Welcome to the live conference of SOOP's Q3 2025 earnings report. Joining you here is I'm the streamer and caster, Kim Soobin. This live conference is open to anyone who is interested in SOOP, but as this is related to earnings, only those who have registered in advance can ask questions in the chat. Today, we have CEO Daniel Choi and Ellen Kim, Head of IR. Will you say hi to those who joined us this morning?
Hello, I'm Daniel Choi.
Oh, should I add?
Yes, go ahead.
Hello, I'm Ellen.
Rogida was here before me for the Q2, and I know that you said you got nervous, but we had a conversation in the back room, and I could really tell that I expected that you'd be less nervous, but you look nervous.
Yes, I am always nervous in front of the camera.
Well, you have been in front of the camera for a long time. You're a professional. Before we started, I thought I'll be okay, but no, not at all. How about you, Ellen?
No, this is a I'm quite nervous every time.
Do you feel that nervousness as soon as you see the camera going live, or even before, do you get that butterfly in your stomach?
Well, for me, when you start your opening, then I get nervous.
I would love to break the ice, but let's talk about weather, okay? Well, it's gotten quite cold. How do you keep your health?
Well, I get cold quite easily, and yes, I do feel the temperature dropping like crazy. I went to Bangkok a couple of weeks ago, and I got back a week before, and I could really feel the coldness in the air, and I heard that it's going to get even colder. I hope that you get more extra layer.
How do you keep yourself healthy?
Yes, I'm doing my best.
I know that the weather is cold, but I hope that today it's going to be quite hot topic today. Ellen will present SOOP's business performance and financial results for Q3 2025, and then we'll have a Q&A session with the two. Now, Ellen, take us away.
Let me present the business performance and financial results for Q3 2025. Slide, please. In Q3, SOOP continued to deliver meaningful growth in its advertising and global businesses, supported by solid platform performance. In the platform segment, both subscription and Quick View users increased, maintaining steady momentum.
In particular, virtual idol content such as Hades sustained positive traction, while the success of the GTA V RP server and PUBG: Battlegrounds tournaments drove growth in the gaming category. In the advertising segment, synergy from the PlayD acquisition is taking shape. A hybrid ad model combining SOOP's branding strength and PlayD's performance-based solution is gradually establishing itself, already yielding visible results through joint wins on major campaigns. We plan to build an integrated value chain across SOOP, PlayD, CTTD, and FreeBR to maximize competitiveness.
The global business also showed progress, particularly in the Chinese-speaking market. The main growth driver was securing the exclusive Chinese broadcast rights for the LCK, which contributed throughout the third quarter. In October, we also strengthened our local fandom by successfully hosting the VCT Thailand League offline event. Lastly, in the AI segment, we've begun commercializing our AI advertising technology.
The technical maturity of key AI solutions such as Savic has improved. In Q3, we ran AI video campaigns with several advertisers, generating our first commercial revenue. Q3 revenue was KRW 127.4 billion, up 9% QoQ and 21% YoY. Platform revenue in Q3 was KRW 84.1 billion, down 0.6% QoQ, but up 2% YoY, mainly due to the strong performance of high traffic categories such as gaming, which, however, showed relatively low contribution from gifting. Q3's advertising revenue totaled KRW 40.5 billion, reflecting continued top-line growth driven by solid performance in branded content ads and a seasonal rebound in platform advertising.
This represents an increase of 32% QoQ and 86% YoY. Breaking it down even further, platform ads revenue declined 1% YoY but increased 20% QoQ, maintaining positive growth momentum. Branded content ads showed strong performance, rising 57% QoQ and 114% YoY, marking a sharp surge in growth. Moving on to operating expenses. Q3's operating expenses amounted to KRW 96.3 billion, up 11% QoQ and 18% YoY.
The main drivers of the QoQ increase were higher personal expense due to increased retirement benefits cost and higher production costs associated with the expansion of League operations. Breaking it down by the nature of cost, first, for variable cost, paying charges amounted to KRW 14.5 billion, down 0.3% QoQ but up 7% YoY. Advertising commissions totaled KRW 9.2 billion, down 3% QoQ, but up 18% YoY. Content production costs came KRW 9.2 billion, up 295% QoQ and 186% YoY, reflecting the large-scale expansion of League production. For fixed cost now, employment costs totaled KRW 33.8 billion, up 11% QoQ and 49% YoY. Commissions for copyrights and others amounted to KRW 9.2 billion, up 3% QoQ and 7% YoY. Streamer support payments totaled KRW 2.5 billion, down 0.7% QoQ and 22% YoY.
