KakaoPay Corp

KRX:377300

Earnings Call Transcript

[Operator]

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

Now we shall commence the presentation on the fiscal year 2023 second quarter earnings results by Kakao Pay.

[Won-geun Shin, executive]

[Interpreted] Hello. This is CEO Allen. I would like to thank our fund managers and analysts for joining Kakao Pay's Second Quarter 2023 Earnings Conference Call.

[Interpreted] I will begin with key metrics for Q2 '23, then move on to TPV, consolidated operating revenue and expense, P&L and then we'll end with key performance highlights. First is on the key metrics with Q2 '23.

[Interpreted] Q2 '23 TPV was up 18% on year, reaching KRW 34.2 trillion. Revenue TPV was up 19% on year to KRW 9.9 trillion, nearing KRW 10 trillion mark on a quarterly basis for revenue TPV. Second quarter revenue was up 11% year-on-year, recording KRW 148.9 billion, while Q2 '23 net loss was KRW 6.2 billion, and EBITDA recorded negative KRW 4.7 billion.

[Interpreted] Next, on key business metrics. Q2 '23 MAU of Kakao Pay broke 24 million mark, reaching 24,250,000 users. Transaction per user was up 4% on year to 104 transactions.

Next, I would invite [ Aiden ], our CFO, who will walk through Q2 TPV.

[Unknown Executive]

[Interpreted] Hello this is CFO [ Aiden ]. Q2 TPV was KRW 34.2 trillion, up 18% year-over-year. Revenue TPV expanded to KRW 20 trillion level, accounting for 29% of total TPV. Second quarter TPV saw a double-digit growth year-over-year across all of its service segments, and payment TPV posted a growth of 18% year-over-year.

Thanks to our strategy of focusing on segments that gained benefit on the back of the pandemic, we saw off-line and cross-border TPV share continue to uptrend every quarter, bringing a shift to the breakdown of payment TPV, which previously was heavily skewed towards online payments.

[Interpreted] For Financial Services, driven by diversification of loan products offered, we hit a record high loan volume, posting a 23% year-over-year growth increase.

For the Kakao Pay Money balance, performance achieved was quite meaningful. On the back of growth in stock trading volume and promotions for deposit interest at Kakao Pay Securities, Kakao Pay Money balance for the first time broke 1 trillion mark. And with the increase in users who have the Kakao Pay Money balance and as the outstanding balance amount increased, we expect Kakao Pay traffic, supported by Kakao Pay Money, will only continue to grow.

[Interpreted] Q2 revenue was up 11% on year and 5.2% on quarter to KRW 148.9 billion. For payments, cross-border and off-line payments drove year-over-year growth of 15.3%. In particular, cross-border payments reported 90.2% year-over-year growth with its share growing to double-digit for the first time against the total payment service revenue. We expect higher TPV in the second half from a broader base of overseas merchants and sectors benefiting from COVID recovery, which, in turn, is expected to drive up top line revenue.

[Interpreted] Financial Services was up 3.5% year-over-year and 12.3% Q-on-Q. With new product lineup, there was an increase in loan referral volume, and stock trade volume showed a steep increase versus the previous quarters, attesting to our capacity as a financial platform.

MTS is a service that has sufficient potential in making revenue contribution. In Q2, its contribution wasn't high due to our strategic decision to lower overseas transaction margin, but we are looking forward to top line growth supported by the trading volume trend, which has now entered an up-cycle.

With the adoption of free money transfer service to my account, other services' revenue dipped 10.5% on year. However, from a longer-term perspective, we are seeing signs of contributions made to financial revenue underpinned by rise in Kakao Pay Money balance.

[Interpreted] Q2 operating expense was up 10.1% on year and 4.5% on quarter to KRW 161.4 billion. On a year-over-year basis, payments revenue expanded, driving up commissions paid by 19.2%, while labor cost was kept flat year-on-year.

