SM Entertainment, home to K-pop acts such as NCT 127, EXO, Riize, and aespa, has reported a 9% YoY increase in revenue, breaking a streak of uneven top-line and bottom-line growth over the past year.
In its earnings release for Q4 2024, issued on Monday (February 10), the company reported revenues of KRW 273.8 billion (USD $195.94 million at the average exchange rate for the quarter).
The company’s operating profit surged by 275.6% YoY to KRW 33.9 billion ($24.26 million), which SM attributed to increased revenue, a change in the sales mix, and a reallocation of performance-based compensation.
However, net profit remained in the red, though the Q4 net loss of KRW 24.1 billion ($17.25 million) was less than half the KRW 52.8 billion loss in the same quarter a year earlier.
In an effort to boost the shareholder return ratio to 100%, the company announced it is retiring all the remaining shares it had bought in recent share buybacks.
The 460,000 remaining shares to be retired amount to 2% of outstanding stocks and are worth KRW 40.3 billion ($27.8 million), Co-CEO Tak Young-jun said during a shareholder presentation.
“In February and August, we retired over KRW 35 billion worth of treasury shares, resulting in a total shareholder return ratio exceeding 80%. Based on treasury stock repurchase, the total shareholder return ratio reaches 100%,” he said.
SM Entertainment’s stock ended the day up 5.4%, at KRW 92,300 ($63.61) per share.
SM breaks down its earnings by parent company and subsidiaries. The parent company reported an 11.0% YoY jump in revenue to KRW 181.8 billion ($130.1 million).
A 5.1% YoY decrease in recorded music revenue (digital and physical), to KRW 86.0 billion ($61.54 million), was more than offset by an 88.2% YoY surge in revenue from concerts, to KRW 22.5 billion ($16.1 million).
SM attributed the increase in concert revenue to an expanded touring schedule among its K-pop acts. K-pop has grown increasingly popular, both in the East Asia and Southeast Asia regions, as well as worldwide.
As particular drivers of growth, CFO Jang Jun-min highlighted NCT DREAM’s 2024 world tour, which wrapped up in Q4 with shows in Europe and a finale in Seoul. He also noted NCT WISH’s 12 shows in Japan and TVXQ!’s 20th Anniversary Japan Tour, which sold out all shows upon ticket release.
The higher number of live shows also helped propel the company’s merchandising and licensing revenue, which jumped 51.9% YoY to KRW 51.2 billion ($36.64 million).
Operating profit grew 83.2% YoY to KRW 35.8 billion ($25.62 million), while net income swung to a positive number, at KRW 8.3 billion ($5.94 million), compared to a net loss of the same amount in the year-earlier quarter.
At SM Entertainment’s subsidiaries, revenue grew 4.1% YoY to KRW 135.4 billion ($96.9 million). The operating loss narrowed to KRW 2.1 billion (-$1.50 million) from KRW 8.2 billion a year earlier.
The net loss also narrowed, to KRW 48.7 billion (-$34.9 million), from a loss of KRW 53.7 billion a year earlier.
Artist management, merchandising and licensing and TV production company KEYEAST led revenue growth among subsidiaries, recording a 110.0% YoY surge to KRW 21.0 billion ($15.0 million), which SM said was thanks to increased TV drama production.
SMC, SM’s company that handles K-pop culture in Japan, saw revenue jump 65.7% YoY to KRW 20.2 billion ($14.46 million), which SM attributed to increased activity in the Japanese market.
That was partly offset by a 21.7% YoY drop in revenue at talent agency, TV production, and travel company SM C&C, to KRW 33.4 billion ($23.9 million).
In the shareholder presentation, CEO Jang Cheol-hyuk focused on SM’s 30th anniversary celebrations, centered around a new motto for the company – “the culture, the future” – and SMTOWN, a series of concerts celebrating SM’s founding in 1995.
The first of these concerts, held in Seoul during the Lunar New Year last month, was broadcast alongside TV specials marking the anniversary. Other SMTOWN 30th anniversary concerts are planned for this year in Mexico, Los Angeles, London, and Japan.
The release of Q4 earnings coincided with the release of a teaser for Hearts2Hearts, a new girl group scheduled to make its debut on February 24. The company also highlighted the planned debut of a new boy group, SMTR 25, though no timeline was given.
“As we celebrate this milestone, we remain steadfast in our mission to lead the global K-pop industry into its next chapter,” Jang said.Music ComeOn
