for the fourth quarter. Q4 2024 TPV was KRW 167.3 trillion, up 19% year-on-year. Revenue TPV was KRW 48.8 trillion, increasing 20% year-over-year. Financial TPV for the full year surpassed KRW 10 trillion, while quarterly money transfer TPV for the first time recorded above KRW 30 trillion. FY '24 revenue increased 25% year-on-year to KRW 766.2 billion as digital finance fueled the topline with a whopping 71% year-over-year growth. Net loss for 2024 reported KRW 21.5 billion with EBITDA at minus KRW 20.6 billion. Moving on to business metrics. Kakao Pay's MAU as of Q4 end 2024 was [ 2,402 million ]. Payment MAU exceeded 20 million users despite decline in large merchants. Like the case with TMON and WeMakePrice, we saw new user inflows on the back of offline and overseas merchant expansion, which is driving the size of the payment user base. We are seeing total MAU kept flat year-over-year despite 47% fall in e-document users following the readjustment of the business, a decision which was made to retain a selective focus on our business. Once the service adjustment is complete and after new and profitable services are introduced, we expect MAU will uptrend underpinned by users with higher profit contribution profiles. For Kakao Pay's domestic and cross-border payment, finance, money transfer services, transaction per user increased 10% year-on-year to 92 transactions, while transaction per user based on entire suite of services came in at 99 transactions. With onboarding of many new merchants, mostly from food and beverage sector, we now have 1.13 million domestic on off-line merchants, which is an increase of 14% year-over-year. Next, our CFO, Aidan will present on the details of Q4.

[Interpreted] This is Aidan. Fourth quarter TPV was up 13% year-on-year, reporting KRW 43.1 trillion. Revenue TPV stood at KRW 12.4 trillion. Payment and money transfer TPV sustained a double-digit growth trajectory. Payment posted 16% year-on-year TPV growth as online payment showed robust uptrend in the non-captive segment. We've seen expanded off-line payment seen around CVs, cafes and groceries and on growth in TPV from tutoring institutes via the payment, offline TPV is sustaining a triple-digit growth trend. Cross-border payment also posted a growth of 31% year-over-year on higher TPV from both on and offline. With the start of the DSR Phase 2 implementation, household loan origination by the banking sector declined, driving loan service revenue down by a single digits on Y-o-Y and Q-o-Q basis. Out of stock trading, overseas stock performance stood out with its overseas trading volume exceeding KRW 11 trillion, which is a whopping 157% year-over-year growth. Money transfer reported 14% growth year-on-year. We are seeing meaningful uptrend supported by release of personalized seasonal envelopes and higher cross usage across different financial services. Revenue in Q4 increased 31.3% year-over-year and 17.2% Q-on-Q, reporting KRW 218.2 billion. It was a record-breaking quarterly revenue in 2024, fueled by financial services. Financial service revenue posted record high KRW 84 billion, accounting for 38% of total revenue. It's noteworthy to see investment service revenue growth of more than triple fold year-over-year, while insurance also posted threefold revenue growth, laying the foundation for diversified revenue stream. Payment revenue underpinned by steady online payment growth and steep uptrend in off-line and cross-border posted 7.4% year-over-year and 2.3% Q-over-Q growth. Despite continuing downturn in household lending in the second half, growth in Tier 2 credit loans drove 9.7% year-over-year growth in loan services. On the back of increase in overseas trading and higher FX rate, investment service posted a high growth of 219.5% year-on-year and 132.4% Q-on-Q. Other services was up 2.9% Q-on-Q on growth in revenue from credit card recommendations. And there was year-over-year decline, which is due to the base effect following ad revenue adjustment last year. Q4 operating expense posted 33.9% year-on-year increase to KRW 251.2 billion. Excluding the TMON and WeMakePrice impact, operating expense is up 17.1% year-on-year, reaching KRW 219.7 billion. Commission fee increase was 11.4% year-on-year on rise in MyData operations expense. Due to offline expansion and promotion and investment services, marketing expense increased 20.3% year-on-year and 10.9% Q-on-Q, while FY '24 marketing expense was controlled below 10% of revenue at 8.6%. Increase in other operating expense is due to KRW 31.5 billion of one-off expense from TMON and WeMakePrice and rise in operating expense following revenue increases from financial subsidiaries. Q4 consolidated operating loss came in at KRW 33 billion, but KRW 31.5 billion of Q4 operating loss was due to TMON and WeMakePrice related expense, which was booked in advance under non-operating bad debt expense in Q3 being reclassified to bad debt accounts under operating expense. Excluding this one-off impact, Q4 operating loss is around KRW 0.9 billion, which is nearing quarterly breakeven point. In particular, out of consolidated subsidiaries, Kakao Pay Securities reported its first turnaround in profit of KRW 0.7 billion this quarter, securing a basis for consolidated profit turnaround. Powered by topline growth of financial subsidiaries and gradual improvement in profit-making structure, we will endeavor to bring forward the timeline for a consolidated basis turnaround in 2025. Q4 stand-alone revenue was KRW 160.8 billion, up 7.9% year-on-year and 3% Q-over-Q. Q4 stand-alone operating loss was KRW 20.3 billion. Excluding TMON and WeMakePrice impact, among others, Q4 adjusted operating profit was KRW 11.8 billion with adjusted annual operating profit at KRW 47.7 billion. Next, Jason, who is the Head of Business, will walk through Q4 business highlights.

