Good afternoon. Thank you for joining us for HyF twenty twenty five First Quarter Earnings Call. This is In Myun Zhong, Head of the IR team. I'll be moderating today's conference, which will proceed through consecutive interpretation. Today, CEO, Lee Jae Sang, will present the first quarter business highlights and future plans and CFO, Lee Jeong Joon will present the earnings highlights followed by the Q and A session.
Please note that today's earnings call is based on preliminary consolidated estimates under K IFRS and subject to change during an external audit. Good afternoon. This is Lee Jae Sang, CEO of HYBE. Thank you for joining today's earnings conference call. In Q1, HYBE artists continued to leave strong marks on the global music market.
Many artists such as J Hope, Seventeen, Tomorrow by Together, NHYPEN and Boy Next Door entertained fans from around the world through world tours and fan meetings. We also have several artists who have been very busy preparing for their comebacks. HYBE has been reinforcing a foundation for long term growth by not just attracting new fans, but also expanding and deepening points of contact with fans through the application of the universes of hype artists into various forms of content, merchandise, digital membership and offline experience. In the first quarter, HYBE artists achieved solid results in terms of their music, performance and content. Let me first present their album related results.
BSS, a subunit of Seventeen released their second single Teleparty in two years. The album topped the Oregon Daily single chart on the release day. Another unit of Seventeen, Hoshi and Uzi came out with their first single Beam, which received raves from fans and did well on major domestic and global charts. The Seraphim made a successful comeback with the fifth mini album Hot after seven months, which entered 10 Billboard charts including the ninth place entry to the Billboard two hundred and topped the Oregon chart in Japan. In addition to these meaningful results in the global music markets, the group won the first prize in domestic music shows demonstrating the strong support of their domestic fans.
2US resumed their activity on April 21 with their third mini album Try With Us, which produced their career best result with 558,000 copies sold during the first week. This means that all the albums die to us have each been sold more than 500,000 copies so far achieving four consecutive 500,000 sellers. Meanwhile, Nteam going into their third year released the third single Go in Blind. On the release day 569,000 copies were sold setting a new record for the group, which is a twofold increase from the previous album demonstrating their rapid growth. In the second quarter, many artists are scheduled to come back.
BTS Jin announced its early comeback in six months with the second mini album Echo on May 16. '17 will celebrate their tenth anniversary on May 26 with a new regular album in three years. In addition, ENHYPEN after a powerful stage at Coachella will come back in June with new music. Having achieved new career records with every new album release, BUY NEXT DOOR will continue their impressive growth momentum with the fourth mini album No Genres. Moving on to streaming, music by HYBE artists gained much recognition in the global streaming market in the first quarter.
Currently on world tour, J Hope responded to fans long wait by releasing Sweet Dreams and Mona Lisa back to back. Both songs entered Billboard Hot 100 demonstrating his global influence and musical talent as a solo artist. In their second year, Eyelid released Almond Chocolate, an OSC track of a Japanese film, which ranked the tenth place on the Billboard Japan streaming chart and Oregon Weekly streaming chart. It's worth noting that the tenth place on the Billboard Japan streaming chart is the second highest ranking for an original Japanese song by a K pop girl group, which is an impressive result as a new group. The Korean version of the song was also released for the Korean fans.
Pyeongkyu of Tomorrow by Together released its debut solo mixtape Panic topping the iTunes top songs charts in 11 countries and regions around the world. In the first quarter, streaming accounted for nearly half of the recorded music sales. While album sales fluctuate quarter over quarter depending on release schedules, steady streaming revenue serves as a stable source of profit. Streaming helps mitigate recorded music sales volatility in quarters like this quarter when the number of new albums is relatively smaller. It is also encouraging to see more diversity in artists' contributions to streaming results both at home and abroad.
HYBE will continue to support our artists so that they can maintain growth in both album and streaming sales and achieve success in the global market. Let me now present concert related highlights. In Q1, many HYBE artists conducted concerts globally J Hope, Seventeen, Tomorrow by Together, NHYPEN and Boy Next Door met with their fans on tour stages around the world, while N Team and TWS shared special moments with their fans at the fan meetings, further expanding their fan base. During his first solo world tour, J Hope performed for nearly 178,000 fans in North America with 12 shows in six cities. As the first K pop solo artist conducting shows at the BMO Stadium, he demonstrated his stage power and growth as a solo artist.
