Business

BTS Label HYBE Turns a Modest First-Quarter Profit

BTS
Theo Wargo/Getty Images for The Recording Academy

BTS performing at the 63rd annual Grammy Awards, broadcast live on the CBS Television Network and Paramount+ on March 14, 2021.

Much of the earnings release focused on HYBE’s acquisition of Scooter Braun’s Ithaca Holdings, which was announced April 2.

HYBE Corporation, the label and management home of K-pop superstars BTS, turned in revenues of $158.7 million and a profit of $14 million in the first quarter of 2021, the company announced Tuesday (May 4).

Without tours or big music releases, HYBE needed gains in what it calls “artist indirect involvement” for a 29% jump in revenue compared to the first quarter of 2020. Merchandising, licensing, content and fan club revenues rose 123% while “artist direct-involvement” -- recorded music and concerts -- fell 24%.

These positive first-quarter results don’t, however, come close to the company’s impressive previous quarter, Q4 2020. Then, still without touring income, HYBE produced livestreamed concerts and had strong music sales -- 159% greater than 2021’s first quarter -- and closed 2020 with quarterly revenue of $278 million and a $23.7 million profit.

HYBE didn’t provide guidance on concert revenue in 2021, saying “with pandemic conditions still in place, forecasts are still unclear on the possibility of in-person concerts in the second half of this year.” In the meantime, HYBE said it will offer more livestream concerts and “other diverse content.”

Much of the earnings release focused on HYBE’s acquisition of Scooter Braun’s Ithaca Holdings, which was announced April 2, noting it was the the largest acquisition "in history for a Korean entertainment company and the first acquisition of an international label.” It outlined how the deal helps HYBE’s “fandom expansion,” as HYBE calls it: Ithaca increases HYBE’s YouTube subscribers from 120 million to 290 million and social media followers from 440 million to 1.26 billion. HYBE plans to take Ithaca artists onto its WeVerse platform, which had 4.9 million monthly active users in the first quarter.

HYBE’s earnings presentation also laid Ithaca’s business segments: SB Projects is talent management; Big Machine is the record label and publisher; Silent Content Ventures houses premium content such as TV shows, documentaries, movies and other content that can now leverage HYBE artists; and Venture & Consumer houses “consumer brands based on artist IP.”

In March, HYBE changed its name from Big Hit Entertainment and restructured itself into three segments: Big Hit Music houses the labels BELIFT Lab, Source Music, PLEDIS Entertainment and KOZ Entertainment; HYBE IP and HYBE 360 encompasses HYBE Edu and Superb; and WeVerse is HYBE’s social media platform that had 4.9 million monthly average users during 2021’s first quarter, up from 2.4 million a year earlier.

Except for the total revenue figures, the below metrics are provided in Korean won (KRW) and can be converted at $1 to 1,125.9 won.

Financial metrics:

  • Revenue: 178.3 billion KRW ($158.7 million) in Q1 2021 -- up 29% from 138.5 billion KRW ($120.6 million) in Q1 2020; down 43% from 312.3 billion KRW ($277.9 million) in Q4 2020.
  • Operating profit: 21.7 billion KRW in Q1 2021 -- up 9% from 19.9 billion KRW in Q1 2020; down 39% from 256.7 million KRW in Q4 2020.
  • Net profit: 15.8 billion KRW in Q1 2021, up 11% from 14.2 billion KRW in Q1 2020; down 41% from 26.7 billion in Q4 2020.

Revenue streams metrics: 

  • Albums: 54.5 billion KRW in Q1 2021 -- up 33% from 80.8 billion KRW; down 61% from 80.8 billion KRW in Q4 2021.
  • Concerts: 0 KRW in Q1 2021 -- down 100% from 100 million KRW in Q1 2020; even at 0 KRW in Q4 2020.
  • Ads and appearances: 13.0 billion KRW in Q1 2020 -- up 63% from 8.0 billion KRW in Q1 2020; down 5% from 13.8 billion KRW in Q4 2020.
  • Merchandise and licensing: 64.7 billion KRW in Q1 2021 -- down 89% from 34.3 billion KRW in Q1 2020; down 4% from 67.3 billion KRW in Q4 2020.
  • Content: 37.2 billion KRW in Q1 2021 -- up 360% from 7.2 million KRW in Q1 2020; down 54% from 80.9 billion KRW in Q4 2020.
  • Fan clubs and other: 8.9 billion KRW in Q1 2021 -- up 24% from 7.2 billion KRW in Q1 2020, down 6% from 9.5 billion KRW in Q4 2020.

Guidance for Q2 2021:

  • Operating expenses will increase “slightly” compared to the first quarter due to expenses related to the Ithaca Holdings acquisition and preparation for second quarter music releases.
  • If concerts resume, HYBE expects second-half revenues “to greatly outpace not only the first half but the second half of the same period last year as well.”

Stock market:

  • Market capitalization on May 4, 2021: $7.6 billion.
  • One-year increase in HYBE’s share price: 149%