[Interpreted] Hello. This is Jason. First, on payment. As of end of December '24, we exceeded 20 million users who use Kakao Pay's online, offline, cross-border and everyday payment services. Despite churn from bankruptcy of large-scale merchants like TMON and WeMakePrice, total payment service is growing powered by off-line and cross-border payments. Most pronounced growth was from offline, both domestic and cross-border, with its payment user count growing 18% year-over-year. Offline payment TPV, including domestic and cross-border posted 125% year-over-year growth with transaction count up 33%. As such, rise in offline payment usage was the key engine behind payment service growth. Moving on to Kakao Pay Money. User count surpassed 31 million, of which active seniors above age of 50 increased by 1.5 million year-on-year with 50s and 60s age group rising quickly. And a total of 83% of registered users linked their checking account to Kakao Pay Money with an average of 19 million people using Kakao Pay money on a monthly basis. Underpinned by stabilization and scaling up of the money service, we are seeing synergies with MyData service, which is further expanding the user base and money transfer volume. Number of users who have linked up their loading account with Kakao Pay was up 9.5% year-over-year, while number of linked accounts per user increased 33% year-on-year. Kakao Pay Money is now used across various use cases, which drove money transfer up 14.2% year-on-year with Q4 volume exceeding KRW 30 trillion. Kakao Pay has set itself up as a financial platform frequented by people of different age groups, offering customized services across teams to people in their 60s. In December, we also released Teams number, offering a loading channel for on offline payment, transfer and allowance management, lowering barriers for teenagers in opening and using bank accounts. In just 8 weeks since the service opening, 180,000 issuances were recorded so far, and we will continue to leverage it as a channel that connects everyday needs of teams with financial services. We are also strengthening communications and tailored services for seniors. Through adopting bigger fonts, we provide enlarged letters and menu layout, helping seniors to better navigate digital financial services. We also offer sharing feature amongst family members through Family Security keeper to prevent financial fraud, including voice phishing. We also have fun and educational content for senior users attempt at mastering the use of digital services, delivering fun and easy manual for Kakao Pay usage. Next, Jeff, who is in charge of services, will run through quarterly highlights for Kakao Pay app, Kakao Pay Securities and Insurance.

