Good morning and good evening. First of all, thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2025 fourth quarter earnings results by CJ ENM. This conference will start with a presentation, followed by a division Q&A session. If you have a question, please press asterisk and one, that is asterisk one, on your phone during the Q&A. Now, we shall commence the presentation on the fiscal year 2025 fourth quarter earnings results by CJ ENM.
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Good afternoon. This is Won -sung Woo from CJ ENM's IR team. I thank the shareholders and analysts for their participation in this learning session, despite their busy schedule. Now, we will commence Q4 2025 results presentation of CJ ENM. 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 we have with us Jin-young Kim from finance, Keun-sup Shin from strategy, and the planning and heads of different business divisions. We have from platform, Nam-joo Lee, from film, Ms. Hyun-joo Jung, from content distribution, Do-hyun Kim, from global, Junhyeob Shin. Music is represented by Yong-ju Oh and Ms. Seo-hyeong Oh. From commerce, we have Jangho Seo. From Studio Dragon, we have Ms. Hye-mi Lee. From TVING, we have Hyungyeong Jang. From CJ ENM Studios, we have CEO Yong-soo Ha . First, there will be presentations on major results and business strategies.
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Good afternoon. This is Jin-young Kim from finance. In 2025, the company saw tangible results of global expansion, together with strengthened competitiveness that comes from business model enhancements. First, on contents. CJ ENM's content ranked number one in 2025 FUNdex ranking for 27 weeks. Major dramas and non-scripted entertainment programs recorded outstanding results and high popularity. Out of 10 best K-dramas of 2025, selected by U.S. Time, five were streamed on TVING. "His & Hers," produced and delivered FIFTH SEASON last year, was ranked as number one global TV show on Netflix after its release earlier this year.
The company realized a diversification of profit models, which starts from pre-planning, fan meetings, to goods sales, that enables multi-faceted long-tailed profit generation with strategic IP design, as was demonstrated with "Bon Appétit, Your Majesty." "Marry My Husband," the Japanese Amazon original drama, recorded top ratings ever in 2025. Many other dramas were produced and aired this way, cementing our global production capabilities. With enhanced daily content and platform services, TVING's AVOD subscriber number increased, and advertisement revenue grew 84% YoY. The company secured a firm position as a key content global hub through HBO Max Southeast Asia and Disney+ branded zone services.
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Mnet Plus established content-based ads, Plus Chat, and album MD business models. With that, it saw a rapid growth of Q4 average MAU of 470% compared to Q1. The platform confirmed its potential with 2025 revenue witnessing an exponential growth of about 250% YOY.
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Commerce is evolving into a trend leading platform with offline pop-up stores and expanded marketing channels that covers SNS and OTT platforms, inviting new customer traffic centering on the MZ customers.
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Thanks to collaborations with influencers and fandom commerce expansion with strengthened short-form content, the company is seeing stronger mobile live content competitiveness. With the introduction of fast delivery, Baro Delivery, and expanded specialized stores with faster delivery, the business is enhancing its services. Accordingly, MLC has grown 66%, continuing top-line growth. Next is our midterm strategy after 2026.
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CJ ENM will continue to grow its competitiveness with content platforms that gave us excellent results in 2025. With that, I have given you the major presentations for our results in 2025. With that, now let's move on to talk about our midterm strategies that will continue in year 2026.
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Good afternoon. This is Keun-sup Shin from strategy and planning. CJ ENM will engage in the following strategies to transition into an IP and platform-centered business structure and to fully expand to global markets.
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First, for content IP, the company will focus on developing global IP and securing rights. By expanding local production hubs centered on the U.S. and Japan, the company will evolve into a global content IP holder. We will enhance our competency as an entertainment company with stronger planning, production, management, and talent discovery functions, and with global multi-label expansion, the company will expedite our artist business growth with MCN-based national and regional mega HIP.
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TVING, in the digital platform space, will continue to discover representative mega IPs and offer innovative experience and differentiated content with KBO broadcasting, Shorts, and Lives. The platform will enhance its status as a daily platform and will focus more on overseas expansion that started last year with branded zones.
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Mnet Plus, our other platform, will see enhanced original content production targeting K-pop core fans, where the fan interactive product and services design will advance its business model and lay the foundation to grow as a global number one K-pop fandom-bound OTT platform.