Having conducted the concerts in North America, he will continue his tour in Japan and Asia. In addition, Jin after his album release will go on his first solo fan concert tour in nine cities in Korea, Japan, The U. S. And Europe starting from June to meet with fans from around the world. Le Seraphim will also meet with fans in Japan, Asia and North America as well as in Korea through their first world tour.
HYBE has been strengthening its concert related capabilities to ensure that concerts are not just one off events, but also opportunities to provide more diverse experience through the temporal and spatial expansion of stage performances, so that artists and fans can get connected at a deeper level. As a result, fans love to go to hype concerts as demonstrated by the fact that 10 hype groups successfully concluded 172 concert shows and fan meetings last year posting a record high concert revenue. We will continue this growth trend in 2025 as well. More artists will go out and meet with fans more frequently than ever. Based on the already announced plans, more than 150 shows will be performed this year and the number will increase further when the planned shows for the second half of the year become confirmed.
We also expect the total audience number to increase significantly as these concerts will take place in relatively larger venues. Furthermore, we plan to create more opportunities to go and meet with fans in regions that were visited less frequently in the past like Europe and Latin America through concerts and festival stages. We will continue to utilize concerts to deepen connections with global fans and deliver music and performances to wider audiences around the world. In terms of merchandise sales supported by the success of concerts by HYBE artists, we offer diverse merch items that reflect unique features of concerts by different artists to make the concert experience even richer for fans. Moreover, it is encouraging that fans also like to purchase merch products that are not related to concerts.
In the past, concert related merch was most popular, but recently character products using artist IPs such as Seventeen's Miniteens, TXT's POOBATU, the Seraphim's Sims Club and Boy Next Door's Bonecto are gaining much popularity as well. Since the second half of last year, more than 200 SKUs based on these four character IPs including dolls, key rings and cushions have been sold through offline pop up stores and Weaver shop. All the character products have been selling really quickly and many items are in high demand resulting in additional rounds of pre order sales. These products are not only available in Korea, but also in overseas markets such as in North America, Chinese speaking markets and Southeast Asia through character themed pop up stores, thereby expanding points of contact with global fans. As part of ARTIF's IT expansion efforts, Puzzle 17, the first official puzzle game of 17 was officially released in 170 countries on April 1.
'17 members participated in developing a match three puzzle game, which offers new types of entertainment to fans with diverse content reflecting the unique appeals of individual members. Fans love to play this game as it includes differentiated components such as puzzle play in connection with the group's hit songs, items drawn by members and unreleased photo cards. HYBE will continue to expand artists universes and charms in diverse ways to offer rich content and differentiated entertainment to fans in various formats and manners. HYBE will showcase new artists this year as well. First in Japan, a new group called AoN formed through a survival program titled Charing High Dream Start Line aired on Nippon TV will officially debut on June 11.
The fandom has already been growing with the popularity of the audition program. Big Hit Music is preparing to debut a new boy group in six years. This is a next generation creator crew that pursues self expression in completely new styles and senses. The crew can create not only music, but also choreography and videos. They already proved their creative talent by participating in the production of music and performances of other hype groups last year.
Their debut is scheduled for the third quarter. With their unique content creation skills, the new group is expected to bring a breath of fresh air to the K Pop market with their free and distinct creativity. We would like to ask for your continued support for these new artists. Moving on to our U. S.
Business. In the first quarter twenty twenty five, HYBE America delivered meaningful results in the global market with our diverse artist portfolio across various genres. Big Machine Label Group was named Publisher of the Year at the Association for Independent Music Publishers Nashville Awards, making it the second time receiving the award following 2021. In Q1, Riley Greene got nominated for five categories for this year's ACM Awards, had his two duet songs certified platinum and entered the country radio top 20 chart with his solo single Worst Way. Thomas Red continued his popularity with gold certification, thanks to more than 10,000,000 weekly streams of his song Something About a Woman.
In addition, QC music artists also achieved great results. Lil Baby topped the Billboard two hundred chart with his fourth regular album Wham. Lil Yachty participated in the world tour by Tyler the Creator and appeared in a Netflix global campaign, which will be released in May. B. X.
