Good afternoon. Thank you for joining us for HYBE's 2026 Q1 Earnings Call. This is Lim Hyeon jeong, Head of IR. I'll be moderating today's conference, which will proceed through consecutive interpretation. Today, CEO Lee Jae-sang will present Q1 highlights and future plans, and CFO Lee Kyung-jun will present earnings highlights followed by a Q&A session. Please note that today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during external audit.
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Good afternoon. This is Lee Jae-sang, CEO of HYBE. Thank you all for joining today's earnings call. In Q1, HYBE posted a record high Q1 revenue of KRW 698.3 billion, thanks to the comeback of BTS. Adjusted operating profit recorded KRW 58.5 billion, which is also the highest Q1 result.
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In March this year, BTS came back to ARMY with their fifth studio album, ARIRANG, in three years and nine months. Following the album release, the group held a comeback concert in Gwanghwamun, Seoul, to greet fans in person as well as through live streaming, which recorded a viewership of 18.4 million globally. On April 9th, BTS kicked off the long-awaited world tour, ARIRANG. Allow me to share with you the strategic significance of this comeback.
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Comeback allowed BTS to demonstrate their musical authenticity and artistic excellence, receiving overwhelming critical acclaim, and reinforced their position as a global icon that can create concert demand in every part of the world. HYBE has been doing its utmost for exceptional musical quality and immersive global concert infrastructure to ensure that BTS just goes beyond being a pop star, but becomes a truly unique artist group admired by audiences around the world. According to Pollstar's analysis on the global concert industry, 2/3 of the artists who have taken up the top 20 spots in the global concert market over the past five years are legendary musicians like Imagine Dragons and Guns N' Roses, who debuted more than 20 years ago.
Based on this type of data, we are convinced that the success of BTS is not a short-term phenomenon, but the group will maintain their status as a legendary band that can lead the global market for a very long time. As this is a new year where BTS will start their new chapter, I'd like to present some major achievements of BTS.
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BTS new album 'ARIRANG' has completely taken over the daily listening routines of fans worldwide and demonstrated its absolute influence in the digital streaming market. Upon release, the title track 'Swim' landed at number one on the Billboard Hot 100, making it the 7th Hot 100 number one song by BTS. All 13 vocal songs except number 29 swept the charts globally from the 1st place to the 13th place except the U.S. It is almost unprecedented as a non-English speaking group in the Billboard history that all the songs in one album entered Hot 100 chart simultaneously. Such an impressive performance in the digital streaming market led to strong album sales results. 'ARIRANG' sold 3.98 million copies on the first day and topped the Billboard 200 chart for three consecutive weeks and three major Oricon charts, as well as on domestic charts.
The vinyl sales were impressive as well, with 208,000 copies sold during the first week, the highest weekly vinyl sales record for a group since 1991, when Luminate began compiling the data. The industry highly regards this achievement as it helps re-popularize the trend of full album listening by owning and appreciating the entire album rather than listening to a certain hit track .
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The Gwanghwamun Comeback Live, held right after album release, was an opportunity to confirm the power of BTS fandom after a long break. For safety reasons, only a limited number of fans were allowed to be on site, but the live streaming on Netflix resulted in a record high viewership of 18.4 million for 24 hours worldwide. Given that multiple viewers may share one device for viewing, we believe that the live streaming reached far more people. Afterwards, this live video entered the Netflix weekly Top 10 chart in 80 countries. Along with 'BTS: The Return,' a behind-the-scenes documentary about how BTS members participated in the production of 'ARIRANG' after finishing their military service, BTS has demonstrated its unparalleled buzz on the content platform that surpassed large global sporting events.
Globally, critics have made positive comments that BTS has clearly imprinted their identity on the whole world with this comeback, and that the group has firmly maintained their cultural identity even as they have become a name that everyone around the world knows.
