Kakao Games Posts 26.3 Billion Won Operating Loss for Eighth Straight Quarter
Key Facts
Kakao Games reported an operating loss of 26.3 billion won in the third quarter of 2026 on November 4, marking its eighth consecutive quarterly loss, according to company results reported by E Daily. The operating deficit widened by 3.3 billion won from the previous quarter, pointing to a sequential deterioration in operating performance. Consolidated revenue fell to 69.1 billion won, down 46% year over year and 8% from the second quarter. The company attributed the weak performance to a lack of new releases and lower sales of existing games. The decline puts launches in the coming months at the center of management's bet on a turnaround in earnings.
The contraction extended to the PC and mobile game divisions, the two revenue sources presented by the company in its quarterly results. Online PC game revenue was 18.5 billion won, down 57% from the same period a year earlier and 17% from the previous quarter. Mobile game revenue was 50.6 billion won, down 40% year over year and 4% quarter over quarter. PC revenue fell more sharply than mobile revenue on both the annual and quarterly comparisons. These figures are consistent with the company's explanation that the results reflected a lack of new games and weaker sales of existing titles, rather than attributing the loss to higher costs.
The company is counting on the performance of The World of Dokkaebi, launched in October 2026, and on expanding its reach beyond its domestic market. The company said the game reached the top spot in the Google Play revenue rankings five days after launch. Kakao Games plans a global release on mobile devices and Steam in the second quarter of 2027. Co-CEO Lee Si-woo said the game's success and the integration of Me2on would provide a starting point for an earnings improvement in the fourth quarter of 2026. He added that the third quarter marked the bottom and that improvement would begin in the following quarter. The company also plans to update the game's core content every two weeks for about three months after launch, in an effort to support its performance over a longer period.
Among the upcoming releases is Path of Exile 2, an online action game for PC scheduled for release on December 12, 2026. The company is also targeting a January 2027 launch for Odin Q, simultaneously in South Korea, Taiwan and Japan. Lee linked the targeted return to operating profitability in the first quarter of 2027 to Odin Q's January launch. That return remains a future target dependent on the launch timing and the game's performance as anticipated by management. The company said it received the foreign investment license for Odin in China the previous week, adding that the game's intellectual property had paved the way for entry into the Chinese market. The statement did not specify a launch date there.
Against the backdrop of its expansion plans, Kakao Games signed an agreement in September 2026 to acquire a 39.6% stake in Me2on for about 98 billion won. The deal was expected to be completed during the fourth quarter of 2026. Lee said the integration of Me2on, alongside the success of The World of Dokkaebi, would support the start of an earnings improvement in the fourth quarter. Completion of the deal is one of the factors markets are watching alongside the results of new releases, as the company continues to report operating losses and declining revenue in its two main divisions. Management expects earnings to begin improving in the fourth quarter, then is targeting a return to operating profitability in the first quarter of 2027 based on Odin Q's January launch.