On the back off-line and cross-border payment solutions, A&P expense was up 13.3% Q-on-Q. And owing to the rise in interest expense from increases in Kakao Pay account money balance, other expense was up 18.4% Q-over-Q.

[Interpreted] Q2 consolidated operating loss was KRW 12.6 billion, while net loss reported KRW 6.2 billion. As we control the rise in OpEx to be kept below the increases in revenue, operating loss ratio fell on a Q-on-Q basis.

We will continue with a conservative stance when it comes to expenses in the second half of the year while being strategic in making investments for technology development and system stabilization to provide greater user benefit. In the second half, underpinned by a structure of profit-making from our core businesses, we will enhance revenue from subsidiaries and endeavor to downside losses on a consolidated basis.

[Interpreted] Q2 stand-alone revenue was up 11.3% on year and 5.5% Q-on-Q, reaching KRW 135.9 billion. Second quarter separate basis, operating profit was KRW 10.1 billion with OP margin at 7.4%.

Next, I would invite [ Jason ], Head of Business at Kakao Pay, who will run through our key business highlights.

[Unknown Executive]

[Interpreted] Hello. This is [ Jason ], Head of Business. Q2 cross-border payment TPV was up 1.8x year-over-year. We've seen biggest growth from off-line cross-border payment by inbound foreigners, which drove higher TPV from big merchants such as duty-free and department stores where ticket size is usually big with higher level of consumption.

Kakao Pay was able to expand both inbound and outbound cross-border payments while starting overseas ATM service to enhance convenience for users in Japan, Vietnam and Laos, where cash usage is prevalent.

[Interpreted] Starting from paying for plane tickets to hotels when preparing for a trip to traveler's insurance and ATM cash withdrawals in local currency, we want to be able to strengthen user benefit and convenience through Kakao Pay's all-pass service infrastructure. We will focus on expanding overseas merchant base in favored travel destinations to have people say yes to Kakao Pay even when traveling abroad.

[Interpreted] Next is on loan services where we seek to secure engine for growth through new products aside from unsecured loans. Rollover loan comparison service was launched end of May. And out of the platforms, Kakao Pay was the only one to have built highly reliable and stable services, providing comparisons between loans provided by 23 financial institutions, including 5 major commercial banks. More than 200,000 users have made use of Kakao Pay's loan refinancing service, and Kakao Pay has arranged for loan referrals amounting to more than KRW 100 billion, gaining a top positioning in the platform industry.

[Interpreted] Also, since the launch of mortgage loan service last April, in just 2 months, around 1,000 loans have been extended through Kakao Pay. Driven by our efforts to expand new product lineup, total volume of new loans in June versus January of '23 increased to around 30% of total loan volume. And on the back of success Kakao Pay has gained from loan referrals, we are preparing for a leading positioning in mortgage loan market, which is around KRW 1,000 trillion in size.

[Interpreted] Next is performance highlights of Kakao Pay Securities. Total amount of deposited assets at Kakao Pay Securities end of July was estimated around KRW 2 trillion. On rising funds, stocks and securities deposits, we are seeing stock trade and Kakao Pay money-based payments continue to uptrend. Users' activity rate seen from MTS has gone up 2.4x versus Q4, while trading volume during the same period expanded more by 2.7x. The investment in gamification service has also been well received by an average of more than 500,000 users every season, in turn, driving growth of stock trading volume.

[Interpreted] We also opened up a new feature on KakaoTalk through which orders can be placed for stock trading. Users playing the game on KakaoTalk, where one has to guess how the share prices will move, can simply place trading order within the [ insight ] platform. And we plan to introduce more sophisticated features in phases.

Also, MTS' trade tab was revamped so that you can move from one tab to another at the bottom of the screen across stock details, chart, order book, balance order, offering a most optimized flow for completing the stock trade even for professional investors. We are upgrading the level of MTS service so that it may satisfy needs of users who have different investment patterns and, in so doing, will bring improvements to our bottom line.

