SM Posts 54.6 Billion Won Operating Profit in Q4, Delivering an Earnings Surprise

SM Entertainment announced on February 11 that it posted the highest quarterly consolidated results in its history in the fourth quarter of last year.

Compared with the same period a year earlier, revenue rose 16.6% to 319.0 billion won and operating profit surged 62.2% to 54.6 billion won, delivering an earnings surprise. The operating margin also improved by 4.8 percentage points over the same period to 17.1%, demonstrating enhanced profitability. Net profit for the period turned to a surplus of 27.4 billion won.

SM Entertainment logo image. Provided by SM Entertainment

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On a separate basis, the company recorded revenue of 202.2 billion won and operating profit of 39.5 billion won, up 12.1% and 10.2%, respectively, from a year earlier. Net profit for the period jumped 106.5% year-on-year to 29.3 billion won.

SM analyzed that these results were driven by the strong performance of global tours by key IPs such as NCT Dream, Aespa, Riize, and NCT Wish, as well as by merchandise and licensing businesses utilizing artist IPs that have now begun to be fully reflected in earnings. The company added that improved performance at major subsidiaries such as SM C&C and SM Japan, along with the consolidation effect of DearU, also had a positive impact on consolidated results.

Alongside this earnings announcement, SM shared concrete execution plans for its "SM Next 3.0" strategy, which is focused on building a sustainable growth structure.

Co-CEO Tak Youngjun said, "This is a strategy focused on building a sustainable growth structure rather than on short-term expansion of scale or speed competition," adding, "Through a multi-creative system that enhances the autonomy and efficiency of our production organization, we are creating more predictable and reproducible outcomes across IP planning and production as a whole." He continued, "By pursuing the development of new IPs and our global expansion strategy in a balanced manner, we will strengthen top-line growth, profitability, and the long-term competitiveness of our IPs at the same time."

Co-CEO Jang Cheolhyuk said, "The global expansion of SM Next 3.0 has been designed in a direction that emphasizes sustainability and efficiency," and added, "In line with this, we will actively leverage strategic partnerships and segment our target regions according to the characteristics of each IP and market conditions, in order to maximize both the visibility of performance and execution efficiency throughout the expansion process."

SM plans to continue its growth in album, digital music, and concert revenue in the first half of this year as well, backed by a strong artist lineup. In the first quarter, new releases will be rolled out in succession, including full-length albums from EXO and Irene, as well as new albums from NCT JNJM and Hearts 2 Hearts. In the second quarter, full-length albums from Taeyong, Aespa, and NCT Wish, mini albums from Riize and Hearts 2 Hearts, and a single from Ryeowook are scheduled.

The concert segment will also remain active, focusing on global stages. In the first quarter, starting with Super Junior's 20th anniversary tour, NCT Dream, Aespa, Riize, NCT Wish, and Taeyong will hold performances across Asia. In the second quarter, an EXO tour, TVXQ's concert at Nissan Stadium, and Hearts 2 Hearts' first U.S. showcase are planned.

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