HYBE posted its highest-ever quarterly revenue, but it swung to an operating loss in the third quarter of this year. Large-scale investments tied to expanding global artist intellectual property (IP) and one-off expense incurred during a North American business reorganization weighed on profitability.
HYBE disclosed on the 10th that on a consolidation basis for the third quarter of this year, revenue was 727.181 billion won and operating loss was 42.198 billion won. Revenue rose 37.8% from a year earlier, but it recorded a 5.8% operating loss.
HYBE said, "Preemptive investment to expand global artist IP and one-off expense due to restructuring of the North American business created a factor that reduced the operating margin by a total of 12 percentage points."
HYBE operates in North America through its U.S. subsidiary "HYBE America," covering albums and digital music, content, merchandise sales (MD), concerts and fan clubs. In its second-quarter earnings release this year, it also noted it would adjust HYBE America's strategy and carry out an organizational overhaul.
It sought a strategic shift from a management business based on artist activities to a label business that secures a streaming-based revenue stream. It presented a plan to build a system capable of integrated management of North America and Latin America, and to advance a "multi-home, multi-genre" strategy that can encompass artists across various genres. At the same time, it replaced the CEO and executives and carried out personnel changes that altered more than half of the board composition.
HYBE noted, "Starting next year, with the effects of the restructuring and the resumption of BTS activities, the profit and loss structure of the North American business is expected to stabilize."
With third-quarter revenue of 727.1 billion won, it achieved a record quarterly performance. Including BTS member Jin's overseas solo tour, large-scale concerts by groups TOMORROW X TOGETHER and ENHYPEN drew strong interest worldwide, and revenue in the concert institutional sector rose more than threefold from a year earlier to 245 billion won.
Revenue from MD and licensing, content and fan club sales totaled 249.8 billion won, up 22% from a year earlier. Revenue in the MD and licensing institutional sector was 168.3 billion won, a 70% increase from the same period last year. Strong MD sales were driven by tour MD, light sticks and sales of IP-based character merchandise stemming from artist activities. The fandom platform Weverse also turned profitable on a cumulative basis in the third quarter.
Chief Executive Lee Jaesang of HYBE noted, "As the K-pop institutional sector, the core of HYBE, is expected to maintain profitability of around 10% to 15% this year, the company's fundamentals remain solid." He added, "Most of the factors weighing on profitability will be resolved starting in the fourth quarter of this year," and "from next year, the profit structure will improve and we will enter a full-fledged phase of profitability recovery."