BTS' HYBE Q2 Operating Profit 28 Billion Won... 10 Billion Won Incurred for Ithaca Acquisition Costs

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] HYBE, the agency of BTS, announced on the 5th that its consolidated operating profit for the second quarter of this year was tentatively estimated at 28 billion KRW, a 6.23% decrease compared to the same period last year.

During the earnings conference call on the same day, HYBE explained, "Since the acquisition contract for Ithaca Holdings conducted in early April was very large in scale, temporary related costs of about 10 billion KRW occurred." They added, "Considering the additional amortization expenses due to the acquisition of Ithaca Holdings, the adjusted operating profit margin maintained a solid level of about 15% compared to the previous quarter."

Ithaca Holdings is a comprehensive media company founded by prominent American producer Scooter Braun, managing artists such as Justin Bieber, Ariana Grande, and J Balvin. Through the acquisition, HYBE's subsidiary Big Hit America will hold 100% of Ithaca Holdings' shares.

HYBE's sales for the second quarter reached 278.6 billion KRW, a 79.24% increase compared to the same period last year. Net profit increased by 9.87% to 20.8 billion KRW.

The sales growth was driven by significant expansion in the album and content business sectors as major artists such as BTS, Tomorrow X Together, and Seventeen actively resumed activities. Album sales recorded 107 billion KRW, a 105% increase compared to the same period last year, due to strong sales of BTS's Japan best album, Tomorrow X Together's full-length album, and Seventeen's mini-album.

Additionally, HYBE stated that content sales reached 91.3 billion KRW, a 237% increase compared to the same period last year, thanks to the successful hosting of BTS's online fan meeting. Advertising, appearance fees, and management sales recorded 21.6 billion KRW. MD (fan merchandise) and licensing sales were 50.1 billion KRW, a 12% decrease compared to the same period last year.

HYBE CFO Lee Kyung-joon said, "This quarter, we introduced various products such as BTS's digital single 'Butter' MD, fan meeting 'Soju' MD, and McDonald's MD," adding, "Since most of these are pre-order sales, actual sales will be recognized upon delivery completion, so a significant portion of sales is expected to be reflected in the third quarter."

Due to the ongoing impact of the pandemic, no sales were generated from the performance sector in the second quarter. HYBE also reported that the average monthly active users (MAU) of the fan community platform Weverse in the second quarter reached about 5.3 million, a 9% increase compared to the previous quarter, continuing its growth trend. The ARPPU (Average Revenue Per Paying User), which is the average amount paid by one purchasing user per month, increased by more than 50% compared to the previous quarter. Notably, Blackpink joined Weverse through a recent partnership with YG Entertainment.

CFO Lee Kyung-joon stated, "Blackpink drew a hot response by surpassing 1 million subscribers on the day Weverse opened," and added, "Following Blackpink's entry into Weverse, more famous domestic and international artists are expected to join in the second half of the year."