Good morning and good evening. Thank you all for joining the conference call for the HYBE earnings results. This conference will start with a presentation followed by a Q&A session. If you have a question, please press star and one on your phone during the Q&A. Now we will begin the presentation on HYBE's second quarter of fiscal year 2026 earnings results.
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Greetings. Thank you for joining us for HYBE's 2026 Q2 earnings call. This is Oh Young Min, Director of IR. I will moderate today's conference call, which will proceed through consecutive interpretation. Today, CEO Lee Jae-sang will present Q2 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 review.
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Good afternoon. This is Lee Jae-sang, CEO of HYBE. Thank you for joining today's earnings call. In Q2, HYBE clearly demonstrated the expansion of its global influence and its entertainment ecosystem. On the back of BTS's world tour, ARIRANG, that caught the attention of the world and the overall growth of the entire artist portfolio, HYBE posted KRW 1 trillion 450 billion in consolidated revenue and KRW 170.9 billion in operating profit, both breaking record high quarterly results. Furthermore, the company posted a double-digit operating profit margin of 11.8%, which represents a significant improvement in profitability. As a result, the cumulative revenue in the first half of 2026 came in at KRW 2 trillion 148.3 billion, with KRW 229.4 billion in adjusted operating profit, thereby demonstrating that HYBE has solidified its earnings base by leading global entertainment trends and producing exceptional results.
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ARIRANG, the fifth regular album released by BTS on March 20th, drove the global music market growth. According to Luminate's 2026 media reports, ARIRANG served as a key driver behind the revival of the physical album market, with record high sales of the vinyl record and CD edition of the album in the U.S., as well as outstanding streaming performance. Thanks to ARIRANG's success, Korea's ranking in terms of music exports rose from the fourth place last year to the third, following the U.S. and the U.K., proving the group's direct contribution to elevating the nation's brand and music exports. A new term called BTSnomics was sparked to describe the ongoing ARIRANG world tour after witnessing the massive economic benefits the tour brings to every city it visits. The ripple effects of the tour continue to extend well beyond the concert itself, creating a broader cultural phenomenon.
They furthermore, BTS reaffirmed their status and influence as global icons by performing in the first ever halftime show at the FIFA World Cup finals last week.
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In the first half of the year, all HYBE artists released albums and resumed activities, posting impressive results not only in Korea but around the world. In particular, five of the top 10 artists with the highest physical album sales in the U.S. during the first half were HYBE artists, proving the effectiveness of HYBE's multi-label strategy. First, CORTIS is producing unprecedented results in the K-pop scene and the global market with their single RedRed, released on April 20, and the second mini-album GreenGreen, released on May 4. GreenGreen attracted massive attention with 2.31 million copies sold in the first week, and its merch album editions continue to enjoy popularity, with the sales expected to continue until the end of the year.
As a result, the album has sold more than 3 million copies cumulatively, and CORTIS has sold a staggering 5.25 million copies in total in just 11 months after debut. With the release of the new album, the number of monthly Spotify listeners of CORTIS began to increase, surpassing 12.7 million. The title track RedRed surpassed 100 million streams on Spotify in just 57 days and 150 million streams in 90 days of release, which are exceptional accomplishments as a new act. The album is charted for 11 consecutive weeks on Billboard 200 after charting in as number three. Given that the most streams on Spotify are coming from the U.S., the group has attracted a more diversified and solid global fan base compared to other rookie groups.
Moreover, in a bold move, CORTIS embarked on a world tour after less than a year of debut, starting with a concert in Incheon in July, and their performance at the Lollapalooza Chicago at the end of this week, as well as planning to meet with their fans in major cities in North America and Japan. The boy band has been successfully pioneering a new growth trajectory in the global entertainment market that breaks away from the traditional grammar of K-pop's growth. We ask for your continued support for CORTIS as the group plans to offer their unique color and energy through diverse activities.
