HYBE (352820) Q2 2024 earnings summary

Executive summary

• Q2 2024 marked the highest quarterly revenue in company history at 640.5 billion KRW, up 3.1% year-over-year and 77.5% sequentially, driven by strong artist activities, global expansion, and new business initiatives under the HYBE 2.0 strategy.

• HYBE 2.0 focuses on restructuring into music, platform, and technology-driven growth, with a multi-home, multi-genre approach targeting Korea, the U.S., Japan, and Latin America.

• Major artists, including SEVENTEEN, TXT, ENHYPEN, NewJeans, and BTS members, achieved significant album sales, chart success, and global concert attendance.

• Operating profit was 50.9 billion KRW, down 37.4% year-over-year but up 253.9% from Q1; net profit for Q2 was 16.5 billion KRW, a decrease of 85.9% year-over-year but a 49% increase from Q1.

• Q2 saw record Weverse MAU growth and significant global music and concert performance.

Financial highlights

• Q2 consolidated revenue reached KRW 640.5 billion, up 3% year-over-year, with direct artist involvement accounting for 66% and indirect for 34%.

• Recorded music sales were KRW 249.6 billion (+1.5% YOY); concert sales were KRW 144 billion (-8.6% YOY); merchandising and licensing revenue was 109.1 billion KRW, down 2.5% YOY.

• Indirect artist revenue (merchandise, licensing, content, fan clubs) was KRW 216.6 billion (+17.4% YOY), driven by tour merch, BTS Festa, and new content sales.

• Operating expenses increased 9.2% year-over-year and 70.1% sequentially; gross margin for Q2 was 27.2%.

• Streaming revenue made up 35% of recorded music sales in H1, showing year-over-year growth despite declining physical album sales.

Outlook and guidance

• Expectation of larger top-line growth and improved margins in H2 2024 as artist schedules intensify and initial marketing costs subside.

• Launch of Weverse subscription service in Q4 and anticipated BTS group comeback in 2025 to further strengthen earnings.

• Continued expansion of new businesses, including gaming and creator platforms, expected to contribute more to the bottom line.