Kakao Games is reshaping non-core businesses under a new co-CEO structure and concentrating its efforts on releasing five new titles. It sees the second and third quarters this year as the low point for sales, plans to rebound from the fourth quarter and aims to return to profit in the first quarter of next year.

Kakao Games said on Tuesday it posted second-quarter 2026 consolidated revenue of 75 billion won and an operating loss of 23 billion won. Revenue fell 35.2 percent from a year earlier and 9.5 percent from the previous quarter. The operating loss narrowed by 2.5 billion won from the previous quarter's 25.5 billion won but the company remained in the red, and net loss came to 57 billion won due to higher financial costs.

The earnings briefing was the company's first official communication with the market since the closing of a management-control change transaction in June.

Kwon-ho Shin (신권호), Kakao Games' chief financial officer, said, "We take seriously the communication gap in the previous quarter, and we will continue regular and predictable earnings announcements going forward."

Second and third quarters seen as bottom; rebound from Q4 on new titles, return to profit in Q1 next year

By segment, PC game revenue was 22.3 billion won, up 50.5 percent year-on-year and down 20 percent quarter-on-quarter, while mobile game revenue was 52.7 billion won, down 47.8 percent year-on-year and down 4.2 percent from the previous quarter. For PC games, the entry of 'Battlegrounds' into its off-season and the absence of collaborative content weighed, while for mobile games the natural decline of existing live titles and the transfer of the 'R.O.M' service to its developer each had an impact. 'Umamusume Pretty Derby' posted higher revenue from the previous quarter due to its fourth anniversary event, and 'Odin: Valhalla Rising' topped revenue rankings on the two major app markets after its fifth anniversary update.

Operating expenses were 98 billion won, down 21.2 percent from a year earlier. Labour costs rose 6.2 percent to 39.2 billion won as one-off retirement-related costs at a development subsidiary were reflected. Shin said, "From the fourth quarter, the effects of new title launches are expected to be reflected gradually, and we expect revenue to rebound meaningfully. We also anticipate a return to profit in the first quarter of next year."

The company is also working to improve its financial structure. It plans to use part of 300 billion won raised through the issuance of new shares and convertible bonds in the management-control transaction process to repay borrowings early and cut financial costs. On July 8 it retired 500,000 treasury shares and also disclosed plans the same day to convene an extraordinary shareholders meeting to transfer capital reserves to retained earnings. Shin said the steps were meant to clearly convey to the market a management philosophy that puts shareholder value first.

Release of five new titles; co-CEO says 'Odin Q' expands IP, not cannibalisation

Co-CEO Si-woo Lee (이시우) said he took seriously that repeated delays in new title launches had eroded market trust, and assessed that the company tried to make a big leap by pursuing large projects simultaneously after the success of 'Odin'.

He said the company reviewed its lineup early this year and that remaining projects were at the stage of being released as planned without major revisions. He said it would keep the announced schedule without major changes.

Kakao Games plans to launch at least five new titles in the fourth quarter and the first quarter of next year. In the fourth quarter, it will release Supercat-developed K-fantasy mobile MMORPG 'Goblin's World' in October and 'Dungeon Arise', while XL Games will unveil 'ArcheAge Chronicle' through Steam Early Access under its own publishing. The company plans to expand initial user inflows for 'Dungeon Arise' with collaborative content tied to popular external IP.

In the first quarter of next year, it will release 'Odin Q: Valkyrie's Call' and 'God Save Birmingham'. The company is in final preparations for 'Odin Q', which it cites as its most anticipated title, targeting a January launch next year. Lee said it also considered a fourth-quarter launch but judged January next year to be the most suitable timing, taking into account completeness and market conditions to deliver performance beyond 'Odin'. He stressed it was not considering further schedule adjustments.

On concerns that it could cannibalise revenue from the existing 'Odin: Valhalla Rising', Lee said, "'Odin Q' is an IP expansion strategy for 'Odin', not a competitor." He said that while 'Odin' focused on open-world immersion, 'Odin Q' would focus on large-scale battles based on a quarter-view perspective and nation-versus-nation competition. He said the two games would form a complementary relationship because their combat styles and target user bases are different.

Separately, 'ArcheAgeS: Sea of Freedom' and 'Chrono Odyssey' are targeting launch in the second quarter of next year, and schedules for titles such as 'Guardian Maiden' will be announced later.

"Not sunk costs but return on capital"; reshaping non-core businesses, strengthening shareholder returns

Co-CEO Tae-hwan Kim (김태환) outlined new investment principles, saying what the company needs now is to restore trust by getting the basics right and executing without gaps rather than pursuing vague visions. It will decide on new investments and whether to continue projects based on the return on capital to be invested going forward, not sunk costs, and will reshape non-core and inefficient businesses to focus resources on key projects. It will curb organisational expansion while improving its cost structure by expanding global co-development and outsourcing.

It will broaden its game portfolio along three axes: global expansion of existing MMORPG IP, use of external IP such as webtoons, and securing mass-market genres such as sports and casual. Kim referred to an MOU signed the previous day with The Grim Entertainment, saying it had laid a foundation for cooperation with webtoon production companies starting with 'Goblin's World' using the universe of 'Myeolgwisudojeon'. He said it would keep MMORPG as a core pillar but would not rely solely on MMORPG for overall growth.

On mergers and acquisitions, the company will prioritise securing game developers with proven performance and will gradually increase deal size starting from transactions worth several tens of billions of won. On its relationship with Line Games, Kim said there were no plans to pursue a business combination and there was no change in its stance, but added that cooperation that could generate synergy could be reviewed within the scope of general business partnerships.

The company will also build a basis for shareholder returns. It will secure capacity to buy back shares by reducing capital reserves, and management will buy treasury shares worth a total of 500 million won as a sign of responsible management. It also plans to introduce restricted stock units for employees to align the interests of management, employees and shareholders.

Kim said performance had passed the low point and the company is preparing for a rebound from the fourth quarter through new title launches. He said it would restore market trust through execution rather than promises and would place the highest priority on corporate value and shareholder value in all decision-making.