Hybe posts W188.5b operating profit in Q3, boosted by BTS effect

Hybe [352820], listed on the Kospi, said Tuesday its third-quarter operating profit reached 188.5 billion won ($136 million) on a consolidated basis, swinging to a profit from an operating loss of 42.2 billion won in the same period last year, according to a preliminary regulatory filing.

The result beat the market consensus of 166 billion won compiled by Yonhap Infomax by 13.6 percent.

Sales came in at 1.53 trillion won, up 109.8 percent from a year earlier. Net profit of 11.3 billion won also marked a return to the black.

Hybe's cumulative sales through the third quarter stood at 3.67 trillion won, putting the company on the verge of becoming the first domestic music label to surpass 4 trillion won in annual sales.

"Both sales and operating profit hit record highs on a quarterly basis," the company said, noting that the previous quarterly records had been set in the second quarter of this year — when BTS's world tour "Arirang" launched — with sales of 1.45 trillion won and operating profit of 170.9 billion won. "We rewrote those records in just one quarter," it added.

Hybe said the results demonstrated its "structural evolution from a K-pop company into a global top-tier entertainment platform," adding that the combination of direct revenue from artist activities such as albums and tours with high-margin streams like merchandise and licensing had secured both the volume and quality of its earnings.

By segment, concert revenue led the way, driven by the strong performance of the BTS world tour. Hybe's third-quarter concert sales reached 726.8 billion won, a new quarterly record.

The company said BTS drew up to 70,000 fans per show on its European and North American legs, while Enhypen conducted an Americas tour and Le Sserafim, &Team, Boynextdoor, TWS, Illit, Katseye and Cortis also held tours during the quarter.

In the album and music segment, a mix of new and back-catalog releases generated sales of 282.8 billion won.

Among indirect-participation revenue streams, the merchandise and licensing segment stood out with sales of 334.6 billion won.

Hybe said it had overcome the traditional limitation of merchandise sales being concentrated at the start of a tour, building a model through BTS's second North American tour leg in which fan spending continued and repeat purchases occurred throughout the entire run. "Rather than relying on the scale of the tour itself, we delivered diverse merchandise experiences to fans through localization grounded in innovation across planning, production and retail," the company said.

During BTS's North American tour, about 1 million fans visited merchandise sales venues across 12 cities over 45 days, with about 2 million items sold.

Hybe added that the results validated the fruits of its "multi-home, multi-genre" strategy, which it has pursued through years of infrastructure investment.

On BTS, the company said the group would "continue touring through the first half of next year, meeting fans around the world," while also pursuing music projects and a range of other activities to broaden its reach.