The Plug had all the way ranked fourth on the Hot 100 chart and delivered impressive performances at major festivals like Coachella and Dream Build Festival. HYBE America has started a new project to launch a next generation pop group by combining drama and music in collaboration with a global YouTube creator, Alliance Universe that has more than 90,000,000 subscribers. In this project, storytelling based on digital content and Hive's talent development capabilities will be combined to establish a new artist development model with Gen Z as a target group. Has been expanding its influence in The U. S.
Market based on a strong artist portfolio, content planning capability and new original projects. We will keep sharpening our competitive edge in the global music industry based on the two pillars of label operations and original content development. Since debut, Katsai achieved much success in The U. S. With being number one on the Billboard Emerging Artist chart and named the Global Push Artist by MTV.
Its debut title Touch reached two seventy million cumulative streams demonstrating their popularity in the global market. This summer, the group is officially invited to perform at Lollapalooza Chicago, another opportunity to reinforce their position as a global artist group. Cat's Eye will come back with a new single Gnarly on April 30, which will help further expand their reach to global fans. Moving on to Latin America. In Q1, HYBE carried out various activities in full swing in this market to build a new pillar of global business expansion.
J Hope's solo concerts in Mexico City in March marked the beginning of active expansion to the Latin market. The pop up stores during the concerts aim to blend the artist universe with the local culture, which successfully showcased how Hive Latin America is able to connect with local fans and execute business. In April, many hype artists participated in major music festivals in Mexico, including Tecatepal Norte twenty twenty five and X Ceremonia twenty twenty five. SEVENTEEN and Tomorrow by Together performed on the main stage demonstrating the global status of K Pop. Meme de Real under Doste Mil and Magna under Zarpazo of HYBE Latin America also performed on the same stage showcasing HYBE's unique business structure of having both the global and local artists together.
This type of structure is also applied to expanding the scope of the music industry. HIVE Latin America announced that it would launch Pase a la Pharma, a reality program to discover Mexican bands in collaboration with Telemundo, the largest Spanish speaking broadcaster in The U. S. We will pursue artist contracts through this program. Major Latin artists such as Ana Barubara, Adria Tavela and Oracio Palencia are serving as judges.
And all songs for the program are produced by Edgar Barrera, a world renowned producer who has won a total of 26 Latin Grammy Awards and one Grammy Award for the past three years including Producer of the Year and Songwriter of the Year. These activities in the region are not just events, but also serve as the starting point for building a sustainable business foundation in Latin America. From 2025 onwards, Hype Music Group and Hype Latin America artists will carry out more diverse activities to interact with local Latin fans and Hive will keep strengthening the synergies between the global expansion of influence and local strategies in the region. Finally on Weaver's, a global super fan platform listening party was introduced in March, a new service where artists and fans can interact with each other real time while listening to music together. In addition to the existing Weaver services for communication between artists and fans, content, commerce and live sessions, this new streaming related service has further expanded the domains of the platform.
Real time chat and sharing of music at the listening party offers immersive experiences for deeper connection between both artists and fans and this service is supported through partnership with Spotify, the largest global audio and music streaming platform. Apple Music will soon be added for the convenience of global users and Weaver's will further expand partnerships with global music streaming platforms. Listening Party is meaningful and that it offers a new channel of connection through music and expand interactions between artists and fans and among fans as well. Going forward, Weverse will continue to grow as a platform where new opportunities are created and utilized and sustainable growth of artists are supported by advancing services in consideration of immersive fan experience and scalability. Now CFO, Lee Kyung Joon will report on the consolidated financial highlights.
Good afternoon. This is Lee Jeong Joon. Let me report on HYBE's consolidated financial results for Q1. The consolidated revenue posted 500,600,000,000.0, up 39% year over year. Revenue with direct artist involvement including recorded music sales, concerts, advertisements and appearances was billion accounting for 64% of the total revenue, while revenue with indirect artist involvement, including merchandise, licensing, content and fan club sales recorded KRW178.1 billion, taking up the remaining 36%.
This is thanks to the world tours by major artists such as Seventeen, Tomorrow by Together and ENHYPEN. Operating profit in Q1 posted billion, up 50% year over year. Typically, the first quarter is a period when artists take a break after busy year end activities and prepare for new albums and projects. Therefore, in Q1, we had relatively fewer album releases and content offerings, thus posting a slightly lower profitability compared to the prior quarter. However, cost saving efforts across Hype that we mentioned at the previous earnings call are expected to produce tangible results this year and our revenue and profit are expected to improve from the second quarter when most artists resume activities, release albums and start their tours.