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On June 12th, LE SSERAFIM, ILLIT, and KATSEYE released their collaboration digital single ICONIC BY MISTAKE . The song entered the Billboard Hot 100 at number 38 by immediately capturing the hearts of global fans. It has shown remarkable staying power, remaining on Billboard and Spotify global charts for more than a month. The collaboration created synergy among the three acts with their own unique appeals and fandoms, and despite a short promotional period, generated significant buzz through the widespread circulation and amplification of short-form content, including dance challenge videos. Moreover, the project led to a significant crossover among the three fan bases, as well as new fan acquisition, thanks to the buzz created by the project. This case is illustrative of HYBE's advantage with a multi-label structure that allows complementarity and synergy between labels and generation of differentiated content.
We will continue to create synergies through unique collaborations among artists across geographies and fan bases.
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LE SSERAFIM came back with their second regular album, PUREFLOW Pt. 1 on May 22nd. The title track BOOMPALA enjoyed much popularity thanks to its infectious beat, rhythm driven lyrics, and the catchy intro that went viral. The group is currently on a world tour scheduled to entertain fans in major cities in Japan, North America, Europe, and Asia until the end of the year. The first regular album, released by BOYNEXTDOOR on June 8th, sold more than 1.08 million copies in its debut week, making it the fourth consecutive million seller. They kicked off their first large scale world tour on July 19th, with 35 concerts scheduled for 24 cities in Japan, North America and Asia, starting with shows in Seoul and Busan. ENHYPEN started their world tour Blood Saga in Seoul in May, which includes 35 performances in 22 cities.
The band performed for the first time in Latin America during this tour. Their stadium concert, with more than 40,000 seats in São Paulo, Brazil, was quickly sold out, demonstrating their global popularity. In addition, their performance at Campo Marte 26, a festival held in Mexico City along with HYBE's Latin group Santos Bravos, was met with an overwhelming response from local audiences.
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Recent unit and solo projects by HYBE artists also produced significant results. On June 22nd, Evan made his solo debut with the digital single album Ride or Die, in which he took part in songwriting, composition, and production, showcasing his unique music style and artistic direction. The 8, a unit of SEVENTEEN consisting of Vernon and The 8, released their first mini album on June 29th with the title track singasong, offering experimental electronic sounds that are different from typical K-pop music styles. TXT's Yeon-jun released his second mini album, NO LABELS: PART 02 on July 10th, which landed at number 16 on the Billboard 200. Following last year's debut solo album, this new album entered the charts as well, which became the best performing release by a Korean solo artist this year.
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As a group formed through HYBE's first localization project, KATSEYE has demonstrated a unique growth model in the global market with outstanding success across major music charts and award shows. They emerged as a new global pop icon as they received three awards, including the prestigious New Artist of the year at the American Music Awards in May. Riding this momentum, they expanded their musical spectrum with a new digital single, "Animal," released on July 24th, to build anticipation for their upcoming third mini album, "WILD." KATSEYE achieved their highest ever ranking with "Animal," ranking the 4th and the 9th on Spotify Daily Top Songs USA and Global, respectively, on the release day. The music video surpassed 10 million views on YouTube in just a day, demonstrating their prowess. The group is scheduled to embark on their North American and European tour, THE WILDWORLD TOUR, in September.
The tour sold out just 48 hours after tickets went on sale, demonstrating the immense support of their fans around the world. As a result, four performances were added to the tour, resulting in a total of 31 concerts in 27 cities in 10 countries. To celebrate the second anniversary of their debut, the group's first documentary film, titled "KATSEYE: WILD HEARTS," will be released in theaters around the world on August 12th to share with their fans the story of KATSEYE's transformation into a global pop group. The new label, ABD, launched in May, announced the name of its first girl group, TUIDE, on July 20th. The new group has seven members whose faces and profiles have not been revealed yet. They will showcase performances of every track on their debut album for the first time at the TUIDE exclusive preview playground.
As suggested by the meaning of the group's name, Tune the Tide, they will offer new entertainment by tuning diverse tides around the world. We ask for your continued interest in and support for TUIDE. Finally, on Weverse. Weverse has continued to evolve as a platform that connects artists with their fans by introducing new services for fans since its launch in 2019. In addition to K-pop artists, the global artist lineup has expanded as many global artists have joined Weverse, including representative P-pop groups such as BINI, a Filipino girl group, and SB19, a Filipino boy group, who opened fan communities on the platform in the first half of 2026. As a result, the number of Weverse communities surpassed 200 in the second quarter this year, with an 8% growth in MAU QoQ to 14.43 million.
