Welcome to the live conference of Soop's Q1 2025 earnings report. It's my delight to join this conference. My name is Streamer Rogida. Very nice to meet you all. Thank you everybody for having me here. I would like to say also that we are joined by our panel, who will answer all your questions. We're going to answer some of the questions that we get from the chatbot. This live conference is joined by CEO Daniel Choi, Ellen Kim, Head of IR, and Isla Chan, the Team Leader. Can you say hi to those who joined this morning?
Hi. I'm Choi Young-woo. This is my third time joining the conference. I go to awards and everything. I thought that I'll get more relaxed this time, but I'm quite nervous once again. Rogida, you just introduced yourself as you're the up and rising emcee, and it's my honor to have you here.
Thank you so much. That's very kind of you to say that. Now, Ellen, could you say hi?
Hi. I'm Ellen Kim, Head of IR. I look forward to a very constructive conversation. In this hot weather and this hot hotness, will be translated to the studio when we have the conversation. How about you, Isla?
Thank you everybody for joining. I would love to be able to answer all your questions and hope you find the conference helpful and informative.
Well, I've seen previous conferences, and I was so surprised. I was like, is it okay if I join you? You know what I mean? Thankfully I was invited. I don't know if I'll be a good suit here, but thanks to your encouragement and just watching you preparing for this conference, I can say that I'm in good hands.
You say you're nervous? I don't understand. You've already done the conference before, and you're a good speaker yourself, to be sure. What makes you nervous?
Well, thank you for your kind words, but I am not a celebrity at all. I try to have my own streaming a little bit. Not showing my face, but just gaming. But I think, as a creator, there is a rough road ahead of me. I know that you are a great emcee, and you are going to do a good job.
Thank you for your warm words. We are all complimenting each other. This is great.
It is such an honor, and I look forward to a good time today. Just to break the ice, I know we kind of discussed that, oh, we are going to start off kind of fun. Yes, we said that, but I have been doing this for many years, but there was no one time that I was not nervous. I always think that the streamers are just amazing to be able to pull off that. Everything you say and how you behave are broadcast everywhere. That is nerve-wracking. But I just think that we are all in one boat, so it is going to be great. Isla, I thought that you were going to be very energetic, but you look nervous too.
I'm always nervous. You won't believe me. I always think that whenever they take up the questions, I feel relieved.
You're going to be the one who presents us with the results, so let us start on that. I hope that those who join us for the conference will listen to you and also ask us a lot of questions. Isla Chan will first present our Q2 2025 business performance and the financial results, followed by a Q&A where Daniel Choi and Ellen Kim will also answer some of the questions. Without further ado, let's start.
Let me present the business performance and financial results for Q2 2025. In Q2, Soop focused on expanding its ecosystem by enhancing its business model through proactive streamer support, AI development, and subscription-based platform upgrades. Brand marketing efforts further boosted Soop's visibility, while content-based B2B partnerships supported the global rollout. The Soop AI project is progressing steadily. SOOPi, the AI video assistant that knows you best, is now modeled after 45 streamers and serves around 41,500 diehard viewers and subscribers.
It's continuously evolving to recommend both live and VOD content from streamers, while also answering questions about the platform and cultural content. In addition, SARSA, the AI manager for streamers, launched open beta 1.0 with its third update. Beyond stream summarization, it now offers chat management, real-time viewer sentiment analysis, and new feature recommendation. SAVYG, our video AI, is being tested as a tool for ad content creation beyond its current use in video balloons.
On the brand side, the Soop Adventure campaign launched on April 30th, introduced the brand to the public. While the launch of the user participatory Soop Adventure Season Two on June 20th strengthened our user engagement. We saw strong results in global content partnerships. The exclusive Chinese broadcast of LCK Road to MSI, which was held from June 13th-June 15th, along with expanded game and sports content like the KBO League and Three-Cushion World Cup, helped drive global traffic. Sponsorships and donations are gradually gaining traction around co-streamed broadcasts and simulcasts, which is a promising trend. Lastly, in the advertising business, we conducted a company-wide structural review and reorganized following the PlayD acquisition. We are now building an integrated strategy to maximize synergy across Soop, PlayD, CTTD, and FreeBR. That wraps up our key business highlights, and let us move on to the earnings.