Let me give you more details by revenue category. In Q1 revenue with direct artist involvement included reported KRW136.5 billion of recorded music sales and KRW155.2 billion of concert sales. Recorded music revenue saw a Y o Y decline due to less activities compared to the prior year, but concert sales more than tripled year over year, thanks to the huge success of tours in Korea, The U. S, Japan and Asia by J Hope, seventeen, TXT, NHYPEN and Boeing Next Door. Of the revenue with indirect audit involvement in Q1, merchandise and licensing recorded billion, up 75% year over year and content sales posted billion, down 33 year over year.
In Q1, tour related merch items were popular globally for artists under Hive Music Group, including J Hope, who started his first solo world tour. And character products based on artist IPs launched since last year contributed to merch revenue. Content revenue included sales of the memory book DVD of Carrotland that that took place in July as well as BTS seven Moments, a special archive including a video and a photo book of the members through 2022 and 2023. Moving on to the KPIs of Weverse, the platform maintained a solid traffic trend with the average MAU of approximately 10,000,000, thanks to global activities of artists, diverse content offerings and events. The new digital membership subscription introduced in Q4 contributed to the growth of the number of paying users by promoting interactions between artists and fans.
As a result, the total transaction volume increased Q o Q. However, given the relatively low unit cost of subscription services, the average monthly revenue per paying user was slightly down quarter over quarter. In 2025, diverse businesses that HYBE has been preparing for several years will start to produce meaningful and tangible results. We will accelerate meaningful growth through the expansion of the music portfolio under the multi home multi genre strategy and development of new businesses such as solutions, platform, gaming and AI, all of which aim to deliver differentiated and unique experiences for our fans. We will strive to lead the global entertainment industry with a balanced attention to growth and profitability.
Our future has already begun. I'd like to thank you all for supporting us on this journey. Thank you. Now we will begin the Q and A session.
Now q and a session will begin. Please press 1. That is 1 if you have any questions. Questions will be taken according to the order you have pressed the number 1. For cancellation, please press 2.
That is 2 on your phone. The first question will be provided by Jihan Lee from Hana Securities. Please go ahead with your question.
I'm Yeehoon from HANA Securities. Thank you for this opportunity to ask questions. You mentioned some of the plans regarding new artists that will debut this year, so I'd like to ask two questions. First of all, as you mentioned, Big Hit Music will come up with a new boy group, which is in six years and a lot of people have been waiting for this. And you mentioned that this group will debut in the third quarter.
If there are any other details regarding this new group that you can share with us, please do so. Secondly, you also mentioned about another group that will debut this year and your successful debut experience with Cat's Eye is impressive. I'd like to understand were there any challenges and any stories that you can share with us in the process leading up to the debut? Thank you for your very good questions. I'm CEO, Lee Jae Sang.
First of all, thank you for expressing your high expectations for this new group that Big Kids Music will introduce soon. As I mentioned in my presentation, they will debut in the third quarter and other than that there aren't a lot of details I can share with you, but I'd like to mention that we people at Big Kids Music have been preparing for this group for a long time and Mr. Shi Hyuk Pang is involved in the production and creation of content related to this group. And for the past history of K Pop several boy groups have emerged in the market with different styles. But what I can say is that this new group will be able to offer very new and very original music that has not existed in the past.
And another detail that I can share with you is that this group will have five members. And I wish I could share more, but I hope that you will continue to stay interested in this new group so that we can come up with a wonderful music for you. Thank you. Moving on to your second question, you asked about our plans regarding debuting a buoy group in The U. S.
As well as any learnings that we've taken in the process of debuting Cat's Eye. This is a wonderful question. We've been conducting business in The U. S. In earnest for the past four years and there are several important lessons that we've learned along the way.
First of all, we recognized that there are very much there are a lot of differences in terms of contracting structures compared to Korea and The U. S. In Korea, there are several comprehensive management contracts in place. However, in The U. S, there are several different contracts that are needed for label operations versus promotions and tour agencies, distributions and productions.
We already knew this going into The U. S. Market, but when we were actually engaging in specific businesses, we had to learn how to consult with different stakeholders, how to coordinate different positions and how to go about in making decisions. Along the way, we had made some errors, trials and errors and we have learned a lot of lessons. However, we were able to successfully debut Cat's Eye, which shows that our genuine interest and commitment to this cause has worked.