Successfully positioned as an all-in-one global super fan platform that supports communication between artists and fans, album and merch purchases, concert viewing, music streaming, and offline events, Weverse has reached a critical point where it needs to grow to the next level. Against this backdrop, Yang Ju-il was appointed as new CEO of Weverse, who is a platform business expert with extensive experience across the IT platform and content industries. Under the new leadership, Weverse aims to focus on further improving its services and strengthening business execution and capabilities as a leading brand in the field of fandom platform business. The first half of the year was a significant period as the efforts we have made over many years translated into tangible results. BTS' historic comeback, which fans had long awaited, drove the growth of the global music market and reaffirmed the power and status of K-pop and BTS.
ICONIC BY MISTAKE , a collaboration project featuring three girl groups, created an opportunity to scale up the unique appeal of each group while maintaining creative independence and originality of the HYBE Music Group labels involved, thereby enjoying tremendous popularity across regions. Debuted less than a year ago, CORTIS is writing a new history in terms of album sales and music streaming by applying a completely different grammar from other traditional K-pop idol groups to attract fans from around the world. These achievements are the result of HYBE's relentless execution of a strategy to redefine the familiar and maturing market and pioneer into completely new territories. Guided by the clear vision of becoming a global entertainment lifestyle platform company based on music and technology, HYBE is ceaselessly pursuing new, ambitious initiatives. We ask for your continued interest as we continue to push boundaries and deliver even greater growth.
Now, I will hand over to CFO Lee Kyung-j un, who will report on the financial results for Q2.
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Good afternoon. This is CFO Lee Kyung-j un. Let me report on HYBE's consolidated financial results for the second quarter. We posted KRW 1 trillion 460 billion in consolidated revenue, which is a record high quarterly result. Revenue with direct artist involvement, including recorded music, concerts, advertisements, and appearances, was KRW 1 trillion 39.9 billion, accounting for 72% of the total revenue. While revenue with indirect artist involvement, including merchandising, licensing, content, and fan club sales, was KRW 410.1 billion, taking up the remaining 28%. HYBE also posted the highest quarterly operating profit of KRW 170.9 billion, demonstrating solid profitability. Q2 saw a significant growth in revenue with direct artist involvement on the back of comebacks by major HYBE artists and the beginning of a large-scale world tour by BTS.
As our artists are actively promoting their music and several teams are conducting world tours, a revenue growth trend is expected to continue well into the second half of the year. Let me give you more details by revenue category. In Q2, recorded music sales posted KRW 326.8 billion, a record high quarterly result. Most artists under HYBE Music Group made a comeback, and seven teams recorded million sellers in the first half of the year, according to Circle Chart. HYBE artists accounted for 41.3% of the combined album sales of the top 100 artists. Outstanding streaming performance of our artists has also drove the overall revenue growth. In Q2, streaming accounted for 30% of the recorded music sales, thanks to HYBE artists, including BTS and KATSEYE, entering global charts.
Concert sales also reached a record high of KRW 647.7 billion, thanks to the recognition of sales from BTS World Tour. The tour drove revenue growth by expanding touchpoints with fans around the world through online streaming and live viewing, in addition to offline concerts in Korea, Japan, North America, Mexico, and Spain. Furthermore, SEVENTEEN's fan meetings and concerts by &TEAM, TOMORROW X TOGETHER, and ENHYPEN also contributed to record high concert revenue.
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Within the category of revenue with indirect artist involvement, merchandising and licensing revenue reached an all-time high of KRW 310.6 billion. In Q2, BTS tour-related merch items were loved by fans online and offline, and licensing revenue from The City projects in cities that hosted concerts also contributed to the revenue. In addition, tour merch and character items of HYBE Music Group artists such as SEVENTEEN, TOMORROW X TOGETHER, and ENHYPEN recorded steady sales. Content sales in Q2 fell year-over-year to KRW 41.6 billion, mainly due to the absence of new large-scale events even though artist YouTube and DVD content, as well as existing published games, generated steady sales. Diverse content offerings are scheduled for the second half, including TXT's documentary film and artist seasons greetings.