Q2 revenue was KRW 116.9 billion , up 9% quarter-on-quarter and 15% year-on-year. Platform revenue reached KRW 84.5 billion , down 0.4% quarter-on-quarter, but up 2% year-on-year. This was largely driven by the popularity of categories like sports and gaming, which generate high traffic but relatively low gifting revenue. Q2's advertising revenue totaled KRW 30.8 billion , driven by solid performance in branded content ads and the continued top-line growth supported by the consolidation of PlayD. This represents a 41% increase quarter-on-quarter and 76% increase year-on-year. Breaking it down further, platform ads revenue decreased 6% quarter-on-quarter, but recorded a 2% increase year-on-year. Branded content ads grew significantly, up 21% quarter-on-quarter and 45% year-on-year. In the other advertising category, revenue showed a sharp increase of 95% quarter-on-quarter and 182% year-on-year, driven by the full quarter recognition of PlayD's performance. Let me now walk you through the operating expenses.
Q2's operating expenses came in at KRW 86.9 billion , up 16% quarter-on-quarter and 27% year-on-year. Key drivers of this increase includes higher employment costs due to the consolidation of PlayD, increased variable costs associated with advertising revenue growth, and additional costs related to branding campaigns. Breaking down further by cost type, paying charges, which is a variable cost, amounted to KRW 14.6 billion, up 3% quarter-on-quarter and 6% year-on-year. Advertising commissions totaled KRW 9.5 billion , increasing 57% quarter-on-quarter and 38% year-on-year. Content production costs dropped 42% quarter-on-quarter due to fewer large-scale league productions, but rose 40% year-on-year, reaching KRW 2.3 billion . Among fixed costs now, employment costs totaled KRW 30.5 billion, up 22% quarter-on-quarter and 33% year-on-year. Commissions for copyrights reached KRW 9 billion , up 11% quarter-on-quarter and 51% year-on-year. Streamer support payments were KRW 2.3 billion , up 5% quarter-on-quarter, but down by 2% year-on-year.
Internet circuit usage fees amounted to KRW 5.7 billion , up 15% quarter-on-quarter and 39% year-on-year. Depreciation and amortization expenses, including server acquisitions and amortization of PlayD's goodwill recognized through PPA, totaled KRW 6.1 billion , up 11% quarter-on-quarter and 14% year-on-year. Other expenses reflecting branding marketing activities reached KRW 6.4 billion , rising 42% quarter-on-quarter and 45% year-on-year. Now, on to the operating profit. The Q2's operating profit reached KRW 30 billion , down 8% quarter-on-quarter and 10% year-on-year, so the total operating profit margin stood at 25.7%. Q2's net income stood at KRW 22.5 billion, down 7% quarter-on-quarter and 19% year-on-year, primarily due to an increase in other losses categories stemming from foreign exchange fluctuations. Lastly, please refer to the full-year financial statements for your further details. Thank you.
Thank you very much for your briefs on the financial statements of the second quarter, and thank you for being very concise and also very readably and easily understood. Now, we are going to now open the questions to the participants to this call. Any questions are welcome, and we are able to check your questions real-time, and we will be able to answer as much as possible. Now, we will be waiting for your questions. Any questions are welcome. Anything about the performance, numbers, or business strategies, anything is welcome. Please feel free to ask any questions. But before we start with any questions, actually, maybe we can share some of the questions submitted from the streamers.
Personally, I am a streamer myself, so I am very keen on certain things, and one of that is there are many platforms for the streamers, and there is no one that actually uses AI in full swing. But Soop is different. You have AI reactions, and you also have a video generation. So very specific services are already provided using the AI power. These kind of services driven by AI compared to others, especially other platforms, do you have very many standout features or standout roadmaps that you might want to share with us at this opportunity?
Sure. For us, we do have AI services, and I do believe that it is a very practical and useful tools in real life, actually. Number one out of two is that for our streamers, you usually say big companies or conglomerates, usually the big name streamers, they have their own staff they hire. They get a lot of support in various ways. They are in the position to do that or enjoy these kind of benefits. But there are many other streamers who do not have these kind of capabilities.
For these people, we want to make sure that they can use this platform easily with some of the support features, and that is why we wanted to start these AI features as soon as possible. Especially when it comes to new technologies like AI, you do need certain investment early on, and that is true. That is something that we cannot overlook.
For streamers to monetize and to create business models, we need to make sure that we support them in this regard, and also make sure that this also helps our businesses to grow. So that is our main priority and focus when it comes to AI-powered services. Maybe to give you a peek of some of them, SOOPi is one. I am sure some of them that already use them notice we have some of the test beds for the advertising businesses. Of course, these kind of initiatives are not going to bring immediate results right away visibly, but I know that this can be a long-term strategy that can bring us benefits in the longer term perspectives, I believe.