[Interpreted] Next is highlight for KP Insurance. In just 50 days following the launch of Kakao Pay Insurance, we became one of the top providers of traveler's insurance in terms of number of policyholders. During the 3rd week of July, there were around 1,800 people on average per day who took out the insurance, attesting to a great positive response from Kakao Pay's user base.

A distinct feature which only KP Insurance can offer, such as users designing the policy themselves or being refunded when the insured event doesn't happen or better discounts as more people use it all at the same time, are all helping to create a word-of-mouth effect and attracting more subscribers.

[Interpreted] Next is on asset management services. Kakao Pay reported industry's top performance in terms of new subscribers for its asset management, and we expect Kakao Pay asset management subscribers will reach above 10 million before the end of the year. Subscribers to asset management service have displayed high rate of migration to other financial services, including insurance, loan, credit card recommendation services. On a year-over-year basis, such migration rate to other financial service has increased 155%. We expect asset management services will accelerate growth of Financial Services' MAU and a payout as well.

Lastly, I will turn it over to Allen again to provide the highlights on ESG and future plans before we end the presentation for the second quarter.

[Won-geun Shin, executive]

[Interpreted] Hello. This is Allen again. Kakao Pay was the first fintech company in Korea to publish its sustainability report. Under Kakao Pay's ESG vision of beneficial flow, flexible finance, we will faithfully implement ESG strategies and actively strengthen our ESG disclosure. We will also actively engage in activities for inclusive growth with small merchants as well as SMEs, leveraging our core business of Financial Services with a view towards building a beneficial flow.

[Interpreted] So far, we've shared Kakao Pay's key earnings highlights for Q2 of '23. MAU has reached above 24 million. And out of the total payment revenue, cross-border payment has grown to account for a double-digit share.

In refinancing loans, both in terms of origination and number of transactions, we have proven our industry-leading capabilities, and we expect to reach 10 million asset management subscribers before the end of the year. Also, upon the release of Kakao Pay traveler's insurance, it immediately became a super rookie.

User metrics also continued to uptrend while we had to endure through the period of hard work to bring a new tipping point for Kakao Pay's growth. Thanks to such efforts, we achieved 13% year-over-year growth on a cumulative basis for the first half, but there is still a gap versus what we committed to investors.

For off-line payment, we will expand money-based payment ecosystem through [ around me ] service and drive up the trading volume. And for cross-border payments, in time for the Hangzhou Asian Games, we expect recovery of the inbound group tourists which will trigger the growth of inbound off-line payment market.

We also expect volume growth from overseas stock trading to have a spillover effect on domestic trading, which, in turn, will increase the balance for margin loans, including stock-backed loans. In Financial Services, our strategy will be to broaden the coverage of products for brokering loans and insurances, through which we will secure our growth engine.

So far, Kakao Pay has strengthened connectedness of its diverse portfolio of products, nurturing services that will make contributions to our profit following the path of payment and the loan business. Kakao Pay as a team has experienced resilience, achieving objectives that once seemed unreachable. We will leverage that resilience yet again to improve the company's financial performance going forward.

Thank you.

[Operator]

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

[Sinyoung Park, analyst]

[Interpreted] This is Park Sinyoung from Goldman Sachs. I have 2 questions that I would like to ask. First question relates to your loan refinancing business. I think you were able to gain an upper hand and securing market share in the rollover refinancing loan platform because you were able to prepare early on. And I understand that you will be launching a mortgage loan before the end of the year. Could you provide some color with regards to those aspects?

And also, you have shared with us your Financial Services TPV growth. Do you plan to adjust that target level or the growth guidance upwards? And you also mentioned that the revenue growth has underperformed the target. We'd like to get some color as to what you think is going to be your -- the take rate trend is going to be, the fee rate trend is going to be going forward.

