SM Entertainment Posts Double-Digit Q2 Revenue Jump Amid Live Comeback, Touts ‘SM 3.0’ Buildout

sm entertainment earnings
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sm entertainment earnings
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SM Entertainment’s Hyo, who’s set to release a single later in August. Photo Credit: Like a Fool

SM Entertainment (KRX: 041510) achieved double-digit revenue growth during 2023’s second quarter due in large part to a significant income boost from live performances, according to a newly released earnings report.

Seoul-headquartered SM Entertainment, in which Kakao (KRX: 035720) possesses a controlling interest, just recently posted its Q2 2023 financials. According to the resource, the K-pop company generated ₩239.80 billion ($183.37 million at the current exchange rate) overall on the quarter, including ₩138.90 billion ($106.40 million) from its core music operations. The latter represents a year-over-year (YoY) increase of about 25 percent as well as an over eight percent quarterly improvement.

Behind the sum, the Red Velvet, EXO, and NCT Dream agency pointed to ₩54.4 billion ($41.65 million) from albums and digital, another ₩42.3 billion ($32.39 million) from merchandise and licensing, ₩20.7 billion ($15.85 million) from appearances (encompassing television, adverts, and events alike), ₩20 billion ($15.31 million) from concerts, and the remaining ₩1.5 billion ($1.15 million) from other sources.

Notably, SM communicated that the albums category, despite moving 3.6 million units as opposed to 2.1 million units during Q2 2022, had suffered an 8.7 percent quarterly revenue slip and an 18.5 percent YoY income falloff during the second quarter. Aespa is said to have sold 2.02 million copies of My World throughout Q2 2023, and Q2 2022, the business indicated, had brought a “temporary increase in sales of past albums.”

Next, execs attributed the merchandise/licensing category’s revenue jump (74.8 percent YoY and 42.5 percent quarterly) in part to heightened sales made via “pop-up stores related to album releases.”

Meanwhile, in addition to an adjacent revenue spike (54.5 percent YoY and 23.1 percent quarterly) for appearances, SM said that its Q2 concerts income (up 252.3 percent YoY but down two percent quarterly) had resulted from 60 shows (versus six during the prior-year quarter).

Lastly, in terms of the globally expanding business’s Q2 financial details, SM pinpointed a music operating profit of ₩28 billion/$21.40 million (up 17.6 percent YoY and 43.9 percent quarterly) and net income of ₩17.4 billion/$13.30 million (down 2.5 percent YoY and seven percent quarterly).

During his company’s Q2 earnings call, SM CEO Jang Cheol Hyuk provided an update on an expansion initiative centering on a “multi-production center” system, under which five centers proper and one “virtual artist production center” have been established.

“The individual production centers will take charges of their own productions and business core functions independently,” he explained of the units. Similarly, SM has also debuted a publishing subsidiary called Kreation Music Rights.

Kreation “will supply high-quality music to the multi-production center,” proceeded the SM head, “and the multi-production center will produce music for the artists, which will lead to strengthen SM’s business model sustainably.”

Looking forward to the remainder of Q3 as well as 2023’s final three months, SM Entertainment highlighted coming releases (including singles, mini albums, and albums) from Aespa (whose members today released a “sitcom” episode to promote the forthcoming English-language single), Super Junior’s Yesung, and the newly formed Riize, to name some.

When the market closed today, SM Entertainment stock was worth an even ₩139,000 ($106.25) per share, reflecting a nearly one percent boost from its prior close and an approximately 85 percent hike from 2023’s beginning.