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The long-awaited world tour 'ARIRANG' finally kicked off in Goyang on April 9th. For this tour, a 360-degree open-type stage design is used for all shows to provide an unprecedented and unique immersive experience for the audience while eliminating blind spot seats to accommodate more fans, thereby quenching the thirst of ARMY who have waited for their comeback for a long time. Being the largest-scale world tour in the K-pop history, 'ARIRANG' is scheduled to include 85 shows in 34 cities as of today. Shows that went on sales sold out quickly, so we are adding more dates in certain regions. The fact that their shows to be held in stadiums with more than 50,000 seats in average are quickly selling out is the strongest indicator that BTS is an unmatched IP with global market dominance.
In addition, this tour will be an opportunity to confirm the significance of BTS as a cultural phenomenon. Global ARMY will gather across North America, Europe, Latin America, and Asia, thereby also helping to accelerate the global expansion of K-pop. As indicated by the name of the tour, ARIRANG, this tour will also help promote Korean culture around the world, going beyond the so-called BTSnomics to enhancing the national brand of Korea.
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Having been part of the force to expand the global influence of K-pop, HYBE is making diverse attempts to secure future competitiveness of K-pop. We're not complacent with the success that we have made with artists from multiple labels under HYBE, but we're striving to enhance the value of our music business by offering more differentiated content through countless experiments and new attempts. As a result, in April, TOMORROW X TOGETHER released their 8th mini album, 7th YEAR: A Moment Of Stillness In The Thorns, demonstrating a solid growth trend with 1.8 million copies sold during the first week, making it the 7th first-week million seller. LE SSERAFIM announced the launch of the second regular album, Pure Flow, in May, and pre-released Celebration on the 24th of this month. ILLIT will make a comeback tomorrow with the 4th mini album, MAMIHLAPINATAPAI.
In addition, CORTIS has seen their fandom continue to grow since their debut late last year, thanks to their one-of-a-kind music and content. Their second album, GREENGREEN, to be released in May, has more than 2 million copies in pre-order, showing an explosive growth. The pre-released single, REDRED, was charted on the Spotify Daily Top Songs Global chart as well. Going forward, HYBE will continue to lead change in the K-pop scene to promote diversity in music and introduce new marketing and promotion strategies. We ask for your support as we strive to produce high-quality outcomes to take the K-pop industry to the next level.
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Having made a surprise announcement of contract renewal at the last tour, all 13 members of Seventeen renewed their exclusive contract second time following the first contract renewal in 2021, and promised a comeback. Along with the second contract renewal of BTS in 2023 and a contract renewal with TOMORROW X TOGETHER last year, the second-time contract renewal with Seventeen means that the company continues to support the growth of these artists across longer periods of time based on strong trust. Considering that typical lifespans of past K-pop groups were only four to seven years, HYBE has expanded the life cycle of K-pop bands fundamentally and structurally through superb content production capability and infrastructure.
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Moving on to KATSEYE, they have secured an unmatched status of being the world's number one girl group with Spotify monthly listeners surpassing 32 million recently, which has exceeded what other leading K-pop groups have achieved so far. Furthermore, Pinky Up, a single released in April, reached 40 million streams in just two weeks, demonstrating an explosive appeal in their second year of their career. The song garnered more than 6.3 million views after being uploaded on the official Coachella channel, exceeding that of Sabrina Carpenter, the headliner of this festival. KATSEYE's influence in the North American mainstream market was officially proven with their nominations for three categories at the 2026 American Music Awards.
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In particular, the company highly regards that KATSEYE is showing a solid album sales trend even though this group was debuted in the U.S. The combined cumulative sales of their first and second albums are nearly 1 million copies, thanks to the stable growth of their fandom. Given the pre-order trend of their 3rd EP to be released in August, we expect that this new album will sell more than the previous two albums combined, which is an extraordinary result in the local music market. Considering that average album sales by artists that have topped the Billboard 200 chart this year are around 190,000 copies, the explosive album sales of KATSEYE far exceed those of leading local artists such as Sabrina Carpenter and Olivia Rodrigo. These unprecedented results prove that HYBE's localization strategy is now on a stable track, changing the dynamics of the U.S. music market.