Second question relates to your loan product. Second question relates to the Kakao Pay Securities business. You have mentioned that you're endeavoring to further activate the use and the activity measures of the users of Kakao Pay Securities. You also mentioned that your objective is to gain KRW 10 billion by year 2026 in terms of the annual transaction volume. When -- once you hit that level, what percent of share will your Kakao Pay Securities business take out of that total annual transaction? And what would that translate in terms of the market share?

[Unknown Executive]

[Interpreted] This is [ Jason ]. I will respond to your question about the rollover loan platform. As you've mentioned, we are the only platform company where we are providing the services to 23 lending institutions, and we also have 5 major commercial banks onboarding our network. So we are the only platform that is interlocked with all of these players.

Already, after the service released end of May, 200,000 -- more than 200,000 users have made use of these services, the refinancing services, and we have been able to extend about KRW 100 billion of the loans through the referral and the refinancing platform. And we are, by far, the top player within the fintech industry.

So not just the loan refinancing, we have also increased and added new lineup of products, aside from unsecured loans, to include loans for jeonse and monthly rentals as well as mortgages and auto loans. And now all these new products account for around 30% of the total extended loans. And as a result, Q2 loan TPV was up 40% on a Q-on-Q basis.

Yes, we are planning to release our mortgage product before the end of the year, but this has to be coordinated with the supervisory authorities' guidelines, and they are currently scheduling to release that at the end of the year. So we believe that any impact from -- the positive impact in terms of TPV and revenue increase will start to show in the earnings performance following next year. So at this point, we are still sticking to our conservative stance in terms of our annual TPV guidance, and we will stick to our original target of 15% to 20%.

[Interpreted] In terms of the fee structure and the forecast going forward, it is true that the fee structure is different compared to unsecured loans versus the loans for jeonse, monthly rentals, mortgages and the refinancing loans. Now having said that, these types of loans entail quite large ticket sizes. So we are looking forward to a bigger revenue stream from these new groups of products.

So from a loan referral business perspective, as we were able to diversify the product lineup, we are able to further broaden our downstream market. And that is going to give us a bigger opportunity in terms of further boosting our TPV and top line revenue. And in that sense, we are quite positive.

[Interpreted] It has now become a must for people who are in need of loans to actually look for the most optimal known product by making use of such loan comparison platform. And on top of that, Kakao Pay is providing a very intuitive service, making use of a chatbot type of a service flow.

And going forward, we will make use of more sophisticated user data, based on which, we will be able to predict the exact timing or the most optimal timing for loan refinancing. And also in order to be able to better meet their needs that the users have in terms of lower interest rate, we are, at this point, separately building out a refinancing loan-specific database in collaboration with credit rating agencies.

[Won-geun Shin, executive]

[Interpreted] This is Allen. I will respond to your question about our Securities business. As I've mentioned -- as we mentioned during the May announcement, our goal is to become a financial platform handling about KRW 10 billion worth of transaction in 3 years' time. Now Kakao Pay, in 2023, will be processing about KRW 4 billion of such transactions. And if we are able to grow on a 30% growth trajectory, we will be reaching KRW 10 billion in 3 years' time.

To give a bit more color as to the extent of this growth, that translates into about 30 million of Koreans who are economically active using Kakao Pay once every day. So they would amount to more than 3x a year. So then we will -- and we will be making preparation to meet all of their financial-related needs. And Kakao Pay will become a life financial platform. And one of the key drivers that will help us get there will be for us to make relevant investments.

[Interpreted] Now I think it would be better for me to address your question by sharing with you the vision that we have. The vision of Kakao Pay Securities is to position itself into the industry. And basically, in terms of global stock trading, our target is to become top 5 in 1 year's time and be one of the forerunners at the top 3 in 3 years. Share growth from domestic stock trading business will be slower versus that of the global stock trading business. But we will grow this segment with more technology support, including programmatic trading.