[Interpreted] Good morning. I'm Jeff. I will run through the Pay's growth and performance that strengthen Kakao Pay's platform and competitiveness. Kakao Pay app MAU and WAU is moving very quickly. And in terms of WAU, we've seen an improvement of increase of 79% and MAU of 58%. The growth of Kakao Talk Pay based securities and offline payment benefits and Kakao Pay app's monthly usage growth is hence picking up speed. Users of both Kakao Talk Pay and the Pay app increased 60% year-on-year, showing particularly high activity rate, driving the overall competitiveness of the greater Kakao Pay platform. Users using both, the so-called duo users, visit Kakao Pay services 2x more than Pay app only users with retention at 98% on an N+1 basis, which really attests to the high loyalty. And duo use generate over 2.4x more revenue per user than pay app-only users. In 2025, we will continue to drive up the WAU metrics and broaden the pool of such users so as to further strengthen competitiveness of the Kakao Pay platform. Looking at Kakao Pay Securities, its total deposit asset reported KRW 3.9 trillion, up 73% year-on-year from last year's KRW 2.2 trillion on the back of growing stock balance. It's worth noting Kakao Pay Securities stock balance has exceeded KRW 2.3 trillion, rising 120% year-over-year. Driven by uptrend in new user acquisition and MTS enhancements, Q4 stock trading volume was KRW 17.3 trillion, up 81% year-on-year. Number of domestic and overseas stock trade transactions jumped by more than 4x year-on-year, reporting 54 million transactions. Higher trading volume drove fee income up and Kakao Pay Securities posted quarterly profit from operations in Q4. Kakao Pay Securities is strengthening specialized MTS features, including touch-based ordering, enabling a quick single touch to initiate transactions in the order submission window as well as investment return calculator. We also provide differentiated investment data using AI and AI-powered U.S. market update summaries, which will help lock in broad base of customers. Moving on to Kakao Pay Insurance. We are making a leap as Asia's leading digital insurance company powered by the success of overseas travelers insurance and launch of many new products, accomplishing a stellar growth of 5x versus 2023. Supported by great accessibility through Kakao Talk and the Pay app, overseas travelers insurance won 3 million customers in just 2 years since the launch while shaping the market. Kakao Pay Insurance was recognized for its distinctive product characteristics and innovative coverage against daily needs and has been awarded Asia's Insurance Industry Award and selected as 5-star Insurance Innovator, which was a first for a domestic insurer to be recognized for its innovation on the global stage. Based on innovation, we will make the leap towards becoming Asia's leading digital insurer going beyond the bounds of the domestic market. Aside from 1P insurance business of Kakao Pay Insurance, Kakao Pay offers insurance management and diagnostic services based on industry's top-tier MyData linkup, delivering user convenience via consultation on insurance services. We support policyholders to make the right choice by offering diagnostics on their insurance status, scope of coverage based on real-life information of the users' insurance promptly responding to questions via online chatting or phone conversations as we recommend the most optimal product for policyholders. As a result, number of insurance consultation requests with Kakao Pay jumped 7x between Q1 and Q4 of '24, showing a fast uptake. In 2025, we will further scale up and segment diagnostic scenarios and increase the number of partners we work with to provide frictionless consultation so as to develop a business model that satisfies different needs across the digital scene. Before ending, I will invite back our CEO, to present on ESG and future plans.

[Interpreted] It's Alan again. In 2024, Kakao Pay was able to achieve quite many things, both internally and externally, thanks to its unwavering commitment towards sustainable growth. We are the only fintech company from financial services sector included in S&P Global Dow Jones Sustainability Korea Index for 2 consecutive years, which is a recognition of our ESG efforts. Blind spot Pay School Senior Class was awarded for bettering senior citizens access to digital finance at Consumer ESG Innovation prize in the senior safety category. In 2025, we will continue to create social value for those who are socially vulnerable in terms of digital finance and will live up to our social responsibilities and deliver the value of Together closer, which is Kakao Pay's campaign slogan for shared growth. As presented, despite the challenging business environment, Kakao Pay achieved its target across all its business domains set at the start of the year [indiscernible] we plan to capture both growth and profitability under 3 strategic directions, which are vertical expansion of core business, traffic-based business and data monetization. First, we will explore additional growth by expanding into upstream value chain within our core business domain that we are currently in. For instance, we can broaden the scope of payment business by going beyond easy payment into checkout and value-added services for the merchant, making inroads into businesses for sellers and merchants. In terms of the loan business, we wish to increase value add by offering credit scoring capabilities to financial and IT companies. And for insurance, we plan on expanding business scope by offering services that customer agents can use, expanding from simply brokering for customer consultation. Next is fostering traffic-based business, which is about growing total traffic based on stronger content servicing and quickly increasing traffic into Kakao Pay app through activation programs, and we will leverage this as an opportunity for gaining non-financial businesses. Going beyond the intermediary services for telecommunications and advertising, which we began in 2024, we will be expanding the revenue stream into other non-financial businesses. Last but not least is on data monetization. Based on more than 20 million MyData subscribers, coupled with 40 million Kakao Pay subscribers, last year, we completed an upgrade of targeting platform and user profiling, which will form the basis of utilizing users log base. This will, in turn, help personalize services inside Kakao Pay and enhance customer satisfaction as well as drive business performance. Kakao Pay will continue to deliver better experience to users through continuous growth and innovation and set itself up as a company that fulfills its social responsibilities. Thank you.