Internet circuit usage fees amounted to KRW 5.8 billion, up 3% QoQ and 10% YoY. Depreciation and amortization expenses, including server acquisition and amortization of PlayD goodwill under PPA, totaled KRW 6 billion, down 2% QoQ and up 12% YoY. Operating profit for Q3 was KRW 31.2 billion, representing 4% QoQ growth and 31% YoY growth with an operating profit margin of 24.5%.
Net income for the third quarter came in at KRW 25.5 billion, up 13% QoQ and 6% up YoY. This quarter's results include a total of KRW 6.3 billion one-off expenses, which had a broad impact on the income statement. First, about KRW 4.8 billion was recognized as a one-time retirement benefit expense, which reduced the operating profit to KRW 31.2 billion. If we were to exclude this one-off time item, the adjusted operating profit would have been KRW 36 billion.
In addition, as disclosed already, about KRW 1.5 billion related to a financial penalty imposed by the Financial Supervisory Service was recorded under non-operating expense, other losses. As a result, reported net income for the third quarter was KRW 25.5 billion, incorporating both operating and non-operating one-off items. But if we exclude all these one-off costs, the adjusted net income would have been KRW 31.8 billion. Lastly, please refer to the other balance sheet for the detailed information.
Thank you very much for your presentation. Now let's have a Q&A, and please ask any questions away in the chat room and I'll be more than happy to answer those questions with you all. As the questions come up, I do have some questions that I might want to ask you.
We talked about the broadcasting rights, and that was not only just the feed broadcasting, and you mentioned you're doing the production to be added on top of what you already have. So can you elaborate on this and where do you stand at this point?
Thank you. First of all, we're not going to stop at just simple streaming services. What's most important is communicating with our streamers and helping them connect with the audience. That's what we do as a platform. Of course, the contents play a very important role there. But we're not simply going to buy and purchase contents and provide. That's not going to be the only thing that we do. We want to go a step beyond because we are at the interface with the IP owners here as a platform, so production is something that we want to channel our resources into.
From early this year, we talked about this and we've been working very hard for the production side of it. As you know, very recently in Tokyo, there was a VCT Pacific finals and we were the one that operated all, we were behind all this, and that really showed that SOOP isn't just a local small-scale company. We're really ready and equipped to have something for global events with tens and thousands of the audience. That was really an opportunity to show what we have as capabilities.
Next, please. Some popular streamers claim that they will no longer do a show. Is there an impact on the platform or revenue and outlook and what is your strategy to grow platform revenue?
Well, how should I say? We have business model that's only for certain streamers. It's for everybody. It's difficult to say that this will have any big impact on our overall model. There are. This streamer has other contents for the show, and his core fans do enjoy other contents in that show, too. It is not like the fans have left our platform. They have been involved in other shows, and they have been communicating with us. I do not think this incident will have any fundamental impact on where we are going. Of course, we are also in talks with the streamers on the future direction. We have been doing everything that we can to prevent any impact here.
XL Show is where different streamers come together as a joint show. As Daniel said, these streamers exist in our ecosystem. If you look at our data, these participating streamers, if we looked at their revenue, after this incident, their revenues did not really get any impact. Of course, the fandom for each streamer is quite high. Also, these fans are loyal to SOOP as a whole.
Next question comes from Mr. Tamino from Goldman. Daniel, you led the foreign businesses. What do you think of the expansion to the global market? I feel like it is quite slow this year. What was the difficulties on execution side of it?
Thank you for the great question, first of all. Yes. Until last year, I was the leader in the foreign businesses, overseas businesses. Now that I am in helm of this, we do not think that we are being slow. That is not our assessment. Last year, we launched the platform, and with that launch, various other events were held at the time of the launching. You may feel that it is not as fast as you would like. However, what I can tell you is that there were a lot of trials and testings last year, and in Southeast Asian countries especially, and we showed really great results already. Visible outcomes were already shown last year, but maybe this year we did not. That is maybe what you are talking about.
