SM Entertainment, the South Korean K-pop label behind aespa and NCT, reported an unprofitable quarter on Wednesday (Nov. 4), and its shares fell more than 7% that day. The company said lower physical and digital music sales and reduced concert revenue drove a 9% decline in overall revenue.
Quarterly financial results#
SM Entertainment, referred to as SME, reported the following figures for the quarter:
- Revenue: 291.1 billion South Korean won ($205.2 million)
- Operating profit: 35.5 billion won ($25 million), down 26% from the year-earlier quarter
- Net loss: 1.1 billion won ($775,000), compared with a profit of 44.7 billion won ($31.5 million) a year earlier
Jeongmin Jang, CIO of SM Entertainment, said on a conference call that the net loss was “primarily due to foreign exchange-related losses resulting from the appreciation of the Korean won.”
Album and music sales decline#
Jang said: “New album sales volume decreased by approximately 70% year over year as our major artists focused on expanding their overseas activities.”
- Physical and digital music sales: down 51% to 47.1 billion won ($33.21 million)
- Copies of artists’ releases sold: 1.67 million, driven mainly by sales of NCT 127’s album BLINGY
Licensing and artist appearance revenue rises#
SM Entertainment reported two areas of growth. Revenue from major artists’ album releases and global concert activities, together with intellectual property (IP) licensing collaborations, which the company calls MD/licensing revenue, rose 23.5% year over year to 62.1 billion won ($43.78 million).
Revenue from artist appearances rose 21.3% to 29.2 billion won ($20.6 million). The company said this was driven by artists’ participation in international award ceremonies and music festivals, along with apparel and cosmetics advertising and other areas.