Okay, great. Thank you very much. Now to the next question. Okay, I see some questions coming up. There is a question from Daiwa Securities. Mr. Lee Hyuk-jun says, "Competition is becoming fierce for event broadcasting rights like EWC. What's your investment strategy to secure such broadcasting rights?" Who can answer the question?
I can do that. In terms of the broadcasting rights, yes, of course, that's very important. It plays a crucial role to Soop as a media content provider. As you said, large size sports broadcasting rights and securing such rights is becoming more competitive. We know and we recognize the importance of that, but we're not going to go on with the chicken game. The reason why those contents exist and the reason why Soop exists, is because such content has to be used as a source for the growth of the streamers. Esports content can play a crucial role in terms of gathering the community and fostering a community. It has to be the foundation for such community. That doesn't mean that we go along with such heated competition, and we have to be cold-headed in terms of making decision.
Next question. Let me read this out. This comes from Mr. Cha Minwoo from Goldman Sachs. "Rebranding domestically and overseas business are the two most critical pillars. Which one is considered more important to you at this point? Please give us some updates on both of the businesses."
All right. Thank you very much for the question. Internally, and this is something we've already shared in the previous analyst already. We don't call it rebranding. We like to see it as relaunching. What that suggests is, we changed our name last year and we changed our brand for the platform.
A lot of improvements and tweaks were made, and we think of it as starting basically from the scratch, and that is why we call it relaunching, not just rebranding. This comes from not just internally, but to the streamers and the total community, actually. In the second quarter, for example, we had this branding campaign, and this campaign included the streamers and the professional, who was a baker. That's the name of the player. That's why we had this campaign. I would say the business in Korea versus global business, you ask which one we weigh more. I get that that's a very challenging question to answer. Both are very equally important, of course. What I can tell you is that if you look at the local business here in Korea, there are big, I guess, missions that we need to tackle on right now.
For example, a lot of businesses in Korea are very critical at this point, of course, and they are of the highest importance, I would say. We put all our efforts in rebranding domestically, especially again for rebranding campaigns. It's not just a one-off event. Soop Adventure is a new channel, the whole thing, and we're also devising our own strategies for the second half of the year for this very important campaign. Now on to the global business. This is a new growth engine and the direction for the bigger and more distant future. Of course, with AI and global business, these are the two important things for the future businesses, I would say. Global business is equally important, but which one do we focus more? We need to be very balanced between the two.
I know it's not the answer you might be asking for, but that is the only thing I can say at this point. Now on the updates of what's happening in both pillars. Domestically, there's a very, very high and fierce competition in the platform industry in Korea, as you know. You can see them in some of the statistics and the numbers of our businesses this quarter and the previous, but we need to make sure that we don't lag behind and lead this very fiercely competitive market. So we are working all out for this. Now on to the global business. For the second quarter, I think we're seeing improvements, some progresses, because we launched a new global platform last year, and there were some business and technical challenges, but we faced them head-on and then improved from there.
Based upon these learnings last year, as somebody already mentioned, LCK, the exclusive Chinese coverage, and also other great new contracts, new business opportunities are really being seen to us.
That's great. All right. Thank you very much for answering. Next, there's another question from Mr. Lee Hyuk-jun. Do you see that recent noises on virtual YouTubers are impacting Soop's virtual streamers in any way? Can you answer that question?
That is a very difficult question to answer. From the perspective of a platform, I would say yes, of course, there has been some noises on that front, but we tried not to be swayed by any of those. To do that, we focused on what we can offer and what we do best. Within the virtual streaming ecosystem, essentially it's the same. So within the content category, there's a new category that is most innovative and up and coming, that is the virtual streamer category. Now it's too early to tell whether or not it's being impacted. But we look at the statistics and data in the long term, and the number of the streamers and the amount of content that they create, they are definitely on the rise in terms of growth.
Well, thank you for answering the question. Next question from, again, Tamio of Goldman Sachs. The question is, compared to your initial expectation at the beginning of the year, would you say the overseas business is currently on track or not? Could you also share your internal assessment and the reasonings behind it, if you could? So let's try to answer that question. Who would like to take this question?
Me. I think when it comes to platform, there are three perspectives to evaluate. Number one is the streamers' influx or attracting streamers. Number two is, of course, the users. Number three is the contents, of course. So these are the three pillars, and of course, it'll be ideal to have all three on track or even overperform. I think when it comes to this, in the initial period of the year, B2B and partnerships were mentioned a lot in the first quarter's call. We need to set this very solid base, and that's what we are doing precisely. You can see that in our business, we have a very large scale, especially exclusive LCK Chinese broadcasting rights.
