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 third quarter of fiscal year 2026 earnings results.
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Good afternoon. Thank you for joining us for HYBE's 2026 third quarter 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 Q3 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 CEO Lee, Jae-sang. Thank you for joining today's earnings call. In the third quarter, HYBE achieved the highest ever quarterly revenue of KRW 1,525.7 billion and operating profit of KRW 188.5 billion. The record high quarterly results demonstrate that HYBE has grown from a K-pop entertainment company to a global top-tier entertainment platform company.
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What I'd like to highlight to our shareholders is not just the size of KRW 1.5 trillion in revenue, but the qualitative aspect of the structural evolution that led to the historic achievement. The outstanding earnings were underpinned by the overwhelming success of BTS. It has been proven this quarter again that BTS remains the core of HYBE that is irreplaceable fundamentals. With the global tour extended to the first half of next year, BTS will continue to meet with their global fans and carry out diverse projects and musical endeavors to reinforce their position as a representative act of HYBE. Nevertheless, what I'd like to focus on during this earnings call is how the multi-home, multi-genre strategy that the company has been investing in for several years is finally delivering powerful results.
Our global infrastructure expansion, which we have steadfastly pursued over the past years, has now settled into a structural growth trajectory and is delivering tangible results. Allow me to share with you how HYBE has been operating its growth flywheel by presenting highlights of our overseas artists who have helped diversify our portfolio in the U.S. and Japan, the world's top two music markets.
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Continuing the rapid rise as a global pop icon, KATSEYE has fully demonstrated this quarter how our multi-home localization strategy is working in the U.S. Their third mini album, "WILD," that came out in August, topped the Billboard 200 and sold 150,000 copies during the first week in the U.S., which is 5x higher than the previous album, providing concrete evidence of the expansion of the core fan base. With the lead single "Animal" charted for 12 consecutive weeks on the Billboard Hot 100, their previously released tracks have also re-entered the Hot 100 and surpassed one billion cumulative streams, demonstrating strong fundamentals.
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Behind this growth lies the localization business strategy that we have been implementing in stages in the U.S. From the very beginning, we actively utilized major North American festival stages to expand in-person engagement with the public. KATSEYE's performance on local live stages naturally served as a catalyst for rallying a core fan base. To convert the demand from this expanded fandom into tangible revenue, we also tailored our business model to the specific characteristics of the U.S. market. By partnering with key U.S. retail channels such as Target, we increased the availability of albums and merchandise. Furthermore, reflecting the North American market's high demand for apparel, we entered into advertising and licensing agreements with global brands to solidify the group's position.
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With successful localization both in terms of music and business, KATSEYE is now expanding their influence beyond the North American mainstream to the global stage. In October, KATSEYE appeared at the 2026 Victoria's Secret Fashion Show, which was graced by world-renowned pop stars, and reinforced their elevated status as a mainstream icon. Their growing prominence is translating directly into stronger live event draw. During their first European tour in September, KATSEYE sold out every show, proving their strong box office appeal. The ongoing North America tour has been a resounding success with every show sold out, demonstrating increased profitability. Next year, the group will perform as a headliner at the Lollapalooza India, a major music festival in Asia.
In addition, following the European and North American tours, they have confirmed their 2027 tour schedules for Asia and Oceania, with the arena tour starting next January in 11 cities, including Seoul. We ask for your continued support as KATSEYE grows into a global artist active on the global stage by building on the competitiveness demonstrated in the U.S., the world's largest music market.
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In addition to the U.S., Japan, the world's number two music market, is another key base for HYBE's multi-home strategy. Here, &TEAM, the first global group formed through a local audition, has built a solid fan base. To become deeply embedded in Japan's pop culture ecosystem, &TEAM focused on appearances on major local broadcast media and in films while expanding their reach to the public through a community-focused tour across Japan. The tailored localization strategy has helped consolidate a strong fan base. The group has reached a significant milestone of performing at the Belluna Dome, their first solo dome concert, and released four million-selling albums in a row, demonstrating their strong live event draw and fundamentals in the local market.
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With a solid foothold established in the Japanese local market, &TEAM is now expanding its influence globally, supported by HYBE's infrastructure. Their Korean second mini album, "Mark on Me," released in September, entered the US Billboard 200 at number 20, setting a milestone by achieving the highest-ever ranking for a Japanese boy band. Furthermore, &TEAM members appeared as featured artists on the remix version of "KAWASAKI," a song by Santos Bravos, who debuted in Latin America, another home of HYBE. The featuring garnered enthusiastic response from fans around the world, demonstrating &TEAM's potential for expansion into emerging markets, including Latin America. &TEAM and Santos Bravos will release a new collaboration track, "ORIGAMI," on November 20.