The album release and the world tour of KATSEYE, scheduled for the second half of the year, will drive an explosive growth in revenue in the U.S. and further improve the bottom line of our North American business.
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Encouraged by the success case of KATSEYE, we are preparing for a new girl group through the second global project between HYBE and Geffen Records, with the goal of a debut in the second half of 2026. Emily, Samara, and Lexie are confirmed members of the group with proven talent. World Scout: The Final Piece, the audition show, is currently on ABEMA in Japan, which is gaining huge traction being at number one spot on the K-pop program chart for eight consecutive weeks. After the final member is decided on May 12th, full-scale preparations for the group's debut will begin. We expect that this new group will become a key asset of our multi-home, multi-genre strategy following the footsteps of KATSEYE to secure fandom from both North America and Japan.
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BMLG, a country music label, has recently changed its name to Blue Highway Records and appointed Jake Basden as new CEO, thereby laying the groundwork for a new leap forward. Amid these changes, the label's artists have dominated the charts. Thomas Rhett's new song, Ain't a Bad Life, resulted in a significant achievement of topping the radio charts for the 25th time in his career. Justin Moore also topped the charts with Time's Ticking, the first since the renaming of the label and the 11th time in his career. Lil Baby by QC Music, a hip-hop music label, topped the urban radio chart with Mrs. Trendsetter, making it the 11th time in his career to lead the chart. Songwriter Jessie Jo Dillon, with the publishing business unit of HYBE America, received the Songwriter of the Year award again at the AIMP Nashville Awards in April.
This prestigious award represents a recognition by independent music publishers who lead the North American industry. This award, his third overall and second consecutive win since 2025, once again underscores his unparalleled creative excellence.
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In our management business, Tyla's performance as a global pop icon has been strong. Tyla made history by winning the Best African Music Performance Award for two consecutive years at the Grammy Awards. Also, by being nominated in April for four awards at the AMAs, she has become the most nominated African artist in the history of the AMAs. Her strong momentum in the global market will continue well into the second half of the year, with a new album, A*POP, to be released on July 24th. Like this, HYBE America continues to diversify revenue streams and strengthen its position in North America through strong label operation and activities by top-tier artists in their respective genres.
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Let me now move on to &TEAM, who debuted in Japan through a localization project. The group released the 3rd mini album, We On Fire, on April 21st, which sold 1.09 million copies on the first day and became the third consecutive million seller. Previously, the group became the first Japanese artist to have 1 million seller in both Korea and Japan. This new album sold more than 500,000 copies on the first day in Japan, up 35% compared to the previous album, demonstrating a rapid growth of the fandom. &TEAM is scheduled to be on tour in 11 cities in Asia. They will maintain the growth of their fandom in Japan and around the world, showcasing the success of HYBE's localization project in Japan.
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Finally on Q1 results of Weverse, which achieved a turnaround on a full year basis last year and began its leap to become a super fan platform. In Q1, Weverse proved its competitiveness by achieving the highest activity indicators and profit growth since its launch on the back of the comeback of BTS, as well as activities by major artists. Q1 MAU grew 20% QoQ to 13.37 million, a record high. The fan club membership also saw an explosive growth from the end of 2025, thanks to the presale demand for BTS concert tickets after the announcement of the world tour. Also, the Weverse Con Festival, slated for June, has confirmed the largest line-up of 30 artist teams that encompass generations and genres.
Featuring not only HYBE artists such as ENHYPEN and LE SSERAFIM, but also diverse artists, including a leading J-pop group and Rain, who will take on the tribute stage, the event will solidify its position as a global music festival that can appeal to different generations and different genres. Weverse will continue to offer expanded fan experiences by linking online and offline, and strengthen its leadership as a global super fan platform.
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I'd like to turn to CFO Lee Kyung-jun, who will report on the financial results.
