Good afternoon. This is Won-Seong Woo from CJ ENM IR. I thank the shareholders and analysts for taking time out of their busy schedules to participate in our earning session.
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Now, we will begin CJ ENM's 2025 Q3 earnings report. Please note that the financial and management results presented now have yet to undergo an independent auditor's report, and could be subject to changes upon such review.
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Today, we have heads of different businesses and our CFO, Jong-hwa Lee with us. From media, we have Sang -hyuk Park. From music, we have Kyung-ju Ok. From film, we have Ji-hoon Park. And from global, we have Tong-woo Cho. From commerce, Jin-wook Seo. And from Studio Dragon, we have Seong-ho Jang. And from TVING, we have CEO Ju-hee Choi. And from CJ ENM Studios, we have CEO Deuk-soo Hwang.
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Our CFO, Jong-hwa Lee, will brief us on major results and business strategies.
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Good afternoon. This is CFO Jong-hwa Lee. With delayed turnaround of media platform in Q3, and difference in activity timing of music artists, our profit decreased in Q3 compared to Q2, but saw a slight increase on a YOY basis. View rating and platform performances matrix improved, and based on platform competitiveness, the company will strive for a company-wide profit improvement.
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First, on content. In Q3, dramas such as Bon Appétit, Your Majesty and Shin's Project achieved higher viewership ratings, continuing the quarterly upward trend in both viewership and buzz for major dramas. This is the result of consistently producing well-made content based on the ongoing enhancement of programming and production decision making processes, such as the improvement of the Green Light Committee, or GLC, and quality control, or QC processes.
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Additionally, through the establishment of a strategic partnership with Warner Bros. Discovery, we have agreed to collaborate on the joint planning and production of premium K-content targeting the global market. This is a recognition of our K-content leadership and production capabilities and is expected to provide an opportunity to expand overseas results with strengthened influence in the global market. Furthermore, we continue to expand at the foundation of global production and overseas distribution markets through joint production in Japan and the US, as well as distribution expansion in new markets such as LATAM and MENA.
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As for platform, TVING advertising revenue continued its high growth trend with a 75% Y-O-Y increase in cumulative third quarter figures, and it demonstrated the advancement of the advertising business model by launching an integrated advertisement platform with Wavve. The integrated advertising platform is expected to achieve differentiated results in the digital advertising space through competitive advantages such as economies of scale and maximizing free and combined MAU of 10 million.
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Mnet Plus has smoothly built a circulating structure of content, user participation, community, and commerce, maintaining a high top-line growth, and strengthened its position as a global fan interactive platform with monthly average daily active users in September, growing more than 1,000% compared to January. OnStyle saw high growth in MLC transaction volume through diversification of customer touch points and expansion of brand sourcing, including the expansion of omnichannel IP that simultaneously broadcast on mobile, TV, and OTT using the same IP.
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CJ ENM will continue to enhance our content and platform competitiveness, which in turn will fortify our revenue growth and profit improvement. In concluding, I thank all shareholders and analysts for their support.
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Next is the results presentation. Our major financial statement is on a consolidated K-IFRS basis, and the operating profit numbers include internal transaction. Now, the Q3 2025 results.
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This is Jin-y oung Kim, Head of Finance. Sales in Q3 2025 amounted to KRW 1.2456 trillion, and operating profit reached KRW 17.6 billion, representing an 11% increase Y-O-Y each. I will go over pre-consolidated adjusted operating profit changes by businesses. The entertainment business saw expanded content delivery sales from subsidiaries such as Studio Dragon and Fifth Season, but due to continuous sluggishness in TV advertising, operating profit decreased compared to the previous year. However, commerce improved profitability through continued expansion of mobile live commerce and strengthened high-margin product portfolio.
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From now, I will discuss the performance by business segment and the outlook for the second half of the year.