This collaboration, in which two groups with different cultural backgrounds and musical styles open up new markets for each other, is made possible by the fact that HYBE has a home in key locations around the world. I hope you will look forward to the boundless growth of &TEAM based on global scalability as well as solid local fundamentals.
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The achievements made by KATSEYE in the U.S. and &TEAM in Japan are representative examples that demonstrate how HYBE's multi-home, multi-genre strategy is being effectively implemented in line with the characteristics of each region. Based on the proven success formula, we're expanding our pipeline quickly to our key next-generation markets, including Latin America and India. Our local Latin boy band, Santos Bravos, has already secured a broad global fan base, standing shoulder to shoulder with established artists in terms of monthly listeners on Spotify. We're also steadily laying the groundwork for our localization project in India, the country with the largest population in the world and the world's second-largest streaming market after the US.
To this end, the Weverse Con Festival will be held overseas for the first time in New Delhi, India, in March next year. This festival will feature major K-pop artists, including HYBE artists such as TOMORROW X TOGETHER, ENHYPEN, LE SSERAFIM, and Lara of KATSEYE, as well as top-tier local Indian artists, including King, thereby serving as a meaningful opportunity to showcase expansion not only across genres and generations, but also across regions. Tickets have been selling out as soon as they become available.
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HYBE artists, who are the foundation of our business, have also continued to achieve solid growth. Based on cumulative data by Q3, our artists sold a combined total of 27.97 million copies of albums according to Circle Chart and entertained fans through a total of 259 offline concerts. These overwhelming achievements are the result of the success of new artist IPs, combined with the solid standing of the existing core IPs, demonstrating that HYBE's artist portfolio is expanding evenly across the world.
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To further accelerate the global reach of our artists worldwide, the capability we consider most important is a marketing and promotion infrastructure that provides comprehensive support for artist brands. To internalize this core infrastructure to world-class standards, HYBE launched the Global Label Services in October. After a year-long preparation, we appointed Juan Arenas as president and recruited a number of key talents who have proven themselves in major global music companies, including Interscope Records and Epic Records. This powerful integrated infrastructure, which organically connects all our locations, including Korea, the U.S., Japan, Latin America, and India, and supports all HYBE artists, will become an essential engine to maximize operational efficiency of HYBE's recorded music business and significantly expand our global business opportunities. Starting with the launch of HYBE Global Label Services, we will continue to carry out proactive organizational restructuring and infrastructure expansion to maximize our global capabilities.
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The process by which artist IPs take root in various locations around the world and expand their fan base serves as a strong foundation for the growth of our solutions business, another core pillar of HYBE. Instead of relying only on direct artist activities, HYBE has continued to refine business models with indirect artist involvement by expanding music IP across all aspects of lifestyle. We have proactively implemented measures across various areas to take our global merch business operations to the next level. We introduced exclusive and localized product lineups in line with local trends, supported by the sophisticated product planning system. We also implemented the Weverse Shop Pickup service worldwide to maximize the convenience of merch purchase at tour venues and systematically diversified production lines to ensure supply chain stability.
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The results of our meticulously refined merch business were clearly demonstrated by the success of merch sales during the second North American tour by BTS. Utilizing the already established localization planning capabilities, we have consistently supplied 100- 150 new items to cater to the specific preferences of fan bases in each region during the tour. This allowed us to overcome the limitations of the traditional merchandise business, where sales are concentrated only at the beginning of a tour, and drive sustained spending and repeat purchases from fans throughout the entire tour. As a result, tour merch sales in North America during the third quarter recorded an impressive KRW 107 billion. This is not simply thanks to the size of the tour, but due to the highly advanced global solutions business capabilities of HYBE that led the entire process from planning and production to supply chain management in the U.S.
The sophisticated business infrastructure, which has been developed and proven through BTS, will support BTS tour in the first half of next year and other future projects to offer diverse experiences to fans and generate added value consistently. Furthermore, this proven system is not just limited to certain artists, but it offers powerful scalability that can be immediately applied to artists from other labels for expanding the scope of their global tours. HYBE will keep advancing its solutions capability proactively to expand the virtuous cycle where artist growth is directly translated into strong value creation.