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Good afternoon. This is CFO Lee Kyung-jun. Let me report on HYBE's consolidated financial results for Q1. We posted KRW 698.3 billion in consolidated revenue, up 40% year-over-year on the back of the comeback of BTS. Revenue with direct artist involvement, including recorded music, concerts, advertisements, and appearances, was KRW 403.7 billion, accounting for 58% of the total revenue. While revenue with indirect artist involvement, including merch, licensing, content, and fan club sales, was KRW 294.7 billion, taking up the remaining 42%. Adjusted operating profit recorded KRW 58.5 billion, up 170% year-over-year. Typically in Q1, HYBE artists would wrap up their year-end activities, take a short break, and prepare to work on new albums and projects. The first quarter this year was no different.
We were able to post a record high revenue, thanks to BTS comeback. Starting from the second quarter, most artists will resume their activities, including album releases, and BTS tour will kick off in full swing, so we expect both the top line and the bottom line to further grow.
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I'd like to provide additional explanation on the adjusted operating profit to the investors who might have seen our preliminary earnings disclosure. During Q1, the controlling shareholder of the company has gifted shares to the company for employee compensation. The company used the shares to provide compensation to the employees in the first quarter. The gifting of shares by the controlling shareholder to the company is unrelated to business performance, but it is treated as cost for accounting purposes. As a result, KRW 255 billion was recognized as expense in the consolidated financial statements in Q1. It is one-off expense that must be recognized for accounting purposes despite the absence of net outflow of assets. Therefore, the company also disclosed the adjusted operating profit, excluding the one-off cost impact. Please regard this number as the actual business result of HYBE.
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Let me give you more details by revenue category. In Q1, recorded music sales and concert sales were KRW 271.5 billion and KRW 88.7 billion respectively. Recorded music sales grew significantly by 99% year- over -year, thanks to the unprecedented success of BTS comeback album, ARIRANG, which broke their own past album sales records. Concert sales were down 43% year -over- year because the tours by major artists, including BTS, did not begin in full swing.
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Within the category of revenue with indirect artist involvement, merchandise and licensing revenue recorded KRW 137.4 billion, up 29% year-over-year, while content sales were KRW 105.9 billion, up 157% year-on-year. In Q1, tour-related merch items, including BTS light sticks, were loved by fans worldwide, and character merchandise inspired by artists also contributed to merch sales. Content sales were attributable to the BTS comeback live streaming, the documentary BTS: The Return, as well as the previously released BTS DVDs.
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Moving on to KPIs of Weverse. Average MAU in the first quarter was record high, with 13.37 million, up 20% QoQ. Total payment volume grew 80% QoQ, and the monthly ARPU also rose by 8%. Based on the expanded active user base, we are diversifying monetization streams such as concert online streaming and digital membership subscription. Having turned a profit last year, Weverse is expected to further improve its profitability based on merch sales growth, fan club membership growth, and improved performance of Weverse America.
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2026 is a monumental year when BTS whole group activities that our shareholders and global fans have been looking forward to finally resume in earnest. We are deeply grateful to everyone who has stood by us with unwavering support over the years. We promise to repay your trust and support with outstanding activities and performances befitting the reputation of BTS. Furthermore, along with the BTS comeback as a strong engine, HYBE is continuing to create success stories across the board by further improving our multi-home, multi-genre strategy established for each label and region. This year, we are ready to produce record high results through a balance between qualitative growth of the existing artists and quantitative growth of new global artist IPs. We ask for your continued support for our journey to go beyond the boundaries of K-pop and transform the paradigm of the global entertainment industry. Thank you.
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Now, we'd like to begin the Q&A session.
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Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
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The first question will be provided by Diane Kang from Goldman Sachs. Please go ahead with your question.
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I'm Diane Kang from Goldman Sachs. Thank you for this opportunity. I'd like to ask you two questions. First of all, as we have the comeback of BTS, your mega IP, their contribution to revenue will continue to increase, and there are concerns that there will be an increase in artist fees, which may have a negative impact on your overall margin.
When we look at the Q1 results, it seems that the numbers are decent, and I wonder if this is because of the higher share of album sales in your revenue? Or whether the artist fee levels are okay? Much better than what a lot of people have concerned? We have concert revenues expected for the second quarter. We'll appreciate it if you can give us some color. My second question is regarding your concert sales revenue. It seems that in the first quarter, the number of people who went to concerts were similar to on a year-over-year basis, the size of the concert sales revenue seems to be smaller. I like to understand the reason behind this. Thank you.
