SM Entertainment (041510) investor relations material

Executive summary

• 3Q26 revenue fell 9.5% YoY to KRW 291.1bn and operating profit fell 26.4% to KRW 35.5bn; net income was a KRW 1.1bn loss, with won-appreciation-related FX losses contributing.

• 9M revenue rose to KRW 916.7bn from KRW 855.9bn, while operating income fell to KRW 125.1bn from KRW 188.5bn; the prior-year comparison included a KRW 228.2bn DearU remeasurement gain.

Financial highlights

• 3Q26 revenue declined 16.7% QoQ; gross profit fell 21.7% YoY to KRW 93.1bn, while SG&A declined 18.5% YoY to KRW 57.6bn.

• Income before tax was KRW 3.2bn versus KRW 56.9bn in 3Q25; net income was a KRW 1.1bn loss versus KRW 44.7bn income.

• 9M consolidated net income was KRW 63.0bn versus KRW 328.3bn; income attributable to owners was KRW 68.3bn versus KRW 317.3bn.

• 9M basic and diluted EPS were both KRW 2,983, down from KRW 13,858 YoY.

Segment performance

• Parent revenue fell 22.8% YoY to KRW 173.4bn; album and digital-music revenue dropped 51.3% to KRW 47.1bn as new-release sales declined to 1.67m copies from 5.50m.

• Parent concert revenue fell 34.2% YoY to KRW 34.5bn; appearance revenue rose 21.3% to KRW 29.2bn and MD/licensing rose 23.5% to KRW 62.1bn.

• Parent operating profit fell 29.2% YoY to KRW 28.4bn, with a 16.4% margin versus 17.9%; net income declined 65.7% to KRW 11.1bn.

• Major subsidiaries’ aggregate revenue rose 12.1% YoY to KRW 164.6bn, while operating profit fell 9.9% to KRW 12.2bn; aggregate net income was a KRW 6.0bn loss.

• Subsidiary revenue gains reflected DREAM MAKER concert production, KEYEAST TV production and DEARU subscriber growth; SM C&C faced higher music-content production costs.