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Let me talk about Weverse, a key platform that connects artists' IPs and their global fan bases. As a global super fan platform, Weverse is evolving as a fan community ecosystem where fans go beyond the typical artist-fan relationship to spontaneously interact with one another and expand content. During a recent artist live event, a multilingual real-time fan chat feature called Fan Lounge was offered as a pilot service, which received positive feedback from global users by maximizing engagement among them. Based on the strong traffic base, Weverse is currently implementing service overhaul to continue to strengthen the platform's inherent profitability by increasing user engagement and accelerating integration with new business models.
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The multi-home, multi-genre strategy that is gaining momentum in key global markets, localized solutions business capability, and the evolution of the Weverse platform show that the direction HYBE has been working toward for a long time was the right one. Above all, what is most meaningful is that these efforts have now led to remarkable results that we can share with our shareholders. Not only did we set a record for the best quarterly performance in Q3, but our cumulative revenue for the first three quarters alone has already surpassed all previous annual revenue totals. This is a truly heartwarming milestone that was made possible thanks to global fans who love HYBE music and artists, and also thanks to our shareholders who believed in our vision and stood by us along the way.
We are now making all the necessary preparations for a wide range of activities by HYBE artists, including BTS, and strong global momentum for next year. HYBE will not stay complacent, but continue to open up new possibilities in the global music market and move toward an even brighter future. I'd like to ask for your continued interest and support for our bold journey.
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Now, CFO Lee, Kyung-jun will report on the financial results for the third quarter.
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Good afternoon. This is CFO Lee, Kyung-jun. Let me report on HYBE's consolidated financial results for the third quarter. We posted KRW 1,525,700,000,000 in consolidated revenue, which is a record high quarterly result. Revenue with direct artist involvement, including recorded music, concerts, advertisements, and appearances, was KRW 1,075,300,000,000 , representing about 70% of the total revenue, while revenue with indirect artist involvement, including merch, licensing, content, and fan club sales, was KRW 450.4 billion, contributing to solid growth by taking up the remaining 30%. HYBE also posted the highest quarterly operating profit of KRW 188.5 billion, with the operating profit margin of 12.4%, demonstrating top-line growth as well as strong margin performance. Net profit experienced a decline, mainly driven by non-operating FX-related losses.
The vast majority of this FX impact stems from non-cash accounting adjustments on our foreign cash reserves, a non-recurring item separate from our core operations and underlying cost structure.
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It is meaningful that we recorded solid profitability of 12.4% operating profit margin in Q3, despite unfavorable foreign exchange situations, a QoQ decline in the number of album releases, and changes in business mix following an increase in large-scale concerts. Our operating leverage was created by strong sales of albums released in the third quarter, sustained popularity of previously released albums, and outstanding sales of BTS tour merch maximized through North American localization. Q3 demonstrated HYBE's resilience in maintaining profitability under any circumstances, supported by revenue from direct artist involvement as well as long-tail sales from solutions business.
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Let me give you more details by revenue category. In Q3, recorded music sales posted KRW 282.8 billion. Sales of new albums released by ENHYPEN, &TEAM, KATSEYE, TXT's Yeonjun, and Evan, as well as sustained long-tail sales of older albums, drove solid sales performance. In particular, ENHYPEN's album achieved remarkable success. Their eighth mini album, "THE SIN : BLISS," released in August, sold more than 2.1 million copies during the first week, topping the US Billboard 200. Not only did the group achieve its fifth double million seller in its history, but it also once again demonstrated the overwhelming strength of its core fanbase, with every album released over the past three years selling a cumulative total of over two million copies. I'd also like to note the unusually long-lasting popularity of the second mini album, "GREENGREEN," released by CORTIS in May.
In Q3, we saw continued demand for several versions of this album, including the first anniversary special merch edition, with cumulative total sales surpassing four million copies in September, making CORTIS the fifth K-pop artist in history to achieve a quadruple million seller with a single album. Also, streaming provided solid support for HYBE's strong recorded music sales, representing approximately 30% of the recorded music revenue, which is attributable to the streaming power of BTS, who showed a marked uptick in streaming numbers, building on their large-scale world tour and global momentum, and increased streams of previously released tracks thanks to the success of KATSEYE.