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Media platform saw slower performance due to the sluggish advertisement market. However, the ratings of key dramas such as 'Bon Appétit, Your Majesty' continue to improve. In Q4, the scheduling of anticipated titles, like 'Typhoon Family' and 'Pro Bono,' is expected to positively impact channel competitiveness. TVING is continuously expanding its double subscription plan with Wavve, and is building a structural foundation to maximize synergies in the integrated OTT by newly programming the terrestrial live channels within TVING. In Q4, we aim to increase subscribers through the success of anticipated original titles such as EXchange 4 and Dear X, while pursuing global business expansion through launches of prime sections in Southeast Asia and Japan via HBO Max and Disney+.
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Film and Drama achieved a turnaround thanks to steady content delivery from Fifth Season, ongoing diversification of overseas content sales partnerships, the start of sales in new markets such as Latin America and the Middle East, and box office results and overseas release of the film, No Other Choice. In Q4, performance is expected to be driven by global simultaneous OTT streaming of anchor IPs like Typhoon Family and Pro Bono, creating stable overseas distribution revenue. Through supplying content to global OTT platforms, including Romantics Anonymous and Soulmate, we will continue to strengthen production capabilities.
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Music saw an increase in revenue for Mnet Channel and Mnet Plus through the high performance of Boys II Planet, but profitability weakened due to a decrease in album releases and concerts by Japan's Lapone Entertainment artists, as well as increased investment costs in Mnet Plus and new artists. In Q4, we expect improvement over the previous quarters of performance, supported by expanded tours including MAMA Awards and ZEROBASEONE world tours. Additionally, through the launch of new artists via Japan's HIP HOP Princess, Korea's ALPHA DRIVE ONE, and Mnet Plus original PLANET C: HOME RACE, targeting the Greater Chinese market MCS, we aim to focus on expanding our artist pool and growing global music label revenue from 2026 onwards.
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Commerce profit increased Y-O-Y through top-line growth based on strengthening core PB brands and focus on high-margin product portfolios such as beauty and health supplements. In Q4, we plan to enhance fashion and beauty product curation through mega promotions to respond to seasonal demand and improve profitability. At the same time, we will focus on strengthening customer experience through omnichannel IP expansion across mobile, TV, and OTT platforms, and increase collaboration with trendy brands such as Pop Mart. For further details, please refer to the attached material. This concludes my presentation. Thank you.
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Now, Kwangs uk Oh from Studio Dragon will continue with the presentation.
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Good afternoon. This is Kwang- Suk Oh, CFO of Studio Dragon. I'll brief you on our business performance for the 2025 third quarter. The total number of episodes aired in the third quarter was 72, an increase of 13 episodes compared to the same period last year. Thanks to the expansion of original content supply and strong licensing sales, we've recorded a revenue of KRW 136.5 billion, an operating profit of KRW 10.5 billion, achieving growth compared to both last year and the previous quarter.
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Furthermore, we achieved solid results in terms of content competitiveness. Bon Appétit, Your Majesty achieved a peak rating of 17.1% on tvN, making it the highest-rated program on tvN this year. Bon Appétit, Your Majesty and Genie, Make a Wish ranked first among Netflix global non-English series, proving our global competitiveness in both viewership and popularity.
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In the fourth quarter, Typhoon Family and Shin's Project are running smoothly, and we will reinforce our content competitiveness through the launch of anticipated titles such as Nice to Not Meet You and D-Rex. Additionally, we will accelerate the diversification of our business model through new initiatives, including expanding ancillary businesses that leverage our IP, building fandoms, and developing commerce ventures. Thank you.
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Next, we will move on to the Q&A section. Given the time constraints, please limit your questions to three each, 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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Currently, there are no participants with questions. Please press asterisk one, asterisk and one to give your question.
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The first question will be given by Lee Ki-hoon from Hana Securities. Please go ahead.