That was one great progress that we made. The other is the EA Sports FC Mobile tournaments that we held. The other that we've been doing overall for a very long time, that is our Valorant Champions Tour. Again, that is an exclusivity there. When these come together and accumulate over time, that drives our growth and further empowers us. I think that is why we continue to drive this kind of growth. On top of that as well, we keep on discussing other areas, which is acquiring more streamers. Looking at the Korean streamers, there are many streamers who simulcast overseas, and we need to acquire them. We are growing on that as well, continuously in a sustained manner. Not only that, as we speak right now, our campaign is allowing us to really empower us and acquire more for the simulcast and overseas broadcasting.
For the streamers on other countries, you saw them probably on the news articles. Thailand, we have some MCN contracts, and Taiwan. We are not doing only South Korea, but we also have the MCNs of local MCNs, and we have some more interactions and relationships with them. You will see the results coming out of it very soon. This kind of progresses are being made and will continue to be made. I always like to highlight that when we started the global business, it has been a long-term project the whole time. That is why we need to be patient and see where that takes us to.
All right, thank you. As a streamer myself, I have tried the overseas simulcast myself, and that was the automatic translation services. Many other great supports and features, and that was extremely engaging and being able to communicate with the foreign fans was great for myself as well. Thank you for that. Mr. Odowan from the Samsung Securities. Platform revenue growth is slowing down, which is a concern for investors. Do you have anything in plan that will boost platform revenue growth in 2026?
Before I answer that question, let me go back to your experience of simulcast. If you do that, please let me know in advance, because you do the gaming and visible radio, and you are definitely expanding your foundation as a streamer. If there is anything you need from us to support you in terms of content creation, and we have tools for you, so let us know. To answer that question, platform revenue growth is slowing down.
Well, it has been about three months, less than three months since I became the CEO of Soop. During the Q2, we poured our internal efforts into things like reviewing our long-term vision and long-term plan. What I focused on was making sure that everyone is aligned in that vision. I was very active in engaging with them in terms of having a dialogue with them and listening to those voices, and I got some great feedback from our employees. Not just in 2026, but in the next three years, we have a plan, and this year will be the beginning of that long-term plan. We did have that time of planning all together. To address the platform revenue slowdown, I think this question is essentially about the market itself.
It's not just about a one-time slowdown or if it's a slow growth of the market itself. It will be ideal if we can have exponential growth every time. That would be great, but that's not possible. What we have to do is growing steadily, but focusing on what we can offer. Here, it's too early to tell all the itty-bitty details on what kind of plans we have, but I can say that we had an in-depth review on our future plan, and at some point in time in the future, we will be able to announce those good news.
Thank you very much. Let's move on to the next question. Mr. Chesanu from DS Investment Securities. According to third-party data platforms, the traffic gap between [inaudible] and Soop appears to be widening in favor of [inaudible]. Could you share recent trends in Soop's traffic and PU, paying users? That was a question from Mr. Choi on traffic and the paying users. Answer, please.
Sure. First of all, the third-party data or statistics you mentioned is not 100% reliable. I think we should say that first. Of course, it shows a bigger trend, an overall trend, but we have our own internal data, and that allows us to see that we are growing. Overall though, the pie for this industry is growing, and I think that's encouraging already. We have some internal metrics, and that is how many streamers are active on our platform, and on a day-to-day basis, how many users are spending long enough time with the streamers of their choice. The other metrics that we look at is how many new streamers are, and how many new users are coming into our platform and enjoy our ecosystem.
As for the revenues and the operating profit, they are important of course, but there are many other indexes and metrics that we also care very much about. One thing though, that I must say at this point, is that there are many loyal users to our platform that are spending more time here, and streamers and users on both cases, on both sides, are strengthening our platform. Like I mentioned already, it's not just attracting more of those people, but we will continue to inform more audiences, wider audiences of our rebranded Soop.
Thank you. Thank you very much. Okay, moving on to the next question. Do you think the branded content is structured in a way that it can grow continuously beyond its capacity? If yes, then what do you think will drive its growth? Who can answer the question, please?
Should I?
Yes, go ahead.
As you know, branded contents are widely used in the gaming industry, and it's influenced heavily by seasons. The gaming industry is growing more and more, and our partnership is getting stronger and stronger. Recently, for example, within the recent trend, it's kind of difficult to define what branded content is because there are so many new attempts being made within this context. For example, recently there was a partnership with Epic Games for Fortnite, and so there was definitely a starting point in that partnership. With the Devsisters, our partnership is expanding. Netmarble and other gaming publishers who are our partners, all of these are growing steadily. In terms of how many large size gaming projects are there and how many new projects coming up, these are the elements that can influence us.