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I'm CFO Lee Kyung-jun.
Let me first address your first question. I appreciate that you speak highly of the first quarter results of HYBE. As for last year versus this year, you can see that there were a lot more elements that had impact on our gross profit margin last year in addition to business performance-related elements. However, the gross profit margin in the first quarter is relatively good. It's not just because of the album sales of BTS, but also album sales by other artists, including ENHYPEN. Moving on to your second question, whether the situation or the GP margin will deteriorate in the second quarter, I do not believe so, because we not only have BTS concerts scheduled, but also other artists will resume their activities.
Just because we have concerts for BTS doesn't mean that this will have a negative impact on the gross profit margin, but rather we have other artists and their activities, and all combined together, we expect that our gross profit margin will not deteriorate going forward.
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I'm a CEO, Lee Jae-sang. Let me add some comments. As the essence of our business is music management and artist management, there seem to be concerns that the shifting of profit sharing ratio between the company and the artist may have direct impact on the gross profit margin. It does have an impact on our margin. However, if we manage our company in a way that the shifting of profit sharing ratio will have direct and significant impact on our gross profit margin, it will mean that the company is not doing a good job in terms of defending its business from these types of risks.
As you have seen the BTS concert, we have applied a 360-degree stage setup, which means that fans can enjoy their performance up close and personal, and LED panels are installed very high so that people who are seated on the second and third floor can enjoy the concert in an immersive way. The fact that we have the center stage means that we have eliminated blind spots, allowing to accommodate more fans. In other words, while we have the basically same cost elements and the same special effects for these types of concerts, we're able to add 4,000 or 5,000 more seats, which is part of our efforts to increase our gross profit margin.
Also revenue with indirect artist involvement, as was explained by CFO, accounts for about 45% of the total revenue, which is another way of HYBE trying to work on improving gross profit margin. In other words, we continue to put efforts to lower basic cost units as well as enhancing efficiency in sourcing. All of these efforts are combined together to improve our gross profit trend. We do not expect this trend to deteriorate any further in the future and will only be able to improve.
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Moving on to your second question on the relationship between the number of concertgoers and the size of the revenue. I don't have the number with me as to how many people went to concerts this quarter versus last quarter. As far as I know, the number of people who went to concerts in the fourth quarter last year was bigger than that of the first quarter. There are many different factors that have impact on the revenue size, including where such a concert was held and who performed in such a concert. For instance, in North America, if one of the BTS members held a concert, we can price these tickets much higher, which will have a impact on the revenue side.
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The following question will be presented by Junhyun Kim from HSBC. Please go ahead with your question.
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I'm Kim Junhyun from HSBC. Thank you for the opportunity. I would like to ask two questions. The first question is related to your margin management. In 2025, there were some unexpected factors that had put downward pressure on your margin. One of them would be definitely overseas investment. Compared to 2025, I'd like to understand your overall plans for overseas IP investment and related spending for 2026 as well as 2027. Because of the increasing contribution of BTS to your earnings, there are concerns that HYBE may decide to increase investments for overseas IP acquisition. I'd like to get some guideline on this and how you're going to manage your profit margin? Secondly, my question is related to the Weverse situation.
I can see that there is an upward trend of MAU, and this may have to do with new concerts and new fans coming to the platform. Is it correct to understand that the MAU trend will continue to be on the upward trend? I can see that there is stable increase in the payment and transaction volume, but it seems that the HYBE artist lineup on Weverse platform is not as expanding as expected. If you can add some color on this aspect, I would appreciate it.
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I'm CFO Lee Kyung-jun. Let me answer your first question. We will continue to make investments overseas. The total size of the investment slated for this year will be smaller than last year for two reasons. First of all, when we enter a new market and start our business, naturally, it will incur a larger amount of investment. In doing so, we learn our lessons and we accumulate our knowhow, thereby being able to be more cost-effective in debuting the second and the third teams in that respective region. Likewise, when we debuted the first group in the U.S., it was quite costly, the second time and the third time, it becomes more cost-effective. The same goes for the Latin American region. Initial investments and initial expenses would be quite large in the beginning.