[Interpreted] So we are planning to offer a more upgraded user experience even for derivatives, fixed income and other investment vehicles, not just for stock trading, so that even nonprofessional investors can better enjoy access to Kakao Pay's financial investment.

[Operator]

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

[Dong Woo Kim, analyst]

[Interpreted] I'm Kim Dong Woo from Kyobo Securities. My question relates to a recent trend that we are seeing. In terms of inbound and outbound tourists, we have seen some recovery. You've shared with us what your cross-border payment picture looks like for Q2. I would like to understand as to what your projection for the second half of the year is. Do you foresee that inbound and outbound traveling, the demand is going to actually rebound or even grow going forward? And also, I would like to get some color as to what Kakao Pay -- what is Kakao Pay's cross-border payment strategy?

[Unknown Executive]

[Interpreted] This is [ Jason ] responding to your question. Yes, the second quarter cross-border TPV was up 84% year-over-year and 28% Q-on-Q. And also, on the back of increase in the number of inbound travelers, we have seen cross-border inbound off-line transaction actually show a quite distinct improvement compared to Q2 of last year. We've also seen an uptrend in the number of outbound Korean travelers. And hence, we are seeing cross-border outbound off-line transactions to be also on a year-over-year upturn.

[Interpreted] Now regarding what's going to happen in the second half of the year, because of the Russian-Ukraine war that is ongoing and also possible policy change around the Asian Olympic Games period by the Chinese authorities and the inflation, there are all these variables that currently exist. So we think that it will be difficult for us to see a complete recovery to pre-COVID levels. However, because there is an uptrend in terms in the number of tourists and visitors, we believe that on a comparative basis for cross-border TPV and sales would definitely show an improvement versus or higher growth compared to the online payment.

[Interpreted] And as I mentioned during the presentation, when people are preparing for a trip abroad and purchasing plane tickets, accommodations and going to duty-free shops, we will be able to leverage that opportunity in our payment business, and we are providing also the traveler's insurance. And we've added more countries for our cross-border off-line payment, and we launched an overseas ATM withdrawal service. So by adding such service infrastructure and through facilitating and activating the use of such services, we are going to further strengthen the user convenience.

[Interpreted] So July, August is summer vacation season. September, there's going to be Hangzhou Asian Olympic Games in China, which will have a positive impact. And also, we are expanding to other servicing countries, including Italy and France. And through such activation promotions, we're going to further trigger the activation of our payment business or cross-border payment business in the second half of the year as well.

[Operator]

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

[Kwang Myung Jung, analyst]

[Interpreted] I'm Jung Kwang Myung from DB. I have 2 questions I would like to ask. During your Q4 '22 presentation, you shared with us your revenue guidance of 20% to 30% growth. In light of the current developments, do you think that achieving this objective is still possible?

Second question, globally, we see that fintech companies are introducing a fixed fee system on a monthly basis when they're providing an asset management or advisory services to their user base. And I know that Kakao Pay will leverage the my data information to provide better asset management services to your users as well. So could you provide some color as to what your business direction going forward will look like?

And also, another part of the question is, what your views are towards adoption of artificial intelligence and different models such as ChatGPT? What are your plans to utilize AI or robo-adviser and other innovative technologies in your service offering?

[Unknown Executive]

[Interpreted] This is [ Aiden ], the CFO. I will respond to your question about guidance. Yes, I think that the -- because the first half, the growth rate on a year-over-year basis was not as high as you would have expected, you were asking this question. So I'll first begin with the current status quo as well as what our second half outlook looks like for our payment and financial services.

[Interpreted] Now first, if you look at the top line revenue growth for our payments service in the first half of the year, on a year-over-year basis, the growth rate was 13%. So it looks lower compared to our revenue guidance of 20% growth. But if you look at our payments revenue, we have seen a very steep growth from cross-border payment. And also from the off-line side, we are seeing very pronounced growth on a quarter-over-quarter basis. So as we enter into the second half of the year, we're expecting for a more steeper year-over-year growth rate.

