Japan-based messaging company Line reported a huge net loss for the second consecutive quarter as heavy investments in new business lines, including mobile payments, offset strong results for its core businesses.
The company posted a net loss of JPY17.3 billion ($160 million) in Q2 compared with a profit of JPY3.68 billion in Q2 2018. In Q1 it suffered a loss of JPY10.7 billion. Its strategic business recorded an operating loss of JPY23.5 billion in the April to June quarter.
In a research note, Jefferies equity analyst Atul Goyal said the losses are likely to remain higher than profits from its core businesses for the foreseeable future.
A 12.9 per cent year-on-year jump in ad revenue fueled a 9.5 per cent year-on-year increase in overall turnover to JPY55.4 billion. Its messaging and content unit saw growth slow to 1.7 per cent, while its strategic business, which includes Line Pay and its AI, cryptocurrency initiatives, increased 16.7 per cent to JPY7 billion.
Japan accounted for 26 per cent of total revenue.
The global transaction value of Line Pay increased 10.1 per cent year-on-year to JPY186 billion.
The number of monthly active users (MAUs) held steady at 164 million from the same period a year ago, with Japan the only market seeing modest growth (up 6.6 per cent to 81 million). MAUs fell in Indonesia by 6 million to 18 million and were mostly flat in Taiwan and Thailand.
Operating expenses jumped 40 per cent year-on-year to JPY70.6 billion, with marketing costs soaring 181 per cent to JPY13.1 billion.Subscribe to our daily newsletter Back