However, they continue to decline as we continue to accumulate our experience. Secondly, we already are producing meaningful results in the respective regions that we have entered. For instance, KATSEYE's performance and results are far exceeding what we originally expected. Santos Bravos that we debuted in Latin America visited Korea and was able to produce good results. As we see more and more of such positive results coming out from our initial investments, I believe that the total investment size for this year and onward will not be as big as what we had last year.
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I'm CEO Lee Jae-sang. Before I answer your second question, I'd like to add my comments on the first question. As the CFO just mentioned, the total size of the investment for 2026 according to our plan as of now is going to be smaller than 2025. I'd like to mention that when we make investment decisions and execute them, it takes a lot of consideration, and we already have a list of options and opportunities that we have been eyeing on for different regions and different genres to wait for the right moment and wait for the right opportunities. Even if we see that there is a great genre or region that we can go in and succeed, if the market is not ready, then it will not make sense for us to go there and make investment.
Likewise, when we started our investment in India last year, it took three years for us to ponder upon and look for, wait for the right moment, and that was last year. For the U.S. and also for Japan, there are certain genres and certain types of business that we're looking at right now, but we're not ready to execute on them right now because we do not see that the markets are not ready. However, as you know, market situations may shift really quickly. If we see that there is a right timing, then we will have to execute our plans accordingly. Please be aware that there may be potential changes to our investment plans going forward.
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Moving on to your question on Weverse KPIs. First of all, the continuous growth of MAU is critical for the survival and the success of any platform. How can we grow the MAU? There are several ways to do so. First of all, we may increase traffic of users for the existing artists. We may also include new artists and cover new genres to increase the MAU. As for the first approach, the fans will continue to use the platform on a daily basis, but then the way fans use the platform may vary by categories, and the ways they're coming in and out of the platform vary as well. We continue to track the portion of new users versus returning users.
According to our tracking data, we have an increasing percentage of new users joining the HYBE Weverse platform. This means that the existing artists will continue to attract new fans, and these new fans come to the Weverse platform to enjoy HYBE artists. At the same time, other artists, as well as HYBE artists, will continue to expand their activities and increase their brand value, which will lead to the growth of their fan base, which will naturally lead to a growth in the MAU for Weverse as well. Secondly, we may include new genres and new artists. We have been doing that as well, and we've been focusing on Japan, but for selective and strategic reasons, we have included BINI and SB19 from Southeast Asia.
For instance, BINI has been really doing well and performed at Coachella, and the fans of BINI continue to use Weverse services in various ways. These are some of the strategic ways that we have recruited new artists who have joined Weverse to contribute to the growth of the MAU continuously. In addition to that, we may increase the activities of the existing fans for the existing artists. In other words, we may encourage them to spend more time on the platform and make it a routine to use the Weverse platform, thereby increasing their own MAU level. To do so, we not only work with the Weverse, but also work with the labels and artists to produce content.
That's not only it, but rather fans and their activities are critical in increasing the activity level of fans on the platform. We are currently developing various service models to increase the level of MAU for existing artists and existing fans. As for your question on the utilization of DM and why certain HYBE artists are not using DM while some others are using it, of course, DM is a great service model. It allows fans to directly communicate with their artists. However, this cannot be applied to all artists in the same manner, because depending on the artist, depending on the labels and the team colors, their preferred ways of communicating with their fans may be very different. Indeed, some fans do not favor DM method of communicating with their artists.
Therefore, we are in constant communication with the labels and artists to see whether they are ready or whether they want to utilize DM as a service to interact with their fans. The same goes for the listening party. Basically this can be applied to all types of Weverse services. We need to cater to the characteristics of fans and artists and launch or apply services in the right manner, in the right time, by communicating with the labels and management.
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This concludes the 2026 first quarter HYBE earnings conference. Thank you very much.