But as Ellen already said, in Taiwan, there's an LCK Chinese language feed broadcasting that we did, there are many other activities that we're doing in Taiwan. I think it's an expansion of growing of the pie. But when it comes to business side of it, as I keep on saying, when it comes to the foreign businesses of any sort, it's something that we need to look at in the long-term perspective, not short one. But in order to keep and grow this momentum, we need to make sure that we need to grow the market, the partnership with the locals is something that we're working very hard on. So I hope that you would look into that aspect, not just from the business side of it.
We've had the fan meetings with the streamers already, we will continue to throw those kind of events down the road. So that will be something connecting the streamers with the local users as a collaboration and partnerships in a broader and deeper way, something that we're looking to bring into this. I was going to actually say at the end of it, but let me go ahead and say now that the topic is already. There's a global platform and the Korean local platform, the simulcast is done by some of the streamers. I think we've successfully expanded into the global market.
But right now we're preparing something, that has to do with the very fundamental of the streaming service, which is the communication, of course. In the chat room, there are two different chats, global versus local, so the streamers have difficulties doing both of the chats and engaging with them in the equal level. So what we're trying to do is incorporating these chats into one, there's a technical aspect we're working on right now.
Ad revenue grew a lot QoQ, but the paying charges growth is not as big. Why? Do you think the overall advertising profitability would rise as the advertising mix changes?
I can comment on that. The variable expenses in advertising, it includes the paying charges, but on top of that, the branded contents had a lot of expenses. The league production revenue growth was visible. The operating expenses on production has risen alongside.
Next question, Mr. Cho Sung-woo from DS Securities. The branded content ads in the 3Q was pretty successful. Tell us more about this, and do you think this momentum will continue to the 4Q?
I can take it?
Sure.
Yes. I think when it comes to contents, the ads, branded content ads, I think there's a seasonality as well. There's new titles being released. With the game companies, we have always had the broad and deep partnership with those companies. We've always been working in that direction, and I think it really materialized this quarter. Having said that, It is influenced by the trend and the seasonality of the game market itself.
Of course, we're going to try our best and increase the volume and everything and to become more efficient. However, like I said, is it going to be better even next year? To that question, that has to be influenced by the market situations, and that's outside our control. But what I can tell you is that we will do our best to expand our presence and footprint there.
To add to that, for the lead production cost, about the revenue, we've been growing over seven and eight years already. What that means is that this industry in Korea and abroad is growing overall. When it comes to the production outside this country, we are also doing a lot of strong sales activities already there. I think there's a great potential to grow. As he mentioned already, when it comes to Star Balloons and the platform ads, which grows on a very steady manner. There's a seasonality in this area for the ads.
Depending on the game industry itself, I think there will be big variables. I can add on that variables or the fluctuations. We want to minimize that uncertainties and become more stable in that category. To do that, as I mentioned already in the earlier part of this year, the partnership strategy is very critical. In the past, we had, of course, our Thai office and our events in Thailand, for example, and we would have the partnerships for that particular event. Let's say if there's events in Korea, then we have other partnerships. What's important, though, is the more global, more integrated partnerships.
The Thai team and the Korean team working together could create even stronger synergies is something that I've already highlighted in the previous quarter. To do that, we need to grow our capabilities from the Korean side. The Thai aspect also needs to grow so that they can work with us. Recently, the global size event that we held successfully is something that shows and is a testament to our potential. Just last week in Bangkok, we had an esports match already. It's a big size already. After this event, many of the game companies are knocking the doors at us because they've seen that we are capable of doing this. I think in the future, we can hold even larger and global scale games in the future. Thank you.
Feel free to leave question in the chat. As a caster who's involved in esports casting, every time I go out there for the casting events, I check on the viewership too. How I feel these days is that the number of students is being reduced and the population itself is decreasing, but I feel that a lot of people actually come and watch the esports games. Do you respond to that trend?
Ultimately, where we want to be in the future is that we create a community revolving around the esports games. Of course, production business is an important element here in terms of business, in terms of numbers, but partnership is very important to us. Also supporting the streamer so that they can thrive, that's quite important for us, too. When we carry out different businesses, we look at all different aspects also. You're correct to say that.
From DB Securities, talked about the synergy with PlayD. Can you tell us more about this and how that impacts your performance and the value chain expansion, including CTTD? Tell us more about the strategies for the advertising, please.
Sure. Within SOOP, we had our advertising team that was doing a great job already, and CTTD was a separate agency that helped us in that regard. But internally, there are FreeBR and other bodies, and I thought we had some challenges creating the challenges between all these different parts. Of course, in each of their category, they did a great job individually.