In Q1, payment revenue was year-over-year 11% up, but in Q2, it was higher at 15%. And as Jason has shared with us the strategy going forward, in Q3 and Q4, there will be sectors that will benefit from post-COVID such as airliners, traveling agencies and duty-free, and we will be able to expand our market share and from our existing merchant base. And we will also implement a promotion for Kakao Pay Money-based payment, which will all drive a higher top line revenue growth going forward.

[Interpreted] For Financial Services, through the fee policy as well as through different promotions, we will drive overseas stock trading, which would lead to a higher top line revenue from our retail services. Aside from the fee income that we take from stock trading, there is higher level of deposits at our Securities business, which is driving up NIM, net interest margin, and we are expanding margin loan business and also preparing for an introduction of stock-backed loans. These will be some additional revenue models that we could leverage from.

And also in terms of the loan business, will continue to be #1 in terms of refinancing those out of the fintech company. So we are making good preparation ahead of the introduction of the mortgage loans, which will start within the year. So through such expansion of new product lineup, we will continue to sustain the growth trend.

[Interpreted] And for our insurance business, KP Insurance has now started full-fledgedly the sales of the traveler's insurance, and we are also seeing growth from B2B sales as well. So we go -- we are expecting for meaningful growth going forward on a year-over-year basis.

[Interpreted] You may think that our second half top line revenue objective may look aggressive compared to the first half performance. But in the first half, we were in the process of overcoming the difficulties that we have experienced in the second half of last year, and we've been solidifying and building a firm basis for a structural revenue growth going forward. Underpinned by this, in the second half of the year, we will be able to normalize the growth rate of our payment business, and we'll start to bring tangible results from our financial product sales and revenue. And we will do our utmost to make sure that we meet that 20% revenue guidance.

[Won-geun Shin, executive]

[Interpreted] This is Allen. I will respond to your question about leveraging my data and our asset management services. Now we started with a newly revamped asset management service since early this year. A new user acquisition trend has been quite pronounced versus our peers. Home screen facelift will continue to happen as we enter into the second half of the year, and we expect subscribers to rise by 2.5x versus end of '22.

Our revenue model, however, is not a fee-based membership. We will, of course, improve our service offerings and have all our users enjoy a private banking level of services, which was only previously enjoyed by high net worth customers. And this will not be for a fee. We will support people's financial activities by designing the most optimal portfolio for that individual and gain fee income from this, and this will work as our basic revenue [ stream ].

[Interpreted] Of course, aside from the take rate structure, we also can combine my data information with data that Kakao Pay has. Based on this, we can extract the best data set and use it to understand and segment our customers. With this, we can do targeted ads to reduce people's fatigue for advertisement. And to advertisers and partners, it will be efficient marketing tool. So we're preparing for this data business as well.

[Interpreted] Now we are also thinking of a win-win profit model for both the customer and the service provider where asset management fee is only recognized when the return is above the market growth rate once we combine discretionary and advisory services of Kakao Pay and its subsidiary, Kakao Pay Securities, with my data.

[Interpreted] You also asked about our plans and use of for the adoption of AI. In terms of AI adoption, we are open to many opportunities, including providing that investment advisory, which I just mentioned about a brief time ago. We've been using AI in our workflow automation, personalized recommendations and risk analysis. And generative AI that is specialized for Korean language can be brought into the financial domain. And we are currently conducting a research and to finance specific AI technology at this beginning of this year.

Short term, we've completed proof-of-concept of Kakao Brain's KoGPT for our service adoption and carrying through with the next steps. We will have financial AI models that users will benefit from by increasing the learning parameters of that AI algorithm model.

[Operator]

[Foreign Language] The following question will be presented by HeeYeon Lim from Shinhan Investment Securities.

[HeeYeon Lim, analyst]

[Interpreted] I have 2 questions relating to your Securities business. It's been about a year since the release of your MTS services. What is the current market share in terms of global stock trading? And what is the management's take on year 1 performance?

