Good morning, and good evening. First of all, thank you all for joining this conference call. And now we'll begin the conference of the Fiscal Year twenty twenty five Second Quarter Earnings Results by C. J. E and M.
This conference will start with a presentation followed by a divisional Q and A session. Now we shall commence the presentation on the fiscal year twenty twenty five second quarter earnings results by CZ E and M. Good afternoon. This is Wonsong Woo from CJ E and M IR. I thank the shareholders and analysts for taking time out of your busy schedules to attend today's earnings release session.
Now we will begin the earnings release session for CJ E and M Q2 twenty twenty five. Please note that the financial and management results presented today have yet to undergo an independent auditor's review and could be subject to changes upon such review. Today, here with us are heads of different business units and CFO, Took Soo Hwang. From Media, we have Chan Hyuk Park from Music, Yong Ju Okay from Films, Kyunjoo Jeong from Global, Chunjoo Kim from Content Business, we have Changho Seoul and from Global, we have Chunjoo Kim from Commerce, Jinuk Seo Studio Dragon, Jeong Ho Jang and we have TV CPO, Joo Hee Chewi. First, CFO, Took Soo Hong, will brief us on major results and business strategy.
Good afternoon. This is CFO, Took Soo Hwang. Profit in Q2 decreased on a Y o Y level, but seen much improvement compared to Q1, confirming improvement. We believe that the foundation for an earnest improvement in the second half of the year has been laid with our tangible results in the first half and our strategic pursuit. There were many meaningful results that are aligned with our 2025 core strategy that was announced at the earlier part of the year.
First, while strengthening worldwide content production competitiveness, Resident Playbook has ranked number one on Drama Viewership, Teasing and Netflix. Fifth Season's IP delivery has seen an increase by 11 compared to last year and seen a turnaround. Severance has been nominated in 27 categories for the Emmy Award, bringing the total nomination for fifth season to 36. As for acceleration of globalization, focus was on various activities including album release of JL1 and IANI concert. Lapona's half year revenue increased by 80% compared to last year, setting a new record.
KCON Japan twenty twenty five was also a hit with over 110,000 attendees. Korea Japan joint planning and production dramas also saw growth with titles such as Marry My Husband Japan. As for digital transformation fortification, subscriber decreased after the termination of Naver membership in Q1 is fast recovering in Q2. New subscriber number is increasing through bundling with Waze and increased alliance with Petain Minjo. Content cooperation synergies such as cross programming is seeing an increase.
TV's ad based ADD subscriber ratio is at 46.3, which is an increase by 21 percentage points compared to last year end. Through human IP and video content investment enhancement, Mnet has seen its global accumulated subscriber number go beyond 30,000,000 and is establishing a profit model including an advertisement based on it. According to the two track content strategy of celebrities and influencers, commerce continues to grow with 47% growth in first half in MLC transaction amounts. The business is also enhancing its differentiation and competitiveness with new premium brands and strengthening exclusive products. CJ E and M will continue to accelerate the implementation of business divisional core strategies and through that will improve each business' profitability and focus on strengthening fundamental business competitiveness.
I thank the shareholders and analysts for being with us. This concludes my presentation. Thank you. Next is results presentation. CJ E and M's results presentation is based on consolidated K IFRS numbers and operating profit has not been eliminated of internal transaction.
Good afternoon. This is Kim Jin Young from Finance. The revenue for the 2025 was trillion, a 13% increase compared to the same period last year, while operating profit was KRW 28,600,000,000.0, a decrease of 19%. I will go over the changes in operating profits by business segments before the adjustments in the consolidated financial statements. The entertainment sector saw an increase in profit compared to last year due to the positive performance of La Pony and the turnaround of fifth season.
Although profits in commerce decreased due to an expansion of strategic investments such as new IP planning for the enhancements of the OnStar brand and onlineoffline marketing activities, revenue growth continued, thanks to the ongoing successful mobile live commerce. From Page five, I will discuss the performance of each business segment and the outlook for the second half of the year. The media platform has continued to experience poor profitability due to a downturn in the broadcasting advertisement market. But from Q2, the viewer ratings for major anchor dramas have improved. And in the second half of the year, the company hopes to improve profit by scheduling high profile premium content.