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Concert sales reached a record high of KRW 726.8 billion, mainly thanks to BTS' world tour in Europe and the U.S. Strong demand generated unprecedented concert revenue, with an average of 70,000 attendees per show in the third quarter. In addition, other artists also conducted large-scale concerts, including LE SSERAFIM, &TEAM, BOYNEXTDOOR, TWS, ILLIT, KATSEYE, CORTIS, and ENHYPEN's tour in the Americas. Most of the tours will continue into the fourth quarter, which are expected to make continuous revenue contribution and expand engagement with fans around the world.
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Within the category of revenue with indirect artist involvement, merchandise and licensing revenue once again set a new all-time quarterly high of KRW 334.6 billion. Supported by the successfully localized infrastructure in North America, as explained by the CEO, BTS tour merch sales far exceeded market expectations, driving strong growth. We were able to achieve quarterly merch sales of more than KRW 300 billion, driven by the sellout of tour merchandise for KATSEYE and ENHYPEN for expanding the scale of their tours across the world, in addition to sustained lifestyle consumption of character IP merch items for artists like SEVENTEEN and ENHYPEN. This result once again demonstrates the company's ability to translate global influence of artists into high added value.
Content sales were KRW 56.7 billion, and we benefited from KATSEYE's documentary film, which has been highly acclaimed in the global market, and the successful Asia launch of the game title Architect. Going forward, we expect an increase in content sales in Q4 with annual seasons greetings packages by major artists and the upcoming release of BTS Arirang Tour official DVD that fans around the world have been waiting for.
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Moving on to the KPIs of Weverse, average MAU in the third quarter was 14.22 million. Given the high base of record-breaking MAU trends in the second quarter, it is an encouraging indicator as it shows that we have successfully maintained a high MAU level. As major artists focused on large-scale offline tours in Q3, total paying amount and monthly ARPU fell 19% and 10%, respectively, on a quarter-over-quarter basis. While most artist activities were conducted offline, the platform's activity levels were supported by a steady influx of new fans for artists such as CORTIS. Based on the strong global fan bases, Weverse aims to further enhance the platform's inherent profitability by continuing to refine its services and features and strengthening business execution capabilities.
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The numbers I reported today are not just business results, but a testament to the efforts we have made to build fundamentals that can withstand any changes in the business environment. The horizons of the global entertainment industry that HYBE is set to pioneer remain wide open. Building on the strong earnings fundamentals that we confirmed this quarter, we will continue to drive long-term upward growth. We deeply appreciate our shareholders for their unwavering trust and support. HYBE is committed to delivering measurable results that justify your trust. Thank you.
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Now we will have the Q&A session.
[Non-English content]. 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. [Non-English content]. The first question will be provided by Ki-hoon Lee from Hana Securities. Please go ahead with your question.
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I am Lee, Ki-hoon from Hana Securities. Thank you for taking my questions. I'd like to ask a question about future BTS activity plans. BTS carried out their activities for three quarters this year, starting from April, and according to the announcements that have already been made, we expect that there will be BTS activities into the second quarter of next year. There are many assumptions in the market that there will not be any major activities in the second half of next year. Considering the significant contribution of BTS to HYBE's earnings, we would like to understand if there will be any future activities planned.
I understand that you won't be able to give us any specifics, but we would like to understand if there will be any group activities or solo activities planned for the second half of the year so that we can better understand future performance of the company going forward. Secondly, there are some concerns among investors that there may not be enough earnings momentum after 2028. We understand that there will be BTS activities next year, but I wonder if there will be any comebacks or anything that we can expect from 2028 to 2029, and I wonder if there's any remaining period based on the contract with BTS. Because there are some concerns that we don't really have much visibility as to the investment opportunities for markets going forward.
The third and final question is, if there's any color that you can provide on your non-operating losses, I would appreciate it. Thank you.
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Thank you for your questions. I'm CEO Lee, Jae-sang. I understand that you've been covering HYBE for the past seven years, and the questions that you asked today are quite similar to the kinds of questions that we received for the past six years. The basic idea is that there is quite a lot of concern in the market because there is not concrete plans for BTS activities after the second half of next year. However, I'd like to ask you to understand the characteristics of the tour as a business model. In the first half of next year, we have tour schedules already announced because of the nature of the tour business, including the advance confirming of the routing as well as promotion-related activities.
And because we also need to conduct some value-added businesses, we need to announce our ticket sales in advance. Therefore, given the nature of the tour business as a business model, we tend to offer visibility up to six months to nine months in advance. However, when it comes to albums and other activities, there is no company in the global music market that would announce any specific activities that will happen one year or longer from this point on. I'd love to share more details, but I also at the same time wonder if this would be the right approach. Because of the lack of details of future plans, will it have burden on the stock price or pressure on the stock price? I'd like to offer you a different perspective, and I hope that you will deliver my message to your investors.