In terms of the branded content, always peaked in the latter half of this year. year-on-year, 45% growth was marked in the first half, and of course, the gaming league and gaming related branded contents are included here. This year, the gaming companies' branded contents have increased, and this is positive sign. Also in terms of AI, of course, it's kind of early to tell, but branded content using AI technology, that is being developed right now. In fact, a couple of companies actually tested the solution. I believe this is quite meaningful point. As Daniel said, going abroad, the esports league that we produce or game companies with good IPs and producing league with them, because of that, branded content is going to grow continuously.
Next question from CLSA, Kim Dong-jun shared this question. To what extent do you expect the government-issued consumption coupons distributed in Q3 to influence your results? That is the question regarding that consumption coupons. Anyone would like to take this?
Well, this is the first time ever that government issues a civil league coupon, so we don't really have a grip of what it will do to us. So probably better to look at it for another month and see how that impacts our businesses overall.
Okay, thank you very much. Moving to the next question right away. Shin Eun-jung from DB Securities. Please share with us the PU of Q2 costs related to the relaunch PlayD PPA. That's the first question.
So let us answer the first question first. The Q2 of PU. In terms of the paying user number, quarter-on-quarter, 2% decline was recognized and the ARPU increase compensated for that. The cost related to the relaunch KRW 1.6 billion has been executed, and some of them was put into advertising and also sponsorship. PlayD PPA, KRW 200 million was expended for that.
Okay, following question, and that was, are there any specific areas where synergies with PlayD are already being realized? Additionally, could you share your plans on how to intend to further unlock value from this partnership going forward?
I think I'll take this question. As for PlayD, it has joined the Soop, and this acquisition happened only this quarter, so I think it's too early to say anything has really materialized or realized. But what I can tell you at this point is that, in the second quarter, this quarter, basically, there have been many programs and activities that we focused on, and PlayD was definitely a part of that overall efforts. PlayD and Soop has this interaction and relationship.
Not only that, there are many other related businesses. There are brothers and sisters companies. Synergies with all of them in a bigger picture is very critical. Creating synergy is very important, and we've had a revamping of business and also the staff restructuring, and we will, of course, align our business plans according to that in the second half of the year. Get excited and stay tuned for that.
All right. Thank you very much for that answers. I think that is it for all the questions that have been posted up, and we will be more than happy to answer questions if there are any more coming from the participants. If not, I can maybe ask another question regarding streamers.
Your questions are quite sharp. It hurt. No, I'm just joking. This is great. Great opportunity to listen to the voices of our streamers. I love it.
Yes, and thank you for your thorough answers. The one person media is now experiencing the growth of commerce. As a streamer myself, this year, I would say I streamed three times on this topic of commerce. Do you have any strategies on commerce or plans to boost commerce? Could you answer the question, please?
For example, Shukto, that's an internal tool that we have to boost collaborate with our partners, and we do the live commerce with our streamers, and we also have our own sales. This is being discussed as a part of creating synergy with PlayD. Of course, the content that's going to be created and also the streamers business, these are all part of this strategy. Of course, we will be able to propose something very amazing and exciting coming up very soon. We answered many questions, and we talked about some business highlights in Q2.
Now it looks like it's time that we wrap, and I believe we have answered all the questions thoroughly. Let's maybe just share the last words before we officially wrap up. Daniel first.
Sure. Well, like I said, I'm not used to appearing on live shows like this, so I have been very nervous the whole time. When the questions are posed, of course, I've tried to have a script for these answers. Again, I am not a professional here in this kind of industry, and if I wasn't, therefore enough or sufficiently answered your question, you can contact us in other communication channels, anything that you prefer, and I'll try to answer as many questions as possible. Again, it's a scorching heat in Korea, but stay healthy and stay hydrated. Thank you.
Now to you. Well, thank you very much for all these great questions today, as always. We did the new branding or the launching last year, and there are many structural business changes as well internally. That means we really are just making a new step forward. This entire company is making this whole change, and I think it comes with some sort of pain, of course, and I would like to have all of you stay tuned for this growth that we will be manifesting very soon.
Okay, now Isla.
As the two of them already mentioned, the first half of the year, we really focus on internally solidifying ourselves and hope to be able to come back to you in the second half of the year with more great results. Thank you all very much for your time.
Thank you. Thank you very much. I think this has been a very meaningful and great discussions together, and it has been an honor to be part of this. Now this wraps up the second quarter's earnings call. Thank you all very much for your time out of your busy schedule, and we will come back to you with even greater results. Thank you all very much. Have a great day. Thank you.