Teasing has seen a recovery in the number of subscribers, thanks to the expansion of platform synergy through bundling since June and advertising revenue has increased due to the expansion of AVOD subscribers and KBOs popularity. In the second half of the year, we will enhance popular original content such as Exchange and The Great Escape and sports event related content such as KBO, while focusing on achieving a turnaround through sustained subscriber growth through bundling and partnership services. We will also work to secure a global foundation centered in Japan and Southeast Asia. As for movies and dramas, fifth season has seen a turnaround with expansion of delivery including Nine Perfect Strangers Season two and Fight Season two and is aiming for solid delivery including His and Hers for Netflix in the second half of the year. The overseas distribution of domestic content is expanding its global influence through premium cake content production and distribution capabilities based on comprehensive partnership with global platforms such as Netflix and Amazon.
In the second half of the year, anchor content such as Bon Appetit, Your Majesty and Typhoon Trading Company is scheduled for airing on global OTTs as well as the release of Director Park Chanuk's No Other Choice. Music has grown breaking quarterly sales record with album sales and concerts performances of Lapones artists. Plans for the second half include securing local Japanese artists such as Hip Hop Princess and business expansion, while focusing on strengthening the global MCS business model centered around Moist to Planet in the Greater China region. The product sector, strategic marketing investment costs increased due to the strengthening of content and expansion of customer touch points such as offline pop ups. However, MLP transaction amount has grown and sustained growth in revenue was supported by the strong performance of the health supplements and beauty categories with the wellness trend.
In the second half, the business will strengthen the growth momentum of e commerce with implemented collaboration and SNS and expansion of marketing channels, including TV. For more details, please refer to the material. Thank you. Now Studio Dragon will present the results. Good afternoon.
This is Chang Song Ho from Studio Dragon Finance. I will brief you on the management performance for Q2 twenty twenty five. The total number of episodes aired in Q2 was 41, the lowest level ever recorded. The number of TV programmed episodes decreased by seven Y o Y at 27, which led to a decline in programming and licensing revenue. The profitability worsened with remaining amortization costs from the previous quarter's major productions.
With that, the second quarter revenue stood at billion with an operating loss of KRW2.9 billion. However, there were positive results in terms of content viewership performance. Our unwritten sold achieved a peak rating of 9.4% on TVN and Marry My Husband Japanese version, a remake of our Mega Hit IP, ramped first for five consecutive weeks shortly after its launch on Amazon Prime Video Japan, proving our content competitiveness and growth potential in the global market. In the second half of the year, we aim to recover our lineup and maximize the performance of each project such as Head over Hills, Bon Appetit Your Majesty and The Manipulated, while strengthening our approach to the global market. Furthermore, we will solidify our mid to long term growth foundation by diversifying our business model to go beyond the current drama business, including launch of new actor partnerships and expanding ancillary businesses.
Thank you. Now we will entertain your questions. Given the time restriction, please limit your questions to three each and centering on core issues. The first question will be given by Kim Hwae jae from Patient Securities. Please go ahead.
Yes, I have two questions. First is on your K Culture Value project. I have noted that there was liquidated delay damage amounting to something around billion. And has any of this amount been previously reflected in your book numbers? If so, I would like to know the amount and what would be your response to this damage compensation going forward?
And my second question is on local production. Well, I do have noted that, marry my husband, the Japanese version has done quite well in the Japanese market. So I would like to see an update on your future local production plans. Yes. This is Jin Young Kim from Finance.
I will be addressing your first question on the liquidated delayed damage imposed by Tongji province. So we have disclosed in July, the claim from Tongji province stood at billion. But as to how they came to a conclusion of this number, we have yet to find out their formula or the legal foundation for imposing this damage amount. And we believe that they have claimed this damage amount, but not based only on the basic contract that we had in place, but also for the period that continued after the termination of the contract. And we have received advice from our legal advisors and have built a reserve, which is founded on a very rational calculation.
And it has been audited by independent auditors. And as was disclosed, we have shifted to this number and we're currently reading ourselves for a damage suit. Now on local production. Yes. This is Studio Dragon answering to your second question.