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We will address the three questions. The first question is on your TV advertisement. I see that the TV ad space has seen a decrease by 17%. However, looking at your viewership, it's doing quite well. So why the disparity? Why the widening gap? And what's your short-term view on this decoupling effect? And in the three to six months timeframe, what do you think will happen given that you're doing quite strong with content viewership? Do you think the advertisement market will follow suit, or will there be a real decoupling between viewership and the advertisement income? My second question is related to your overseas profit structure.
For example, let's say there is a subscriber to Disney+ in Japan. Do you charge them according to the view or according to how they watch the Korean content on this platform? So how is this business structured? So, this is my second question and m y third question is related to your music business. Could you give us the profit for Mnet Plus only? And if it's recording a loss, do you have short-term plans to address it?
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This is Media answering your first question on advertisement. The TV advertisement market in the first half did not see good results. As a whole, the market size has decreased by 20%. If you look at the TV advertisement market, most of it is upfront sales, pre-sales of the advertisement slots, so the results tend to come after some time. In the first half, as was mentioned, the space does not really perform well, and this has been reflected in our third quarter numbers and our results. This time around it will really be felt in the fourth quarter numbers and the first half results of year 2026. I cannot say for sure whether the advertisement market as a whole will see a rebound, but we will do our best to defend our position with integrated advertisements and other tools in order to defend our market share.
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This is CEO Ju-hee Choi, Chief from TVING, answering your second question on their activities overseas. As you have mentioned in your question, I cannot give you the details, but we work with Warner Bros. Max in Southeast Asia and Disney+ in Japan. We do get a minimum guarantee as well of performance-related bonuses.
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It's still in an incubation phase that we are still making investment for Mnet Plus. This only started generating revenue with Mnet Plus in 2025. We have our IP such as KCON, MAMA, and Mnet, and with these contents we have reached a meaningful number in terms of MAU at 20 million and DAU at seven million. We're in the process of honing our IP and we believe that in 2026 we will be able to double the current revenue level and in the mid to longer term, we will of course be seeing a turnaround when it comes to our revenue.
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The following question is by Shin Eun-jung from DB Securities. Please go ahead.
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Yes, I have three questions. First is for TVING and Fifth Season. Could you tell us the revenue and operating numbers for TVING and Fifth Season? And if possible, could you give us a guidance for Q4 as well? My second question is for PLANET C: HOME RACE . Have you made any final decisions on your China-bound activity? Could we see programs being aired on other channels other than Mnet? And my third question goes to Studio Dragon. I think you've missed the market anticipation when it comes to your results. Could you please elaborate on your Q3 results?
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On your first question, the revenue of TVING this quarter stood at KRW 98.8 billion and an operating loss of KRW 16.1 billion
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The number for our season, when it comes to revenue, it's KRW 199.7 billion revenue with operating loss of KRW 2.1 billion.
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Looking at the outlook for Q4, we'll be airing the much anticipated originals such as EXchange 4 and Dear X soon. We've introduced the double advertisement subscription scheme in October, and we have also introduced a band section, and we will be seeing brand recognition with these two models. With that, I think we'll soon reach a BEP point.
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If I may give you a guidance for our Q4 numbers. This is the season where we've seen a turnaround in Q3. We continue the momentum. We will be seeing a continuation of this momentum in Q4. As for drama, we will be delivering American Class and as for movies, we have Working Title and Astronaut to be released. And with that, we do expect to see the continuation of this improved momentum in Q4. Our operating profit numbers will see an improvement over the previous year
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The last question on PLANET C we will start filming the program this week, and we have plans to open this program on Mnet Plus channel in mid-December. The program is comprised of Chinese entertainers, so it is Korean content because it will be a use of local Chinese IP. We'll be working together with a Chinese partner who has been in the local Chinese music business for a very long time. I think we could see a finalization of this plan this year, and with that, we will be making our announcements to the market.
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This is from Studio Dragon. While it's true that we did not meet market anticipation for our results in Q3, it's because some of the episodes of Dear X was not recognized for its profit. Our original intent and plan was to recognize profit from all of the episodes of Dear X in Q3, but that has seen some delay. In Q4, we'll be seeing additional profit recognition from Dear X. It was sold in the local market, but not on a global stage.