Like I mentioned, in the global music market, no company would announce details about artist activities that will happen one year from now. That's not what's happening in the industry. And that does not mean that there will be no activities at all. You've been observing HYBE and the kinds of actions we've been taking over the years and the path that we've been taking. Even though there's no specific announcement about any activities, I hope that you will refer to our past trajectory and how we've been growing our business and continue to have trust in what we will offer in the future. Currently, we're discussing with BTS members about diverse activities, including solo and group activities. And about Arirang World Tour, there will be additional editions of shows to this tour.
And after this Arirang tour is over, we're preparing for group and solo activities, and I hope that you will take them into account. Even though I cannot give you any specifics right now, please trust in us and what we can offer in the future.
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Secondly, as you may remember, when you look at how our revenue and our profit has been growing since 2021, going to 2022, 2023, 2024, and 2025, you know how we've been able to grow our business. You may remember in the early 2023 and 2024, when there was news that BTS members would serve in the military. A lot of people said that HYBE won't be able to sustain its business because of its dependency on BTS for 80% of its revenue. However, that didn't happen, and in 2024 and 2025, we were able to grow our business further, both the top line and the bottom line.
And when BTS members came back, we were able to achieve even greater growth. It is mainly because of the multi-home, multi-genre strategy that we've been implementing for many years. Of course, BTS is our representative act, and it is serving as a global core of HYBE's business. However, we do have many other successful artists, including KATSEYE, ENHYPEN, Santos Bravos, CORTIS, and &TEAM, and so on. And in Nashville and Atlanta, we're working with diverse musicians for country, Latin, pop, and hip-hop music genres. I understand that you may have some concerns about dependence on BTS. However, for the past several years, we've been working to hedge against this reliance on BTS, and I believe that we have been proving ourselves for the past five years.
Our shareholders and analysts, you know how HYBE has been growing its business, and I hope that you will continue to understand HYBE as not just a company depending on BTS, but a company that's expanding its business portfolio by focusing on multi-home, multi-genre, and multi-artist strategy. And we will do our best to not disappoint our shareholders with our earnings.
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I'm CFO. Let me answer your third question. Most of the non-operating losses had to do with foreign exchange impact. We have a large amount of foreign currency cash and deposits, and with the appreciation of the Korean won in the third quarter, we incurred valuation losses on our investment assets, which has nothing to do with our operation.
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[Non-English content]. 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 taking my questions. I have two questions. First of all, recently some major entertainment companies have successfully launched their local artist IPs, especially in Southeast Asia, some K-pop groups with local members and produce music in local language. We have had such cases. As a result of other successes, there tends to be an understanding in the market that HYBE's unique IP production system is not as valuable as before. I'd like to understand the company's view on the current and changing competitive landscape. With many labels under HYBE group, you continue to launch new IPs, and in terms of the pipeline expansion, this is a positive change.
However, this may lead to a change in the competitive landscape. My second question is about the multi-home, multi-genre strategy. TXT has been successful, much more so than what the market had expected, but some may question whether this type of success can be repeated. In producing such multi-home, multi-genre IP, you may need to apply a different methodology, which is different from the K-pop methodology. For you to increase the hit ratio, I'd like to know if you have any particular success strategy so that you can repeat these types of successes going forward. I would also like to understand when these IPs will be able to make meaningful contribution to your earnings? Thank you.
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Thank you for this very meaningful question. As you mentioned, not only major companies but also smaller companies have had some success cases of launching their successful artist IPs. There are also some rising artists in Southeast Asia, and I believe that these are all very positive trends. What I'd like to emphasize from HYBE's perspective is that there is a difference between gaining popularity among the public to grow their popularity and the ability to create value added by creating a fan economy based on artist IP. On one hand, you may be able to utilize popularity of an artist to gain B2B business profit, but at the same time, there is another aspect of the business which is about reaching out to the end users and continue to generate profit through B2C relationships as well.
These two are quite different in terms of their approaches and in terms of the earnings fundamentals. We're fully aware of these popular artists in Southeast Asia, including no na in Indonesia and SB19 in the Philippines, and indeed, these artists are actually on Weverse. I believe that these are quite positive trends. I'd also like to mention that we will not go into any local market where there's not enough local entertainment or artist industry in place, because it's quite challenging to grow local artists and grow the market all at the same time. However, if we see that there are certain signals in a market with huge growth potential, where local artist IPs gain popularity and create enough market, this is a signal for us to build a localization production base, not necessarily a multi-home, but a localized production capability in that market.