However, we thought that we want to create better synergies, and PlayD is like basically a bridge linking all these different parts of it. What they did is, number one, purely just for the advertising strategy and synergy creation strategy, mainly, it was the critical driver within us. You will be able to hear our visions about this in a more detail later on in a different occasion. For PlayD, again, more specifically, there's CTTD and FreeBR and SOOP. SOOP has our sales capabilities, and we want to be basically an advertising agency of a sort. We're working very hard, and that will be something that you'll see more detailed strategies down the road. Thank you.
The platform revenue growth is slowing down quite a lot, even though the overseas business will add more steam to the growth engine. Do you think it'll be now difficult to achieve two-digit growth in Korea? If then, would you consider strengthening shareholder return?
Yes. In terms of the revenue, we are doing everything we can to improve revenue, but this is not unrelated to the market situation. We have been monitoring this closely, but of course, the growth engine and the new business model development have been at the core of our effort. As I said, advertising business models are being strengthened, and in terms of partnerships, in the past, revolved around branded contents or advertisement in the production.
Now we are going beyond that. Now we are strengthening our close relationship with them so that we can seize opportunity in the gaming. Some companies, some of the partnerships, we have almost completed our partnership and we really wish that we will be able to give you good news during our result broadcasting. You are going to have to tune in. We are definitely expanding our partnerships with various companies. Claiming that we will be able to achieve two-digit growth is not easy to definitely say, because that is related to the market situation. Shareholder return, we are going to keep our previous stance.
Thank you for that. Let us see if there are anything else that you would like to add or share your thoughts about any topic?
Yes. About the platform, I think that revenue is a portion that you are concerned about. Yes, so I can elaborate on that. There is an Excel broadcasting that was initiated by the streamers themselves. If the streamers have any other new ideas, that would be great. This can be something that leads to higher Star Balloons and higher subscriptions, virtual XL. These are the new contents that we introduce, thanks to the streamers, and every time we move to the new horizon, the next step. These great ideas, brilliant ideas, are usually created and driven by the streamers, and we are here to help. For example, signature content is one.
These are some of the great examples that we have worked with the streamers to bring us to the next horizon. Your ideas as the streamers, and our support. When these come together, we can always create new categories. Digital content consumption, we already know that this has been growing and will continue to do so. When new contents are created, then I am sure there is room for further growth.
Yes, great. I look forward to that. New ideas and further collaborations with the streamers. Before we wrap up, could you say a few words?
Thank you so much for joining us despite your busy schedule.
There is one more question.
Yes, of course, we can take it.
SOOP's branding and PlayD performance-based advertisement synergy was mentioned. Does that mean the number of advertisers and the amount of advertisement, the budget, have grown?
PlayD has their own performance-based advertising solution, and it is an agency. We are discussing our future strategies together, and the effect of consolidating them into our company would have immediate impact. Now, we have brought them into some good orbit, and we have stabilized, and then we are going to give you some good news after the discussion with them.
All right, then you can continue on with your closing statement.
Thank you so much for your great questions. This is Q3, and we are going toward the end of the year. The AI solutions and esports and our SOOP Global and other contents, we have been talking about how we have approached this. With AI solutions, after introducing AI solutions, we have tested the solutions and we also applied our AI technologies with other advertisers.
Now that we have been doing lots of tests, we are going to really open this AI to streamers and the users and upgrade our functionality of the AI so that actual users can enjoy what AI has to offer. We will be able to make announcements on how AI has been utilized in the actual shows. Yes. Going global, it is not easy business. As a platform, we go out there and localization itself is important.
But more than that, we want to create synergy between local streamers and Korean streamers and really build fandom. These are actually the main driver of growth of our global platform. So, we're going to improve on that chat service. In terms of content, of course, supplying a variety of contents is very important. We have other efforts that we pour into this, so we look forward to giving you good news next time.
Ellen?
I think Daniel already covered a lot, and I will just say goodbye and thank you. Well, thank you once again, everybody, for the great year already, and the market participants, the shareholders, and the streamers. To all of you in the ecosystem, I hope you have a great year, and we'll do our best to help that out as well. Thank you, two of you, very much.
Okay, everyone, this brings us to the end of the third Q earnings call, and I will see you in the fourth quarter's earnings call. Thank you all very much for your time. Thank you.