After the intense acquisition battle between HYBE and Kakao, SM is receiving positive performance results.
After the intense acquisition battle between HYBE and Kakao, which ended dramatically in March, SM’s ambitious future growth strategy, known as “SM 3.0”, has been evaluated as starting successfully.
On August 2nd, SM announced that it achieved consolidated sales of 239.8 billion Korean won (approx 185 million USD) and an operating profit of 35.7 billion Korean won (approx. 27.5 million won) in the second quarter of this year.
Compared to the same period last year, SM’s operating profit rose by 84% and revenue increased by 30%, mainly attributed to the revival of domestic and overseas offline concerts that were impacted by the COVID-19 pandemic.
The net profit reached 28.3 billion Korean won (21.8 million USD), a 12% increase year-on-year, whilst the operating profit margin recorded 15%, up by 4.4% compared to the previous year.
Meanwhile, compared to the previous quarter, revenue increased by 17.6%, operating profit by 95.3%, and net profit by 22.9%.
In terms of separate accounting, SM recorded 138.9 billion Korean won in revenue for 2023’s 2nd quarter, a 25% year-on-year increase. It also achieved an operating profit of 28 billion Korean won, which is an 18% increase compared to the same period last year.
These positive results were achieved by surges in album sales of individual artists, as well as the increase in revenue from merchandise (MD) sales and licensing, which were linked to album releases and pop-up stores. Moreover, the revenue from artist appearances in broadcasts and offline events also significantly improved.
SM’s affiliated companies also achieved excellent performance, and SM expects that the positive growth trend will continue in the second half of 2023.
As for its artists, EXO’s 7th full-length album, which was released on July 10th, sold 1.56 million copies in its first week. On the 17th of the same month, NCT Dream released their 3rd full-length album, which recorded 3.65 million copies in its first week, following a pre-order number of 4.2 million copines.
In addition to the North American single by aespa and NCT’s full-length album, SM plans to release regular albums for NCT 127 and Red Velvet in the fourth quarter, as well as a mini-album by aespa. Moreover, a new boy group called RIIZE will debut in September.
Additionally, to make a more significant impact on the global market, SM will establish a North American joint corporation with Kakao Entertainment. By concentrating the core capabilities of SM’s global IP and production capacity with Kakao Entertainment’s music distribution network and multi-label system, they plan to accelerate their efforts to expand in the North American market.