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Moving on to the KPIs of Weverse. Average MAU in Q2 broke the record again following Q1 with 14.43 million, up 8% quarter-over-quarter. Total paying amount and monthly ARPU increased by 12% and 24% QoQ respectively, showing a solid growth trend. More fans have visited the platform more frequently, thanks to a wide range of activities by HYBE Music Group artists, and their time spent on the platform led to an increase in membership subscriptions and paid content purchases, creating a virtual cycle. Furthermore, along with the increase in tours, we are actively promoting a service where fans can purchase merchandise online and pick it up at the concert venue, which improves the fan experience while also enhancing profitability. In the second half of the year, Weverse will continue to improve its services and strengthen business execution capabilities to further drive profitability.
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The first half of 2026 showcased tangible results for HYBE's ecosystem with the start of whole group activities of BTS. To ensure continuation of positive results into the second half of the year, HYBE will deliver unique entertainment that fans have never seen before. We ask for your unwavering support as we strive to stay one step ahead of changing times and generations and create new next-level experiences. Thank you.
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Now, we would like to have a Q&A session.
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Now 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 Eric Cha from Goldman Sachs Securities. Please go ahead with your question.
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I'm Eric Cha from Goldman Sachs Securities. Thank you for the opportunity. I'd like to ask you two questions. First of all, I appreciate that the company has posted a revenue which has exceeded the expectation by a big margin. But we saw a decline on a quarter-over-quarter basis in terms of GP margin, and this has led to a dilution of the leverage to a certain extent. So I'd like to understand the drivers behind the decline in the GP margin quarter-over-quarter. What is your outlook for GP margin in the second half of the year? The second question has to do with your profitability outlook. In the second quarter, as you mentioned, your operating profit margin recorded a double-digit figure, which seems to have finally normalized in terms of its level.
But going into the second half of 2027, do you believe that this double-digit operating profit margin will be sustained? What will enable that to happen? I would also like to understand the company's mid to long-term goal for your operating profit margin. Thank you.
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Thank you for your question. Let me address your first question regarding the quarter-over-quarter decline in our gross profit margin. Compared to the first quarter, where we had a smaller share of concert revenue, we have seen an increase in the concert revenue in the second quarter, which is about threefold. You may see that there is a higher percentage of costs related to concert activities, including the paid cost for the concert venue, as well as the sharing of revenue with artists, because it falls under the category of revenue with direct artist involvement. As a result, we have seen an increase in the cost percentage in the total revenue. However, when we look at the overall GP margin across different business models, we can see a steady trend.
Therefore, please understand that the quarter-over-quarter decline in the second quarter for the GP margin is mainly because of the increase in concert revenue in the second quarter.
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Moving on to your question on the profitability in the second half and going forward. As I mentioned, we are maintaining stable level of profitability across different business models. Of course, depending on the mix of these business models in our entire revenue structure, profitability may vary slightly. However, we are taking efforts in order to maintain the level of profitability that we posted in the second quarter. In particular, we may not be able to dramatically change the mix of the business models in our business portfolio, but we are trying to continue to reduce the percentage of costs in each of these revenue categories. In particular, when it comes to concerts and merch production, we continue to increase profitability by reaching the economies of scale.
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I would like to also comment on our outlook on operating profit margin into the second half of the year as well as 2027. We are making a lot of effort to continue to improve the operating profit margin, in particular as the growth of the young artists, including Cortis and KATSEYE continue to materialize. As we continue to diversify our portfolio, we expect our operating profit margin to continue to improve.
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The following question will be presented by Ki-hoon Lee from Hana Securities. Please go ahead with your question.