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Now on AI, which is the core technical factor in future content industry. The company will create new AI-based content in animation and movies. By establishing a network comprised of entities from the public, private sectors, and the academia, it will lead the AI ecosystem. The company will accelerate the adoption of AI in all production stages to enhance processing quality and also reduce production costs.
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Lastly, for commerce. The MLC business model will be strengthened with increased influencer pool and short forms with enhanced system and infrastructure. By combining data analysis and trend capturing capabilities, the business will establish a system of high-mix, low-volume sourcing to address diverse customer lifestyle and expand into new categories, thus enhancing our MD competitiveness.
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Next is the results presentation. CJ ENM results are based on consolidated K-IFRS numbers and internal transactions among different businesses have not been carved out. Now our results for Q4 2025.
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Next, I will talk about the results for the fourth quarter of 2025. Revenue reached KRW 1.4378 trillion, a decrease compared to the previous year. Operating profit recorded KRW 86 billion, more than doubling on a YoY basis. I will go over the changes in OP of different segments based on figures before consolidation adjustments. In the entertainment business, revenue decreased due to a high base effect from FIFTH SEASON's major series, Severance Season 2, from the same period last year.
Operating profit improved significantly thanks to reduced losses in TVING, improved profitability of FIFTH SEASON, strengthened distribution of drama content, and reduced losses from CJ LiveCity. Commerce revenue and profit grew due to high season effect focusing on fall/winter fashion and the continuous expansion of mobile live commerce. From page six, I will discuss the performance of each business segment and our outlook for the second half of the year.
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Despite a decline in TV advertisement revenue due to a continued slowdown in the advertising market, the media platform's revenue increased, aided by the inclusion of Wavve. In particular, TVING reduced its operating losses thanks to a high growth in advertising revenue driven by original hits such as Transit Love 4 and Dear X, as well as contributions from overseas branded zones. in 2026, subscribers will continue to increase through strengthened partnerships and bundles. The company plans to achieve performance growth through advertising revenue increase based on the integrated TVING Wavve ad operations and by becoming a K-content hub centered on global branded zones. On the channel side, we will defend revenue and secure platform competitiveness by strengthening integrated TV/OTT IP programming and continuously enhancing advertising products that link linear TV and digital.
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Profitability for films and dramas has significantly improved, thanks to strong distribution sales of FIFTH SEASON, cost efficiency, as well as robust sales of E&M Studio's dramas to Netflix and Amazon, and expanded sales of both new titles and libraries to new overseas sales partnerships, including HBO Max, Disney+, and others. Despite the high base effect with the supply of major IP, Severance Season 2, in the same period last year. In 2026, we will continue simultaneous broadcasting with global OTT platforms while expanding our global reference by discovering new partnerships centering around Japan, Southeast Asia, and North America. Additionally, we will increase profitability based on hit IPs, such as the musical Spirited Away, and strengthen our global presence by securing mega and franchise IPs.
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Despite the investment costs incurred for the growth of Mnet Plus, music achieved the highest profits of the year, thanks to strong album sales from INI, JO1, and others. Record-breaking results from 2025 MAMA and pre-debut results from advertising and fan club subscriptions for ALD1. In 2026, we will focus on growing domestic and international sub-label revenues through artist expansion, while increasing Mnet Plus traffic centering on human IP and in-house content. Additionally, we will build stronger synergies and strengthen business competitiveness by broadcasting global live performances, such as MAMA and KCON, through Mnet Plus, which will diversify our revenue sources.
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Commerce saw significant profit improvement YoY, as MLC transaction volumes continued to grow, maximizing the benefits of peak season driven by strong fashion sales in the fall-winter season and the expansion of short form and influencer commerce. Notably, the upgrade of the Baro Delivery infrastructure and the strategic management of fandom portfolios like Labubu strengthen traffic and retention amongst the MZ generation, which is a remarkable achievement. In 2026, we plan to diversify customer lifestyle categories based on trend data analysis and expand product planning to include influencer commerce and reinforce differentiated IP formats such as The Kim Chang-ok Live that only E&M can offer. Additionally, through the expansion of SNS OTT channels focused on short form content, we aim to establish a growth structure for the commerce platform. For details, please refer to the presentation.
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Now we will deliver you the results presentation of Studio Dragon.
