[Click eStock] DearU, Profit Turnaround Expected This Year

[Asia Economy Reporter Hwang Junho] IBK Investment & Securities predicted on the 25th that DearU, which operates the world's number one message fan platform 'DearU Bubble,' will turn profitable this year.

DearU, which was listed on the 10th, is a subsidiary of SM Entertainment. The company's main service is 'DearU Bubble,' which utilizes artist IPs. Since its launch in February last year, the service secured 1 million subscribers within 11 months and had 1.2 million subscribers as of the end of the third quarter.

The subscription retention rate is also about 90% on average. The revenue distribution by region is approximately 29% from South Korea, 19% from China, 12% from Japan, 14% from Southeast Asia, 6% from the United States, 6% from Europe, and 14% from other regions.

About 23 entertainment agencies are registered on this platform. A total of 54 teams and 229 artists are active. Continuous growth in the number of subscribers (Q) is expected in the future. DearU plans to use the public offering funds to expand domestic and international music artists. Additionally, it plans to secure IPs of sports stars and actors who have global fandoms.

An increase in ARPU (P) is also anticipated. Starting with the opening of a digital item store scheduled for the first quarter of next year, the My Home (3D Digital room) service will begin. As of the end of the third quarter, the ARPU (average revenue per user) was about 7,000 to 8,000 KRW per month, indicating low price resistance for new services.

Based on these projections, the expected sales this year are forecasted to reach 41 billion KRW, a 214.5% increase from last year. Operating profit is expected to achieve 16 billion KRW, turning profitable.

Researcher Lee Hwanwook of IBK Investment & Securities analyzed, "Expansion of new fandoms for artist IPs, additional registration of new artists (singers and actors), and continuous increase in the number of subscribed artists per person are expected," adding, "Operating leverage effects due to scale expansion will occur, and the operating profit margin is expected to reach 39%."

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