Second question is from a more mid- to longer-term perspective. Compared to your peers in this industry, how do you plan to further up your competitive edge and lower the gap that you currently have with them?

[Unknown Executive]

[Interpreted] This is [ Eddie ]. I will respond to your question about MTS. It will be difficult for me to provide you with a specific market share number, but I can tell you the growth trend, which is that compared to end of 2022, we've seen the growth to be three-fold. And on a Q-on-Q basis, the growth was around 30%.

And also, in terms of new subscriber acquisition, we made full use of gamification program that will start potatoes -- sweet potatoes. And then on top of that, we had undergone a new home screen revamp and provided aftermarket support and also renewed and gave a new facelift to the older screen. So with all of these improvements in the MTS services, we are seeing retention measures improve. As a result, for our stock trading MAU, during the first half of the year, we've seen growth of around 40%. And PV, which is a measure that we continuously monitor as an important activity indicator, during the first half has gone up by 3x as well.

[Interpreted] Also, in terms of users that are trading global stocks, compared to end of '22, the number has grown by more than two-fold, and the share of overseas stock trading now account for about 60%. So we are seeing a quite elevated level.

And also, we have a community, a so-called discussion room, where people can very easily and comfortably talk about this very difficult topic of stock investment. And in the second half of the year, we are preparing for multiple service releases to further facilitate the fun and the communication that people can experience while investing.

[Interpreted] Also, we have enabled a stock transaction to happen on top of the KakaoTalk platform starting July 11 in the form of [ MVP ] method. And through continuously scaling up these features, we will further expand on the investment convenience, and we will further strengthen the connectiveness that -- to our daily lives and the investment. So if you can really play this whole context of where people can really initiate and start investing whilst communicating with friends on KakaoTalk, I believe that this could really create a new type of investment culture.

[Interpreted] In terms of profitability, if you look at the total amount of outstanding credit in the market, that was about 18% increase. But for Kakao Pay Securities, that outstanding balance posted a growth of around 600%. And so we were able to outperform the market. And in the month of August, we're currently preparing to release a stock-backed loan service, which will be provided not just with domestic stock trading, but also for global stock trading as well.

And also, we will provide the service during the nighttime as well as during holiday or through the weekend. Going forward, as such, we will continuously come up with multiple services that can better meet the needs of our users and also help us with our bottom line.

[Interpreted] And also, on the back of our acquisition of Siebert Financial, we are looking into many different new business opportunities. We have been able to bring cost savings in our overseas global stock referral business, recommendation business, and we are equipped with price competitiveness. We will look into other areas so that we can maximize synergy and lead the market.

[Interpreted] Now you also asked about our mid- to long-term strategy. If you look at overseas stock markets, the competition on margin has become very fierce. And Kakao Pay Securities have taken a bold step to cut around 5% of basic fees. And after that action, we've seen almost all brokerage firms immediately come on board. And we see a very fast and accelerated pace of downward stabilization.

[Interpreted] In light of these developments, we believe that going forward, companies would have to compete not just on fee, but more companies that can actually provide better investment experience will be the one that will be chosen by the users and the investors.

In that sense, despite the fact that Kakao Pay Securities is a late entrant into this market, we believe that we are really leading that change and accelerating that speed of change. Through a lot of promotions and new features that we are introducing, we are making contribution to the transformation of the market itself. Going forward, we will continue to meet the needs and the requirements of our users that had been unmet by the existing companies. And we will do our best, and we are endeavoring to the utmost speed in providing the best and most satisfying stock service to our users.

[Interpreted] So it's been 1 year since we released overseas stock services, and the recent 6 months growth has been much steeper compared to the first year. And we now see the fundamentals becoming much more solid and robust. To share with you a little more detail, in the first half of the year, we focused on improving the essentials, the basic features of MTS. And as a result, we are seeing all the retention measures really improve.