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I am Ki-hoon Lee from Hana Securities. I would like to ask two questions that are quite similar in line with the previous questions. First of all, when we look at the fact sheet, especially the labor costs, even though we exclude KRW 260 billion of one-off labor costs that incurred in the first quarter, we can see that there is an increase of the labor cost by about KRW 30 billion in the second quarter. I would like to understand whether this has to do with any one-off factors such as incentive payments, or whether this increase is a recurring phenomenon. I also like to understand if there are any costs that were recognized in the second quarter that we need to be aware of. Moving on to business risks, it was reported in the media about your business in the U.S. as well as issues with Supertone.
Going into the second half of the year as well as 2027, I would like to know if there are any risks to your businesses that are other than the core business in your portfolio, whether there is any caution that we need to take. I believe that most of the risks have been addressed, but if there is any risk that we need to be aware of, please share it with us.
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Let me comment on your first question about the increase in labor costs. This is partly attributable to incentive payment as a result of successful business performance. Also there was increase in costs of labor as we hired some global talent. As for expenses that were preemptively recognized in the second quarter, according to our accounting standards, if there are any costs or expenses that we anticipate to incur in the third quarter and the fourth quarter, some of them have been preemptively recognized in the second quarter in a conservative manner.
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We do not see any major non-business expenses that we anticipate in the near future. If we continue to manage our business in the way that we do, I believe that we can maintain this level of profitability.
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The following question will be presented by Jun-Hyun Kim from HSBC. Please go ahead with your question.
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I'm Kim Jun-Hyun from HSBC. I'd like to ask you two questions. First of all, you already provided some explanation on your outlook on margin going forward. But for the past two to three years, we can see an increase in costs related to new talent acquisition and production cost increases, which have led to a decline in the overall profitability. At the same time, as there is a growing contribution of top-tier artists in your portfolio to overall revenue, this will lead to a damp on your margin, and this will lead to uncertainty in terms of margin outlook. So from the management's perspective, what do you think has to be improved in order to improve the overall margin and profitability, so that we can continue to expect your margin outlook to improve, even though there is a greater contribution of earnings from top-tier artists?
Secondly, when you are not only doing K-pop business, but also non K-pop IP acquisition. I would like to understand your OP margin and GP margin outlook in the medium to long run for your K-pop business. I wonder if we can expect a high-teen margin that we had in 2019 and 2021. Secondly, what are the long-term growth drivers of HYBE? This is a question that I would like to understand. Obviously, BTS activities may decline going forward in the next two to three years. You need additional growth drivers. If you can add some color on when or how NewJeans will make a comeback, or whether you have any new group in your pipeline as well as non K-pop IP acquisition plans. Thank you.
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I am CEO Lee Jae-sang. Let me comment on your very important question. It boils down to the issue between margin and volume. As I previously communicated through earnings conference calls, if HYBE just wants to stay in Asia, then we can just focus on margin and profitability. However, if we want to become a top-tier entertainment company in the global market, then we need to increase the volume as well. This is a very important necessity. In order to increase our volume and presence in the global market, the role of top-tier artists is very important. Of course, as they continue to mature, their revenue sharing ratio may go up, which may have a negative impact on our overall margin.
But it is very much because of the top tiers, we can increase our volume and presence in the global market, which will give us an upper hand in negotiating in terms of infrastructure and of services. So we are now in a transition to be able to do so. We should of course, not take for granted the lowering of margin for top-tier artists, and this should never be justified or taken for granted. But what we are trying to do is to continue to generate profit, not just from their music, but also from other business models, so that even though they are not active in their music promotion, their contribution to revenue will continue to be generated. A good example is a recent collaboration with Lifestyle Brands. Moving on to talent acquisition or debut processes.
For the past couple of quarters, we have had many debut groups that came out in the market. But when you remember about three years ago, when there was a new group that debuts, then it takes three to four years for that group to contribute to profitability. However, when you look at the recent examples of KATSEYE, CORTIS and Santos Bravos, they are doing really well and their contribution to profitability is materialized really quickly in just less than a year. So we do not provide artist-by-artist breakdown of profitability contribution. But I would like to say that we continue to have success in these new groups because we made uncompromising investments in content production and quality enhancement so that we can monetize from them. At the same time, quality standards may vary in different markets.