[Operator Instructions] The first question will be provided by Kim Dong Woo from Kyobo Securities.

[Interpreted] I understand that Kakao Pay has adopted AI technology and its service offering, especially on Kakao Pay's insurance intermediary business, it is being powered by AI. If you could share with us what the performance of this initiative is? And also, do you have plans to adopt AI to your investment and other tax-related services? And what are your plans going forward in 2025?

[Interpreted] First, on AI for insurance diagnostics, the thought behind this is that we felt insurance is considered most difficult by the financial consumers. So we took AI to first train on insurance. Now this insurance AI service will use the most recent health checkup information and see whether the user is insured for the health-related conditions that they should be aware of and provide diagnostic results on the optimal coverage. While it's too early to share specific results as the service is still in beta phase, and the entry point is deep, we are seeing a meaningful increase in the percentage of users who receive diagnostics eventually applying for insurance consultation. In 2025, we will continue to improve the quality of AI counseling and consultation through training on -- training the model on the terms of services of the insurance policy and health-related indicators relevant to the users' health screening results and update the model that are optimized for different scenarios. Aside from insurance, we are currently also working on AI-powered spending and consumption management model. We are also discussing the expansion of services related to investment and tax that you just mentioned that you asked about. For now, we want to provide users with personalized consumption and spending management through the use of the so-called spending agent so that we could improve their immediate spending habits and provide real savings to users. We are also working on scenarios for this so that we can collect data and improve service effectiveness and gain synergies with the company's other service offering.

The following question will be presented by Lim HeeYeon from Shinhan Securities.

[Interpreted] Following the performance of Q3, we've also seen in Q4 that the growth of the Pay app has been quite strong. And I believe that this is also contributing to making the overall Kakao Pay platform much more solidified. You also mentioned that the number of dual usage is going up. What were the key levers behind the increase in the metrics? And also, what is your strategy going forward for 2025 and onwards?

[Interpreted] This is Jeff. Since the major update in June of '24, Pay app has seen sustained uptrend in its weekly and monthly active user count in Q3 moving on into Q4. This was thanks to, first, Pay app-centric USP development for stocks, offline payment and user benefits and a variety of growth activities that we engaged in, which we've done to drive installs, visits, usage and return visits to the Pay app as well as continuous improvements to the notification feed and basic tools of the app. As a result, the pool of users using both the Talk Pay and Pay app have increased by approximately 60% in 1 year, and Kakao Pay continues to drive cross use of various different financial and daily services through data-driven recommendations and notifications across various channels, including Kakao Talk and the Pay app. And to these users with dual usage habits, we are also driving up frequency of visits and repeat visits, eventually strengthening the foundation of revenue expansion. In 2025, we will continue to grow Pay app's weekly and monthly AU, monthly active user profile while expanding its dual user base. While much has changed in 2024, there is still much to be done in terms of strengthening Pay App's core USP and improving its usability. We will hence execute on this in Q1 and continue to grow the user base. At the same time, we also want to more actively drive cross usage so that the growth of the platform directly contributes to the growth of our financial and key revenue-generating services. In '24, we were able to find the optimal traffic conversion method for revenue contribution through various validations and analytics. And in 2025, we want to expand this. and leverage user profiling and targeting platform to maximize the efficiency of traffic conversion. To this end, we are setting and monitoring new metrics across range of Kakao Pay products.

The following question will be presented by Park Sinyoung from Goldman Sachs.

[Interpreted] I am Sinyoung Park from Goldman Sachs. In 2024, the growth that we've seen from your digital finance services was mainly driven by the securities business, the brokerage business. Can you share with us in terms of what your market share and strategy for your brokerage services going forward? And also to what extent would that have an impact on improving your overall profit ability? And as investment has become an important pillar of your business, going forward, can you consider providing us with a separate, I guess, a separate number that specifically retains to your investment business? Second question relates to the payment business. To date, the payment business has been a key lever behind your topline growth. But recently, we see the momentum has lost its steam compared to the past. So what is your outlook and your strategy from mid- to longer-term perspective on your payment business?