As you have noted, Marry My Husband, the Japanese version has done quite well after its release. It has been ranked number one for five consecutive weeks on Amazon Japan. And in the second half, we hope to continue this momentum with two new titles. Well, TBS, Hardcore Dogs and G Tips that's our subsidiary, they have participated in a title called Soulmate and these are the two titles that are scheduled in the Japanese market. The following question is by Shin Heng Zhong from DB Securities.
Yes. I have three questions, one for C. And M and two for C. J. M.
Well, could I know the revenue and operating numbers repeating as of season? And I could if you could, could you elaborate on your forecast for the second half of the year? My first question for Studio Dragon, in your IR documentation pack, I see that you have plans to release 14 titles in the second half of the year. Yes, will give you the breakdown. Yes, we did mention to you 14 titles to be released Yes.
And as to the increase by two, three titles in the '26 compared to the 2025, well, there has been no confirmation yet, no concrete plans as of today. So I cannot give you further color on our plans. So should things become Yes. And as for your China question, we do expect a visit from President Xi of China in October to Korea. And if things go well, we would see an easing of ban on Korean content in the larger Chinese market.
So, Fuji, sales of our old titles to the Chinese market, which would in turn give us additional revenue. And we are also discussing potentials of co airing with the Chinese platforms and also co production with the Chinese makers. In the second half, we strengthened alliance with SK Telecom. And with BAM on a cap sharing, we do hope to see the numbers improve. As for the numbers Currently, there are no participants with questions.
The following question is by Chae Yong Hyun from KB Securities. Yes. I have three questions. First is related to your advertisement business. Well, I see that you have seen a decrease Y o Y when it comes to your TV ad revenue.
What's your expectation for ad revenue in the second half? And well, is it decoupled with the economic move? So, on how the economic cycle moves, do you expect to see a continued expense in revenue? This is my first question. And my second question is for TV business.
I see that Y o Y top line has seen a decline. Well, I think it's because of ARPU business. So in consideration of the marketing activity in the second half, assuming that you see a similar level of ARPU in the second half, will you be working on your numbers through increase of subscriber basis? So we should be working increasing your subscribers? And my third question is for your commerce business.
I see that MLC has done quite well in terms of reported a flat ink number. However, when it comes to operating profit of the overall commerce division, I see that the growth here is negative. Could I interpret this as your MLP business having a lower OP margin? Yes. This is because of the given political and social environment, we found it difficult to turn the situation around with our given capabilities.
And in the second half, we think the environment will somewhat change with improvement in consumer sentiment and also more investment by the government. So we do hope to see the environment change for them. And in the second half of the year we also have and with that we will be doing our best when it comes to our sales activities and content or context targeting and we would also present to the ad owners a TV in TV solution. Yes. This is Yoshui Choi from T.
Bing answering your question. You've asked whether our decrease in number was due to the influence from our lower ARPU. Well, not necessarily. It's mainly due to two events. First is the termination of our agreement with Nabir, which led to a decrease of our subscriber income subscription income.
And second was due to sluggish international sales. And we do expect to see things to change for the better in the second half. We've already seen much evidence to that end. Well, we've seen our subscriber bases improve in June with our collaboration with and also with bundling with Waze. And in July, we will have put a ban on account sharing and we have strengthened our alliance with SKT.
With that, we saw our subscriber basis improve. And we have our growth expectation for the second half because we worked closely with our achieving international partners and we on a Y o Y basis have seen our ad revenue a twofold increase. And with the KBO peak season, we hope to see this momentum continue. And with that, on a Y o Y basis, we will see an improvement on our revenue numbers. Yes.
This is Tao from Commerce division addressing your question. Well, your question was related to the increase in our MLT number, but strong Sidoti numbers. Well, as for our mobile live commerce business, well, we are currently seeing a transition from TV home shopping to a more mobile based shopping experience. And rather than focusing on immediate profit, we are working to increase the size of this business and also to enhance our market presence. So we are in the midst of investing for our IP and also engaging diverse marketing activities when it comes to commerce and MOC activities.
So as for our MOC business, are seeing profit, but it's a little bit above our breakeven point, not much of a contribution. But going forward in the second half and also going into year 2026 with a larger sized business, we hope to see much greater contribution from MOC as well. Next question please. The following question is by Yi Gi hun from Hana Securities. Please go ahead.
