SM Q2 Operating Profit 35.7 Billion KRW, Up 84% Year-on-Year

Thanks to the Offline Concert... MD Sales Also Contributed
Operating Profit Margin Increased by 4.4%p YoY to 15%
Subsidiaries Including Dream Maker Turned Profitable

SM Entertainment (SM) announced its Q2 earnings on the 2nd. Revenue reached 239.8 billion KRW, with an operating profit of 35.7 billion KRW. Compared to the same period last year, revenue increased by 30% and operating profit rose by 84%. The operating profit margin also improved by 4.4 percentage points year-over-year to 15%. After recording negative growth in Q1, SM successfully improved its performance as it fully entered the 'SM 3.0' era.

During the Q1 earnings announcement, SM was the only one among the four major entertainment companies to experience 'negative growth.' Operating profit decreased by 5% from Q1 last year to 19.2 billion KRW. The turnaround in Q2 was driven by active domestic and international offline concerts. Additionally, strong sales of albums by individual artists and increased sales of pop-up store MD (merchandise) linked to album releases contributed to the excellent results. The MD/licensing business division's revenue grew by 75% compared to the same period last year. With expanded appearances in broadcasts and offline events, the performance of the appearance business division also improved significantly. SM’s affiliates, including Dream Maker and SMC, also posted strong results. In particular, Dream Maker achieved a turnaround to operating profit due to a significant increase in domestic and international performance-related revenue. KeyEast also substantially reduced its operating losses.

SM’s growth momentum is expected to continue in the second half of the year. EXO’s seventh full-length album, released in July, recorded first-week sales of 1.56 million copies, while NCT Dream’s third full-length album achieved first-week sales of 3.65 million copies, both setting their personal bests. This month, aespa’s North American single will be released, and in Q4, releases from NCT 127 and Red Velvet’s full albums, as well as aespa’s mini album, are anticipated. Debuts of new artists are also forthcoming. The boy group 'RIIZE,' the first new group introduced three years after aespa, is scheduled to begin full-scale activities starting next month.

To aggressively target the global market, SM will also launch a joint North American corporation with Kakao Entertainment. By combining SM’s global IP and production capabilities with Kakao Entertainment’s music distribution network and multi-label system, the two companies will accelerate their North American market strategy. SM CEO Jang Cheol-hyuk stated, “Since the launch of the multi-production center in March, we have established an independent producing system centered on experienced professionals and strengthened our capabilities. As a result, we have expanded musical diversity, implemented strategic pre-promotions, and improved artist activity indicators. Furthermore, through the establishment of the North American joint corporation with Kakao Entertainment, we will actively expand our global business.”