So, this was something that went a little bit aside from our original anticipation and plans. There was a shortcoming which led to our results not really being on target with the market anticipation. As was mentioned, we'll be recognizing profit from Dear X in Q4, and we also have plans with Nice to Not Meet You, Typhoon Family, and Pro Bono. These titles were pre-sold to OTT, and that will now see a recognition in Q4. With that recognition, we do anticipate to see better results in Q4 over Q3
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The following question is given by Choi Yonghyun from KB Securities. Please go ahead, sir.
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My first question is on Mnet Plus. I think there was an improvement when it comes to traffic, and I also see much improvement with your Chinese content and originals. So could you please tell us about the major metrics that you are really focusing on? My second question goes to the integration of TVING and Wavve. I think that it's running rather behind your original plan. So could you update us with the timeline or your schedule for this integration? My third question goes to commerce. I see that the margin for your commerce business in Q3 is quite strong, and I see that 60% of GMV is with your MLC. Was there a margin improvement with your mobile live commerce?
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As was mentioned, as for Mnet, we've only begun generating revenue in 2025, and we're still in investment stage when it comes to our Mnet activities. We saw much results by just bringing in our existing content, and this was indeed very meaningful. Compared to year 2025, we will see much more original production in year 2026, which will lead to a threefold growth of our business. While we are now seeing revenue generation from our advertisement points and fan clubs, and this will, of course, in turn strengthen our traffic. As was mentioned in my previous answer, we do look at MAU and DAU and other metrics that we value in content search numbers.
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If I may give you more color on the metrics that we are seeing or looking for in Mnet Plus business. Next year we hope to see an average MAU of 10 million and DAU of 1.1 million.
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As to the integration between TVING and Wavve, we are seeing much synergy effect when it comes to operation of these two channels. However, there needs to be more discussion for us to reach a full integration.
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As to the last point, the mobile ad commerce. Yes, we did see some results in Q3, but I believe that we could do even further. We hope to see an improved process and top-line growth in the fourth quarter. Since MLC is a future growth engine when it comes to commerce business, the company as a whole would lend much support.
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Currently, there are no participant questions. Please press asterisk one to give your question.
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The following question is by Kim Hoi-jae from Daishin Securities. Please go ahead.
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My question goes to Studio Dragon. I think you've seen some operating profit margin improvement. Is it because of the cost-cutting activities that were initiated in the second half of 2024? And how much more improvement do you think you could gain from this activity? My second question that goes to Studio Dragon is the series order from overseas buyers. Could you please elaborate on that?
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To the first part of your question on cost cutting, we've introduced many new initiatives, including the changes in our settlement method, but it's really difficult to carve out this effect from the rest of the results. As you will well know, per episode production cost has gone up. It has seen a rise by 20% every year. But Studio Dragon, we were able to curb and contain much of the production cost increase. Of course, we would have to spend more in order to retain quality creators such as writers and directors and producers. But for other parts, including the actual filming, the lighting and the post-work, we were able to well contain related production costs. Therefore, our production cost compared to the market had remained relatively flat. And our activities going forward will of course contribute to the improvement of our operating margin.
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As to the second question, which was on our US series order, in the US, we are working in the market with our remakes and originals. As a remake, we are making quite some progress with some platforms and one or two remake titles. As for originals, we are also working with one or two titles. Next year, I think we could deliver some tangible results, perhaps a pilot phase or even to programming. You will know our investment in Skydance and Paramount. With this investment, we are discussing further partnerships to be involved in different areas as well. With these activities in place after year 2026, you'll see more active movements on our part when it comes to US series orders and remakes.
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Due to time constraints, we have to end the Q&A session here.
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Once again, thank you for your time and your participation. With that, we will end the presentation for Q3 earnings session of CJ ENM.
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This concludes the fiscal year 2025 third quarter earning release by CJ ENM. Thank you for your participation.