HYBE "Improving Multi-Label System... Expecting 2Q Rebound with Key Artists' Return" (Comprehensive)

"Continued Consideration for Multi-label Advancement"
"Adoer Incident, Necessary Measures Will Be Taken"

Hive is initiating an audit of the management of Adore, a subsidiary to which the group NewJeans belongs, leading to conflicts. The photo shows the Hive headquarters in Yongsan. Photo by Jo Yongjun jun21@

Park Ji-won, CEO of HYBE, addressed the allegations of a hostile takeover attempt by the management of its subsidiary ADORE, stating, "We will properly resolve this issue and continuously consider and improve what needs to be supplemented to advance the multi-label system."

During the Q1 earnings conference call held on the 2nd, CEO Park apologized, saying, "We are sorry for causing concern to our shareholders due to this matter."

He explained, "HYBE has experienced many trials and errors in building a multi-label system and has grown by overcoming them, establishing a stable revenue portfolio," adding, "An audit regarding ADORE (the hostile takeover allegations) has been conducted, and necessary measures will be taken going forward."

Earlier, HYBE accused Min Hee-jin, CEO of ADORE, of attempting a hostile takeover, conducted an audit, and filed a complaint against her with the Yongsan Police Station in Seoul. Additionally, HYBE requested a board meeting to dismiss Min and other executives. When Min's side refused to convene the board meeting, HYBE submitted a petition to the court for permission to hold an extraordinary shareholders' meeting, with a hearing held on the 30th of last month.

Currently, both parties are also engaged in disputes over whether there has been a breach of the shareholders' agreement.

During the conference call, HYBE refrained from answering questions related to ADORE as much as possible. Just before the Q&A session, HYBE stated, "Since legal procedures are still ongoing regarding recent issues related to ADORE, we will not accept related questions."

Amid the unsettled atmosphere caused by the dispute with CEO Min, HYBE received an unsatisfactory performance report for Q1.

HYBE posted consolidated sales of 360.9 billion KRW and an operating profit of 14.4 billion KRW in Q1 this year, marking decreases of 12% and 73%, respectively, compared to the same period last year.

HYBE attributed the sharp decline in operating profit to "the activity hiatus of existing artists such as BTS and the initial costs related to the debut of new groups."

The company evaluated that the successful debuts of TO1 and ILY:1 offset the impact of senior artists' rest periods, allowing HYBE to maintain a profit trend. Both groups' albums sold over 500,000 copies each, achieving half-million seller status.

Although there were relatively fewer new releases in Q1, steady revenue from digital music provided a foundation for stable performance. As a result, the proportion of digital music in HYBE's Q1 music sales rose to about 50%.

Direct participation revenue streams such as music sales, concerts, and advertising/appearances amounted to 217 billion KRW, accounting for about 60% of Q1 sales. Among these, concerts by SEVENTEEN, ENHYPEN, and &TEAM contributed significantly.

Indirect participation revenue streams, including licensing, content, and fan clubs, totaled 143.9 billion KRW, representing about 40% of sales. ‘Nana Tour with SEVENTEEN,’ co-invested by HYBE and CJ ENM’s production company Eggs is Coming, along with tour merchandise for SEVENTEEN and TOMORROW X TOGETHER, contributed to indirect participation revenue in Q1.

HYBE expects both sales and operating profit to improve from Q2 as artists resume activities en masse and world tours fully commence. Last month, SEVENTEEN, TOMORROW X TOGETHER, and BOY NEXT DOOR made comebacks, while ENHYPEN and NewJeans are preparing for full-scale comebacks. BTS member Jin is scheduled to complete his military service in mid-June.

HYBE also plans to more actively strengthen the global popularity of K-pop. In addition to the existing multi-label system, starting this year, HYBE will pursue a ‘multi-home, multi-genre’ strategy that enhances IP development reflecting local cultures and characteristics. By developing IP tailored to local cultures mainly in Japan, the United States, and Latin America, HYBE aims to secure a leading business position locally and attract fans unfamiliar with K-pop into the HYBE ecosystem.

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