Yes, I have first three questions. First is with Voice of Planet. You did mention in your previous answer the expectation for e spend on Korean content. And will voice the plan and the rumors of the competition be the beneficiary of the eSpan on Korean content? So what's your expectation for that?
And my second question is for Apple TV's K Pop. How does this program come to be? And if this program proves to be how will the results be reflected in your numbers? And my third question is on your finance income. Well, was it due to the strengthening of loan did you enjoy a foreign currency exchange gain?
Yes, this is my first answer related to your Boys to Planet and the relate to China business question. Well, currently, Episode three has been aired for Boys two Planet program. And compared to Season one, Boys two Planet, this season is much more popular. It has gained more anticipation from the general crowd. And we do not as of today know how many Chinese people with the Chinese voice will be included in the final debut group.
But regardless of whether the ban on Korean content would be lifted in the second half or not, we are making our own operations. So in China, in order to boost their internal economy, we do see a lot of concerts ongoing in China. And even if there are few Chinese board members in the debut group, we could think about creating a unit group with the other Chinese participants and having them for concerts and other opportunities. So we are currently in discussion with our Chinese partner. Nothing has been confirmed yet, but before the whole program is over, we have to come up with the details.
And as for your K Pop related question, the whole project, the initiation of the project was about three years ago. Lionel Richie, the U. S. Singer gave us this idea. Well, it was through a discussion with that singer that we came to see the birth of this program.
Initially, it was intended as an R and D music entertainment format, but later it evolved to be a K pop format. So during the discussion, course, Young Lee gave us a lot of idea, a lot of input and we are the main participants in the program. And it's not a contract with Apple Korea, but Apple itself. So should this attempt prove to be a success, there could be an increase in going forward. And this is Wang Yuan from TV.
Well, K Pop, the program will be aired on Apple TV plus in Korea plus TV. So with K Pop, we hope to see an increase in expansion of our subscriber bases too. Yes, Apple TV plus one would be airing K Pop and we currently at Apple TV have a TV brand which is below Apple TV. And Apple TV, they have this huge need for Korean content. So it will not only be music format, but also drama and other entertainment formats that is aired through Apple TV platform.
So likewise, we have this ongoing tight collaborative relationship with global OTT. And as to your last question on our financial gains, yes, we did benefit from foreign exchange rate changes, but the major influence was with PBS derivatives with Netmarble. When we sold our shares with Netmarble in July 2024, we've gained a PRS derivative product gain. In the first quarter, the share prices of Netmarble stood only at RMB39000. In the end of second quarter, that has skyrocketed to RMB52000 giving us a derivative gain.
Next question, please. The following question is by Yi Hyun ji from UZ Investment Securities. Yes. I have two questions, one for CJ E and M and one for Studio Dragon! Well, the first question for CJ E and M is related to your Fifth Season business.
I see that drama delivery was quite good in the results. Is it because you delivered more titles or is it because the delivered titles were more larger projects? And will this result be sustainable going into the future? This is my first E and M related question. And my second question to Studio Dragon.
I see in the presentation deck, you have plans for two titles in the second half, which will be balanced in the market. Well, have you already received the series order? Or is it going to be booked? So I'd like to know more details about the two titles that are found for The U. S.
Market in the second half. Yes. This is Kim from Global Business addressing your question. Well, if you see the delivery schedule for this year, well, it's quite even throughout all the quarters. And in the second quarter, we were able to deliver without major budget.
And we do hope to see such trends continue in the second half. And with that, we will be achieving what we have set out to achieve. And this is Judy Frag. And answering your question to the two series order that is on the presentation deck. Well, typically production time takes longer in The U.
S. Market. So the two series orders that you see in the presentation deck, the results of those projects will be reflected after next year. And well, we have plans for over 20 titles in The U. S.
Territory, we are have plans for planning and also development of them and we have already a set up structure for four. So that is our plan for The U. S. Market. We will have to end our Q and A session now.
This concludes the Q A session of PJ E and M. This concludes the fiscal year twenty twenty five second quarter earnings results by CZ E and M. Thank you for your participation.