This is Eddie. I will respond to your question about our securities and brokerage business. As you know, Kakao Pay's Financial Services revenue in '24 grew 71% year-over-year with the securities business up 87% year-on-year, contributing to the overall revenue growth. In Q4, if you look at the breakdown, we saw revenue growth in both retail and investment banking and retail revenue also saw large increases in trading volume on the back of overseas trading picking up. And coupled with 10 bp increase in fees in Q4 of '24, there was 178% year-over-year growth and 101% Q-on-Q growth. In 2025, we plan to grow by more than 40% year-over-year through revenues from overseas trading as well as new businesses that are currently in the pipeline. In addition, based on reaching breakeven for the first time in Q4 of '24, our aim is to post a turnaround in profit in 2025 through stable and expanded profitability. Regarding our strategy for 2025, as was the case in '24, overseas stock trading services will continue to be a key driver of growth, and we plan to further strengthen our position in the market by securing top-tier trading volume based on scaled-up services. In addition to this, we plan to diversify our financial product portfolio to continue the topline growth and profit enhancement in the retail business. Pension savings, which was launched at the end of '24 is actually a good case in point. We are looking into also launching overseas derivative services based on our recent strategic alliance with Eugene Futures. And just as we are seeing meaningful results with pension savings, we will also launch and promote brokerage ISA accounts that can provide tax benefits to customers, emphasizing Kakao Pay Securities strength of accessibility and ease of use. In summary, we view 2025 as an important year for Kakao Pay Securities to further strengthen its positioning in our existing business verticals as well as add new businesses and achieve our goal of a turnaround to profit, thus gaining self-sustainability. With regards to a separate carve-out breakdown information sharing regarding our brokerage and securities business, we will review that request and come back to you with an answer.

[Interpreted] I'm Jason in charge of the business. Responding to your question about the payments business. As you've correctly mentioned, payment business still remains an important part of Kakao Pay's revenue stream and payments continue to grow at a double-digit rate, as you've seen in 2024. While it is true that the growth rate of online payment was lower than in previous years due to sluggish domestic commerce market, including the TMON and WeMakePrice incident, off-line and cross-border payment revenue reported 40% to around 50% year-over-year growth. And its share against the total revenue base is gradually increasing. We believe, hence, that there are still a lot of opportunities for market expansion as the penetration rate is still low. And in particular, as you've mentioned, despite the decrease in the number of large merchants accepting payment following the TMON and WeMakePrice default, MAU has increased to more than 20 million, and we think the fundamentals have become stronger. And based on this, we expect that the payment business will continue to grow meaningfully in the year 2025 and beyond as we expand into upstream value chain through vertical expansion, which will entail more of a value-add business opportunity with sellers and merchants. Kakao Pay's mid- to longer-term goal for the payment business is to become the top-of-mind payment service for users. We aim to establish ourselves as a payment method that is used most frequently by users at every moment when they need to make a payment. In terms of business, we plan to increase the number of active merchants by increasing payment users in conjunction with enhanced off-line payment benefits. In cross-border payment, we will continue to increase the number of overseas merchants through collaboration with our wallet partners and promote unique marketing collaborations fit for each country. To share with you a bit more of a detail, first for online payment to expand the profit source, we will focus on pay money-based marketing and on generating repeat usage through point scheme activation to increase the share of pay money usage and our market share within the Kakao captive and for key merchants off platform. And we secure additional growth engine by attracting large strategic merchants and expanding into new markets such as EVs and MVNOs so that we may drive external growth. Offline payment will focus on growing the user base by focusing on payment user expansion in [indiscernible] categories and to drive repetitive habit to trigger volume growth and increase the number of point of payment using kiosks and table ordering at acquired merchant base so that we may drive up activation rate at merchant touch point. For cross-border payments, starting with online, we plan to expand the basis through strong coupling of marketing efforts with existing large merchants such as Google, Apple, Temu and AliExpress and securing new merchants such as Amazon and Disney+ as well as enhanced payment failure rate. For offline payment, we plan to expand wallet and new countries based on successful cases such as Japan, China and Macau, such as seen in Japan, China and Macau and strengthen collaborations with Alipay and KA merchants through differentiated marketing, which befits each country and also combine MyData and Kakao Pay's payment data to strengthen targeted marketing against the entire journey cycle of overseas travelers for both inbound and outbound to strengthen new payment user acquisition and retention.

[Interpreted] We spent about 1 hour. We hence would like to take the final question before we close.

The following question will be presented by Yu Incheol from Citi Securities.