In the second half of the year, we will also focus on various different trading and investment performance analytics and provide names to the users so that they can very easily make investments into stock and also have fun along the way. So we will bring Kakao-style approach into providing these services.

[Interpreted] At the same time, we have already introduced the integrated margin money services, whereby people could really save on the currency exchange fees. And so we have been -- we have come up with a structure whereby if people engage in more transactions, basically the fee that they have to pay on those transactions in trading gets lowered.

And also for this year, we are planning on introducing various different interest rate events as well as many margin-related interest rate events. So we are very actively expanding benefits to our customers which are very tangible. And also, as I mentioned before, we will be introducing stock-backed loan product in August. And through such new releases, we will be able to further narrow the gap that we have with our peers.

[Unknown Executive]

[Interpreted] So we spent more than an hour. I would like to now ask whether you have any final questions.

[Operator]

[Foreign Language] The last question will be presented by John Yu from Citi Securities.

[Incheol Yu, analyst]

[Interpreted] I just have one quick question on your advertising business. Since the facelift that you have applied in April, it seems like you have added more advertisement banner slots on the services. And I think that during Q2, when I went to those places, I saw ads from Chanel, Trip.com, sneakers platform run on those banner slots. So could you provide us with an update on your advertisement business opportunities? It's been about 1 year since what you -- since the update.

[Unknown Executive]

[Interpreted] This is [ Jeff ]. I will respond to your question. Just to share with you some of the outcomes that we were able to enjoy after the UI/UX refresh is that after we applied the new Pay home and our Pay app dated April 10, basically, we also introduced the new pay home screen to build up the platform in June 8 in KakaoTalk platform and the Pay app platform as well.

As a result, if you look at the weekly active user number, as of July, we've seen improvement of around 45%. And in terms of the user engagement for our Pay app, it was a 30% improvement; and on the Talk platform, 20% improvement. So we are seeing both quantitative as well as qualitative growth in terms of user traffic.

And also, we are planning on multiple improvements that is slated for August. We will make arrangements and revamp this space so that more of the content that people are interested in gets viewed much more clearly or more easily. And with those changes, I believe that the user activity measures will further improve.

[Interpreted] Next, to just walk through some of the advertising business performance up to date, is that although the absolute size from advertisement business is not that big compared to first quarter numbers, the number of brands that actually ran advertisement on our space has gone up by 267%, and our advertising revenue also posted a growth of 253%.

We will enter into and execute an agreement with Kia Motors. And we are running advertisements for new upcoming dramas and films, and we have also won an advertisement from Chanel as well. So we are seeing both qualitative and quantitative growth.

And also, we are, at this point, testing a more sophisticated audience-targeted advertisement. And through all of these efforts, we are going to really be able to scale up our platform as well as our product offerings to cover both the high-cost advertisement as well as smaller-sized and lower-cost SMB advertisement.

[Interpreted] Last but not least, our mid- to longer-term strategy going forward is actually three-fold. The first piece has to do with Kakao BizBoard display ad. We are planning to expand the advertisement count up onto the Pay app.

And also, the second is the Kakao Pay's own -- its own DA advertisement, basically, it's an advertisement impression space that is within the Kakao Pay, like in the form of home banners and different screens that tell you that your remittance is complete. We will make use of our data asset to develop and really nurture these DA advertisement products that very much specialize for payment and finance.

And third is our native advertisement. We will grow this into a service that is very much Kakao Pay-specific and which is really focused on providing benefits to the users. So from the second half of the year, we will expand all display ad accounts as well as really make a success case out of our native advertisement business and really provide support so that it could grow as one of Kakao Pay's key businesses.

[Unknown Executive]

[Interpreted] Thank you very much. This brings us to the end of the Second Quarter 2023 Kakao Pay's Earnings Presentation. If you have any follow-up questions, please feel free to 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.]