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Hello, this is Hye-mi Lee, CFO of Studio Dragon. I will share our business performance for the year 2025 and the fourth quarter. Year 2025 was marked by a clear contrast between the first and second halves in terms of performance. Some titles in the first half showed lackluster performance and viewership, leading to sluggish programming and sales. However, in the second half, key titles such as 'Bon Appétit, Your Majesty', 'Genie, Make a Wish', and 'Dear X' achieved notable success both domestically and internationally, significantly improving our performance.
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The total number of episodes aired in the second half hosted at 130, an increase of 25 episodes compared to the same period last year, indicating a recovery in our lineup. Furthermore, the expansion of pre-sales and the improvement in the hit ratio enhanced sales efficiency, resulting in a turnaround of results. With that, the company recorded an annual revenue of KRW 530.7 billion and operating profit of KRW 30.4 billion. In the fourth quarter, increases in the number of aired episodes and pre-sales, as well as sales of older titles in the TVING brand section were reflected. As a result, programming revenue grew by 33.9% YoY and sales revenue by 4.9%, achieving sales of KRW 145.9 billion, operating profit of KRW 18.5 billion with an operating margin of 12.7%.
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In 2026, we plan to normalize the lineup with more than 25 titles through expansion of terrestrial and global-bound originals. We will also focus on production efficiency, including utilization of AI. Additionally, we will actively pursue new businesses such as commerce and digital, aiming to shift an IP-centered revenue structure. Thank you for your attention.
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Now, we will be entertaining your questions. Given the time constraint, please limit your questions to three, centering on core issues.
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Now Q&A session will begin. Please press asterisk one, asterisk and one, if you have any question. For cancellation, please press asterisk two, that is asterisk and two on your phone.
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The first question will be given by Kim Hoe-jae from Daishin Securities. Please go ahead.
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Yes. I have three questions. First is related to the advertisement revenue. Compared to the numbers that you have given us, I think that your ads performance is rather low. So what is your outlook for ad market recovery in 2026, especially for the TV ads? My second question is related to your overseas production hub. In your presentation, you mentioned that you will be expanding your overseas production hub activity centering around the U.S. and Japan. Please give us a status update of what you are doing overseas, mainly in Japan. My third question is related to your non-operating expenses. The number seems quite high. Could you please give us a more detailed explanation on the non-operating expenses?
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Yes. I will give you my answer for our outlook in the TV ad market. In 2026, we do expect to see a steady decrease when it comes to linear TV ad market, because the advertisers, their focus is more now on performance, so they will tend to move to the digital platform ad space, which is much more cost effective. CJ ENM is in a different position to all other local players because we have a digital platform that is TVING and Wavve. We will be providing the market with linear TV plus digital ad opportunities. That is what sets us aside.
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Yes, this is the answer provided by Studio Dragon when it comes to our U.S. and Japan production hubs. We will be working together with the U.S. and Japanese legal entities that belong to CJ ENM, and we will also be working together with the local partners there in our planning and production stages. Marry My Husband last year gave us great success in Japanese market, and we are building on our success. We have a title that is on Netflix, which we plan to deliver in the first quarter. It is called Soul Mate. As you are well aware, the production and production cycle in Japan is quite quick. With that, we hope to deliver you tangible results in the year 2026.
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As for our activities in the U.S. territory, we do have about 20 titles that is currently under development and planning. As you are well aware, in the U.S., we have to go through various stages and processes to deliver actually a title. The best candidate that is close to a series order, we can number about three. We are continuously tapping with these candidate titles.
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Our net non-operating loss is at KRW 133.3 billion. Much of it was related to our copyright losses and also the intangible asset losses that belong to Studio Dragon goodwill rights. Also there were interest losses amounting to KRW 100 billion and intangible asset losses of KRW 47 billion and financial losses amounting to KRW 58 billion. On a YoY basis, there was a decrease of KRW 48 billion. On an amount basis, there was a decrease by KRW 25 billion compared to the previous year.
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Next question, please.
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The following question is by Shin Eun-jeong from DB Securities. Please go ahead.
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Yes, I have three questions. First is on revenue and operating income for TVING and FIFTH SEASON for the fourth quarter. If possible, could you give us a guidance for this year's revenue and operating profit for both TVING and FIFTH SEASON? my next question goes to commerce. I see that there has been significant profit improvement. Is it because of the change in your accounting caches or was there actually a good reason behind your profit increase? My third question is related to the business entering into branded zones of different OTTs. What was the profit recognition related to the branded zones in FIFTH SEASON and TVING?