We have been adjusting the level of investment depending on the market. For the past two years we have been implementing the multi-home strategy, which has given us a lot of lessons. In some of the markets, we can reduce investment in new group debut preparation, because there are different quality expectations by different markets. What matters is how we are approaching this whole business. At the same time, we're building up our infrastructure capabilities through HLS, which is HYBE Label Service. We can maintain high levels of profitability whether we deal with top-tier artists, mid-tier or rookie groups. This is a mid to long-term vision so that we can increase profitability down the road. Finally, for our upcoming plans, the BTS World Tour is still ongoing, and there are many concerts to be held in the near future.
We will not be able to give you any specific details as for future plans, but I can assure you that there are many concerts that are ready and to be scheduled. As for NewJeans, I cannot really confirm anything at this moment, but ADOR will communicate with investors directly later.
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We will take one last question.
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The last question will be presented by Hyok-joong Lee from Daiwa Securities. Please go ahead with your question.
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I am Hyok-joong from Daiwa Securities. I would like to ask a question about your concert business. Back in 2024 and 2025, there were not many K-pop concerts that were held in North America. Concerts in North America provided a good opportunity to acquire light fans so that they can become enthusiastic K-pop fans. But in 2026, today, there are so many K-pop concerts held in North America in addition to local pop artist concerts. Of course, BTS as a top-tier group will do fine, but as for mid-tier or rookie artists, I would like to know if the company feels that competition or intensifying competition in North America.
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Thank you for this insightful question. I do agree back in 2024 and 2025, there was room for us to acquire light fans. But now in 2026, we already have so many K-pop concerts held in North America. So some say that there may be a cap or the potential fan acquisition has reached a limit. However, I would like to beg to differ because when it comes to light fans, why are there light fans in North America? Is it because they are just interested in K-pop content or whether they are because they really love the music and performance and storytelling by K-pop artists, regardless of their nationalities and culture? I believe that the second case is really what is happening. So compared to the past, some may say that there is not much room for us to grow in this market.
But I believe that this is all about implementing a strategy to increase our pie itself. K-pop concert tickets are selling really well, but are we taking away fans for other K-pop groups to HYBE idol groups? Well, there may be some fans that love or support many different K-pop fans or K-pop groups, but I do not think that that is the way for us to go, because I see that there is potential for growth and that K-pop accounts for 5% compared to 2.6% in the past, which means that there is a lot of room for us to grow the pie itself. And these K-pop artists can be classified now as local pop groups or even crossover or Latin, and there are many different ways to classify them. And given the genres and fan characteristics, we can pursue social marketing and collaboration and many other activities.
For instance, supporters of KATSEYE. Is KATSEYE a K-pop group or not? It is already positioned as a pop girl group in North America, and their monthly active listeners on Spotify is world-class. And in the beginning, KATSEYE was labeled as K-pop girl group, but now it is recognized as a pop girl group that is loved by local fans in the U.S., Canada, and Europe. And so that is what we have been pursuing through our multi-home, multi-genre strategy. And thanks to your question, I am reminded again of the importance of this strategy, and we will continue to think about ways to remove potential caps and continue to grow the pie. Thank you.
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One last message that I want to share with the investors and shareholders before we close this earnings call. As you have seen in the earnings report, we have posted record high results since the foundation of the company. I've been doing about seven quarterly earnings calls, and I've been mentioning how we've been able to eliminate any inefficiencies in our business portfolio. What's left for us is growth. For us to achieve this growth, we may need to make some investments and spend some money, and we may also be able to generate growth based on our infrastructure. I'm not saying this because I'm CEO of HYBE, but I'd like to argue that HYBE is on track. The fact is, the issue currently is that all of these efforts may not be valued easily because we are pioneering into new territories.
I'd like to ask for your continued support and unwavering interest in HYBE as we continue to build and strengthen our business and earnings fundamentals and continue to manage our business in a sound manner. We will never be complacent with record high results, and we will continue to strive to achieve the best record. Thank you.