Hive Expanding Weverse, Will Accelerate Further in the Second Half of the Year

2Q Operating Profit 28 Billion Won... 6.2% Decrease YoY
Various Revenues to Be Fully Recognized from 3Q
'Weverse' Joined by BLACKPINK Also Becomes More Abundant

BTS 'Butter' Single CD Concept Image [Image Source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] HYBE, the agency of BTS (Bangtan Sonyeondan), posted earnings slightly below market consensus for the second quarter of this year. This was due to one-time costs related to the acquisition of the U.S. entertainment agency Ithaca Holdings being reflected, as well as the deferral of sales from planned merchandise (MD) such as online concerts. In the second half of the year, with domestic and international artists like BLACKPINK joining Weverse, performance growth is expected through diversification of related content and MD sales.

On the 7th, Samsung Securities maintained a 'Buy' rating on HYBE with this background and raised the target price by 27.3% to 380,000 KRW. The closing price the previous day was 310,000 KRW.

HYBE recorded consolidated sales of 278.6 billion KRW and operating profit of 28 billion KRW in the second quarter of this year. Compared to the same period last year, sales increased by 79.2%, but operating profit decreased by 6.2%. It was also below the market consensus of 30.6 billion KRW. From the second quarter, as affiliated artists began full-scale activities, sales from albums (105.4%), advertising, appearance fees, and management (96.5%), and content (236.9%) showed high growth, but concert sales were still absent.

The operating profit fell short of expectations because the acquisition of Ithaca Holdings was completed during the quarter, and related costs were accounted for in the earnings. One-time acquisition costs were recognized at approximately 10 billion KRW. Additionally, although various MD products were released, including the online fan meeting 'BTS 2021 MUSTER Sowoozoo' and collaboration with McDonald's, due to the difference between payment timing and revenue recognition, about 60 billion KRW is estimated to be recognized in the third quarter.

One of Weverse's key performance indicators (KPI), monthly active users (MAU), increased by 9% quarter-on-quarter to 5.3 million in the second quarter. Although an upward trend has been observed since launch, it is true that growth was somewhat stagnant from the third quarter of last year through the first quarter of this year. However, the number of teams on the platform increased from 18 at the end of the first quarter to 23 in the second quarter. On the 2nd, BLACKPINK also joined. On the day of their entry alone, over 1 million subscribers gathered.

Minha Choi, a researcher at Samsung Securities, said, "Not only BTS but also affiliated artists like Seventeen and TXT are increasing their recognition in overseas markets, and indicators such as album sales are continuously improving, so HYBE's position is expected to grow further," adding, "The direct and indirect synergy effects from Ithaca Holdings will also accelerate."

This content was produced with the assistance of AI translation services.