Technology company Naver Corporation is thought to be investing ₩100 billion in SM Entertainment, the company behind K-pop stars NCT, EXO and Red Velvet
Sign up for IQ Index
The latest industry news to your inbox.
The K-pop giant has reported sizeable increases across the board, bolstered by an increase in record sales and concerts
By Lisa Henderson on 10 Nov 2023
K-pop giant SM Entertainment has reported its highest-ever quarterly earnings for Q3, bolstered by concerts and record sales.
The Seoul-based company, which is home to acts some of the world’s biggest K-pop acts, reported KRW 48 billion (€34m) in operating profit – a 77% surge year-on-year (YOY).
Revenue followed suit with a 40% YoY increase, soaring to KRW 188.7 bn (€133.9m), while net profit reached KRW 37.1 bn (€26.3m), jumping 68% YoY.
SM says increases across the board can be attributed to the rise in music and recording sales by NCT DREAM, aespa and RIIZE, as well as the increase in artist activities such as offline concerts.
The entertainment agency is also home to acts including Girls’ Generation, Super Junior, EXO, NCT and Red Velvet.
The Seoul-based company reported KRW 48 billion (€34m) in operating profit – a 77% surge year-on-year
SM has also revealed a consolidated operating profit of KRW 50.5 bn (€35.8m) for Q3, a staggering 70% YoY increase, as well as a revenue surge of KRW 266.3 bn (€188.9m), a 12% YoY increase. Both figures recorded the highest quarterly performance.
Meanwhile, net profit increased by 189% to KRW 84.2 bn (€59.7m), compared to KRW 29.2 bn (€20.7m) during the same period last year. Operating margin for Q3 recorded 19%, a YoY increase of 6.5%.
SM’s subsidiaries include live entertainment company Dream Maker, advertising, production, travel and talent company SM Culture & Contents, entertainment management agency Keyeast and music publishing subsidiary KMR.
Looking towards the future, SM CEO Cheol Hyuk JANG said: “We have a packed line-up of activities through the end of the year, from aespa, Red Velvet and Taeyeon to TVXQ’s 20th anniversary album and concerts. We are also planning on showcasing a strong lineup of artists and content in the coming year as well. Through our music publishing subsidiary KMR, we’ll actively seek out global songwriters, focus on securing a stable supply of high-quality songs and eventually secure a new stream of revenues for SM through royalties made from selling music to external labels and agencies.”
Earlier this year, internet company Kakao Corp became the second-largest shareholder in SM Entertainment.
SM says increases across the board can be attributed to, in part, to the increase in artist activities such as offline concerts
SM Entertainment says the capital raised through the deal will fund its new business strategy dubbed “SM 3.0” – establishing multiple production centres and labels as well as a music publishing-specialised subsidiary, and investing in the metaverse.
At the end of last year, the Seoul-based operation announced plans to launch a headquarters in Singapore, in order to strengthen its presence in Southeast Asia.
Months later, it was announced that SM and Kakao would launch an integrated division in North America.
The division will combine SM’s global intellectual property and production capabilities with Kakao’s music distribution network and multi-label system, “with the goal of firmly establishing itself as a global K-pop key player”.
The aim is to promote artists from both companies, including Kakao-owned Starship Entertainment’s girl group IVE, as well as SM’s girl group Aespa and boy band NCT.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.