And based on this know how and experience, we have come up with three major strategies. First of all, we need to improve efficiency. And in The U. S. If you are successful, you can expand to other markets, but because The U.
S. Is such a big market, there are multiple channels and a large amount of investments are needed. Therefore, we need to improve efficiency. And there are several channels that we need to target depending on genres, depending on our target groups, depending on our genres, we had to enhance efficiency in marketing execution and marketing strategies. So efficiency is number one.
And number two strategy is differentiation. As I mentioned in The U. S. There are so many different artists in so many different genres. So it is not easy to come up with a successful new project.
So differentiation has been our key focus. As in the case of Allen's Universe project, the kind of group that we will develop is going to be very different from any boy groups or girl groups and any bands that you've seen before. So in terms of our media strategy and music strategy, we will pursue differentiation. The third strategy is leverage. There are many K pop artists who are doing and performing in The U.
S. And there are so many different including country music, hip hop and other pop genre. And when you look at these different genres, there are of course differences, but there are some common channels that we need to target. And based on our experiences in dealing with different artists in different genres, we were able to accumulate know how and I believe that we can leverage this experience in expanding and conducting our business in The U. S.
So efficiency, differentiation and leverage and these will be utilized in our project as was in the case of Fly and Tether, but also in Alliance Universe as well.
The following question will be presented by Joon Yoon Kim from HSBC. Please go ahead with your question.
I'm Kim Shin Young from HSBC. Thank you for this opportunity. I would like to ask two questions. The first question is related to your content sales. Content sales may include sales from VOD and weaver subscription and games and so on.
And I saw that there was a declining trend of content sales in the first quarter. I'd like to understand the reasons why. And if you have any specific growth strategies for content business, please share them with us. The second question is related to your content planning and production capabilities. You have been internalizing these capabilities resulting in a more or in stronger competitive edge in terms of concerts and productions.
However, this has made it difficult for us to predict any cost related elements. So what are some of your strategies to improve your profitability in content and in concert and production related business? Thank you. I'm CFO, Lee Kyung Jun. Let me respond to your first question.
Subscription membership related sales are not included in content revenue, but they are included in the Fan Club sales. Now for content revenue, it includes diverse components including the sales of DVD and memories of VTS and other self produced videos and content. And there is variability in content sales quarter over quarter depending on the kinds of events that are carried out in respective quarters. For instance, in the first quarter of last year, we had seventeenth Nana Tour, which led to a higher revenue of content, while we didn't have such an event in the first quarter of this year. Therefore, there's this relative small or decline in the content sales.
However, going forward, starting from the second quarter, we are planning for various events including the content offerings related to the comeback of BTS and other content offerings. And as our artists continue to grow in a balanced manner, we believe that content sales will grow accordingly. I'm CEO. Let me respond to your second question. As we communicated several times through our earnings and IR calls, because of the increasing demand for concerts after the end of the pandemic, costs related to tours and concerts have gone up significantly.
We are working in the content industry, but moving on to the tour business, when you look at the entire value chain of how tours are planned, directed and performed, you can see that many components are really similar to those of the construction industry and the manufacturing industry because supplies are needed and labor costs incur, which lead to higher variability in cost related elements. Of course in conducting tours we have been internalizing many of these capabilities within the value chain thus making hype concerts more competitive than other concerts. We also need to take into account that different regions offer different contract methods. In Korea, we have this directing and planning related contracts that are signed, but in The U. S.
Artists will have to sign direct contracts related to tour directing and planning. So there are differences by geographies. And so we are now in the process of developing and further advancing the global model for our tour business. But one thing I'd like to point out is that our tour volume is significant and we are taking up a large share in the global tour market. Therefore, we have stronger negotiating power based on our volume.
And in doing so, we try to continue to improve the cost related aspect and continue to get enough and stable supply of materials and venues, so that we can enhance profitability of our tours. However, I would also like to mention that if we focus too much on efficiency and profitability, of course in the short term, we will be able to generate more profit, but this may lead to degradation of quality of tours. There are sets and audio equipment and lightings and other parts of the tour materials, but also there are new technologies that continue to come out in the market every quarter and every year. And we need to be able to incorporate these new technologies to offer more immersive experiences for our fans. So while we try to manage our cost aspect of tours, we will continue to focus on improving and offering high quality concert experiences for our fans.