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I will give you the Q4 results for TVING first. Our revenue stood at, for TVING, KRW 118.8 billion, with an operating loss of KRW 4.1 billion.
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As FIFTH SEASON, Q4 revenue stood at KRW 184.7 billion with an operating profit of KRW 10.2 billion.
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This is an answer for your guidance request from TVING. As was mentioned in our previous answers in the presentation, in the fourth quarter, we saw the lowest loss number ever at KRW 4.1 billion, and it was achieved in a quarter without the KBO season. It is thanks to the subscriber base increase with also the advertisement income increase. We also saw good results from branded international sales. It is quite meaningful in that we have laid the basic structure or the basic foundation that will give us income in the few years to come. In year 2026, we saw this structural improvement. With this structure now in place, we expect to see a further decrease of our loss numbers going forward.
Of course, we would have to invest some more going into the future to secure our top line growth in the future. We would have to spend for some quarters. With that, we conservatively expect some quarters to give us a breaking point and some quarters to record a better number.
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This is FIFTH SEASON. well, we do have a lineup of three, four titles in 2026. We are waiting for some more green lights. We are making this preparatory working together with our platform partners and also with distribution channels. We will be working towards securing a good margin. Going forward, also in year 2026, our focus will be on profitability and not just the top line numbers.
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Yes. If I may give you the result or the answer for comment. Well, there has been no accounting changes, so the accounting rules remain the same. The improved result was from our own efforts. As was noted in the presentation, we had a very good operating result for Q4, focusing on our fashion offerings. The sales performance was excellent with our fashion section and the beauty category, and also the health functional foods. They are associated with better profitability and these sectors performed well in the fourth quarter. Our brand subsidiaries, they also gave us good results, adding to our positive number. We have continuously engaged in cost-cutting measures, including adjustment of labor. These activities together led to a better number for us in the Q4.
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This is again, answering to your Branded Zone results question. We cannot disclose the exact numbers, but I would say that the amount recognized was significant enough to cover much of our production cost. We do have a healthy number of titles that will be released into the market in 2026, namely about 10 - 20 titles. Going forward, we also expect to see much of a recoup from our Branded Zone activity.
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Next question, please.
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Currently, there are no participants with questions. Please press asterisk and one to give your question.
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The following question is by Lee Hwa-jung from NH Investment & Securities. Please go ahead.
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Yes, I have two questions. The first one goes to FIFTH SEASON. I see that the revenue itself for Q4 is smaller than what we opened in Q3. But having said that, your profit numbers are better. Was there a sort of a package deal that helped you boost up your profit numbers? This is my first question that goes to FIFTH SEASON, and my second one goes to Studio Dragon. I believe that you will be releasing four more titles this year compared to 2025. Do most of these new additions go to the Wednesday, Thursday slots?
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This is FIFTH SEASON regarding your question. Yes. As you have rightly mentioned, our profit numbers were better in Q4. It is because we have more distribution-type revenue, which is associated with better profitability and also diversifies our profit sources, including producing services and also equity method gains. In 2025, we had stellar results with Severance and [friendship], and that has given us an incentive amounting to $2 million . We have continuously worked on cost efficiency or cost optimization too, all to give a better profit number this time.
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As for your lineup related question that goes to Studio Dragon. Currently for the Wednesday and Thursday slots, we have one title, "I Give You the Universe." This is the only one. You see an increase in the number of titles to be provided this year because of our extended work with the non-captives. We have plans for the terrestrial broadcasting companies, including MBC, KBS and SBS. We also have plans with originals for Netflix and Disney+. Based on this in-house planning capabilities, we will be working on to enhance our titles and lineups.
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Next, please.
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Currently, there are no participant questions. Please press asterisk one, asterisk and one to give your question.
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Once again, if you have a question, please press asterisk one, asterisk and one.
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Currently, there are no participant questions. Please press asterisk one, asterisk and one to give your question.
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If there are no further questions, we will be ending our Q&A session here.
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I once again thank the participants. That concludes Q4 2025 CJ ENM earnings session. Thank you.
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This concludes the fiscal year 2025 fourth quarter earnings results by CJ ENM. Thank you for your participation.