[Interpreted] I would like to gain some color with regards to the guidance in terms of your growth rate for TPV and your revenue topline growth rate. And also if you could provide additional color on each of the business lines, that would be helpful. Second question is on your margin. Excluding the one-off expenses in Q4 accounts, the overall margin trend seems to be quite positive. So can we look forward to a turnaround in profit in year 2025? Or should we wait a little more as you would need to make continuous investment into your securities and investment business. If you could explain that, that would be helpful as well.

[Interpreted] This is Aidan. Thank you for your question. And I'll first tackle your guidance question. Despite the increasing competition that we are seeing in the payment market, we believe that Kakao Pay will be able to maintain a double-digit growth and our FY '25 revenue guidance is set at 15% to around 25% year-over-year growth. In terms of guidance breakdown, we see that payment -- for payment, it will not be easy for us to maintain the same growth rate in 2025 because of increased competition around large merchants. Nevertheless, we will continue to find new merchants, expand transaction volume and enhance pay money centered marketing so that we may secure profitability. In offline, we expect to maintain the existing level of revenue growth by growing new transaction volume through promotions for PU expansion. Overseas payment is an opportunity for us in terms of aggressive expansion, and we expect to maintain high TPV and revenue growth compared to what we've seen in '24 -- continuing on from what we've seen in 2024. For digital finance, we expect loans to maintain stable growth in terms of credit loans, mortgages, refinancing and auto loans. And in securities, we expect a double-digit growth in revenue, powered by increased overseas trading. In insurance, we expect high growth rate to continue on the back of new insurance product releases, and we expect to grow the insurance database business using MyData as a new business vertical. In terms of other services, we expect stable growth in payment services that are based on non-franchise model such as customized advertising based on MyData and affinity cards and other value-add businesses. So you also asked about TPV guidance for 2025. As you've seen in 2024, we've seen a very steep growth of our digital finance revenue. We will be -- we will make the preparation so that you could refer to the overall trading volume, which will form the basis of your projections of the revenue. Regarding your question about an operating profit turnaround, while there is no certainty as to when we will turn profitable in '25 as it will depend on market conditions and our expansionary strategy, we do cautiously anticipate that there will be a point in time when we will have sufficient visibility. So as you can see from our results this quarter, we've seen significant improvement in quarterly operating profit with an adjusted consolidated operating loss of KRW 0.9 billion in Q4, excluding the one-off cost impact related to TMON and WeMakePrice impairment. Now as you can see, stabilizing Kakao Pay's growth and reducing subsidiary losses are key to achieve a turnaround in OP on a consolidated basis. As Kakao Pay, the parent itself has been steadily generating stand-alone operating profit based on stable revenue growth from payment loans and other services, we expect that the reduction in losses from our 2 subsidiaries, namely securities and insurance will be crucial for reporting a consolidated basis turnaround. As was mentioned just a moment ago, in the case of Kakao Pay Securities, underpinned by profit turnaround in Q4 of '24, we are aiming for a full year turnaround in '25 through service expansion and stable profitability. In the case of insurance, FY '24 revenue, as you know, was up 5x compared to 2023, and we believe that we are still in the expansionary phase. So we are aiming to continue that growth in 2025. Now for consolidated financial service revenue, we are targeting a double-digit growth for the second consecutive year based on 2 pillars, which are securities and insurance business while aiming for monetization from securities. In summary, in 2025, we plan to drive up margin by expanding the ecosystem centered on pay money in payment, which is business of Kakao Pay the parent and drive profit-centered growth by expanding in high-growth areas such as off-line and cross-border payments through efficient marketing. In terms of digital finance, stable growth in loans and higher market share in securities are expected to contribute to the turnaround target and we'll continue to invest into product lineup and the pipeline for our insurance business. On the cost front, Kakao and its affiliates as a whole will continue on with last year's efficiency drive given the uncertain macro environment. Regarding OpEx, including marketing and labor cost, we will continue on with the efficient execution of marketing spending at around 10% or less the total revenue and labor cost spending is expected to grow at a mid-single digit year-on-year for new hires in '25. Therefore, we do not expect a significant increase in expenses relative to sales growth in 2025 as compared to FY '24.

[Interpreted] This brings us to the end of the fourth quarter earnings presentation by Kakao Pay. Thank you all once again for joining us this morning. For any further questions, please do contact us at the IR team. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]