I won't be able to give you any details, but there are certain Southeast Asian markets that we're incubating right now. Of course, you have seen some very successful artist launching cases with marketing and good music, and I'd like to send congratulations on these successful cases in Korea. But for them to grow globally, they need infrastructure. We're not just constrained by the domestic market, but rather we have our bases in the U.S., Japan, India, Latin America, and others, and we continue to pursue expansion and growth of our artists. We're not limited to the domestic market. In terms of the pipeline expansion, I see that there are some positive signals in the competitive landscape, and I hope that you will take that in from that perspective.
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Your second question on whether we will be able to recreate a success similar to KATSEYE. We are not just creating and offering music, but rather we have been applying our K-pop methodology and system to the U.S. pop market to successfully create a strong core fan base. What it means is that this core fan base will continue to purchase merch items as well as albums. As we have been successful in creating such fan base in the U.S. by using the K-pop methodology, we continue to produce very successful artist IPs. We do believe that this is something that we can continue to repeat. Moving on to the multi-home, multi-genre strategy, we now have secured key artist IP and major gateways in our multi-homes, and now we see very successful collaborations among these artist IPs.
This is not just providing an opportunity to allow exchanges of fans from two different fan bases, but rather we can create something that goes beyond that. Good examples are ICONIC by Mistake and the collaboration between Santos Bravos and &TEAM. We are the only company that has such a global IP portfolio, and we are the only company that has 360 degree rights for these artist IPs. With strong collaborations among these artist IPs, we will be able to create even bigger market opportunities.
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I'm CEO. I'd like to make some additional comment. This year and next year, we will have a lot of BTS activities, and sometimes the outstanding success of BTS tends to overshadow the success of new artists as well as emerging and growing artists in the investment and the capital market. I'd like to remind you that there was no artist like the one that we have that was able to sell more than four million copies within just a year of debut. There was no artist in the past that was able to top the Billboard 200 within just two years of debut. There was no group that was able to have multi-million sellers in both Korea and Japan within the three years of debut.
There was no Latin American boy band like the one that we have that was able to be nominated for the best artist within one year of debut. The things that have been made possible in the past that took four or five years, we've been doing this in just one or two years. If it was just one case or one artist, people may say this was pure luck. However, you can see that there are four or five successful artist IPs that we've been growing for the past short period of time, and this does not mean that we just had pure luck, but rather we have been working really hard and we have learned from our lessons. We have learned lessons from our experiences, and we were able to produce unprecedented results that did not exist in the industry in the past.
Such achievements tend to be overshadowed by our leading artist groups of HYBE. However, I've been mentioning this over and over again during earnings conference call to please pay attention to the rising artists, the IPs that we have, and how we've been expanding our artist portfolio.
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[Non-English content]. The following question will be presented by Hwa-jung Lee from NH Investment & Securities. Please go ahead with your question.
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I'm Lee, Hwa-jung from NH Investment & Securities. I would like to ask you two questions. My first question has to do with SG&A. When I look at the labor cost trend, it's been about KRW 150 billion from the second quarter onward. I'd like to understand the reasons behind this size, whether you have now more headcount or more labor organization, or maybe because of increase in incentives because of good earnings. The reason why I'm asking this question is I wonder if this level of labor costs will be maintained even in quarters when you don't have any major revenue events like BTS world tours. My second question is that CORTIS is quite popular, and I'd like to know if there's any visibility as to concert and activity plans for next year?
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I'm CFO. Let me address your first question about the increase in labor costs. It's not so much about the increase in the headcount, because when you look at the headcount, the current headcount is not very different from the one that we had at the end of last year. However, there was an increase in the labor cost mainly because of additional and conservative reserving for incentive payments because of solid earnings. This portion of labor cost increase will not be incurred when we have lower performances in the future, if that becomes the case.
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Your second question about CORTIS concerts. The tour that they conducted this year, the venues were determined before their debut, so the venue size did not take into account the size of the fandom. For next tour, we will consider bigger venues given the large fan base of CORTIS. The venue size would be similar to those of artists with several years in their career.
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This concludes the earnings conference call for the third quarter of HYBE 2026. Thank you very much.