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BTS Sales Lead HYBE to 79% Growth

BTS
Courtesy of BIGHIT MUSIC

BTS

HYBE, home to K-pop stars BTS, overcame a continued touring stoppage and improved its revenue by 79.3% to 278.6 billion KRW ($244.1 million) in the period spanning April 1 to July 1, according to the company's second quarter earnings report released Thursday (Aug, 5). Operating profit did, however, slip 6.2% to 28.1 billion KRW ($24.5 million).

Sales of the BTS, The Best compilation released June 16 as well as Seventeen’s Your Choice and Tomorrow x Together’s The Chaos Chapter: FREEZE pushed album revenue up 105.4% from the prior-year quarter and 96.2% from the previous quarter.

With touring at a standstill, album sales accounted for 38.4% of HYBE’s total revenue in the quarter -- a far higher proportion of revenue than a normal year. (In 2019, concerts accounted for 32.5% of total revenue to albums’ 18.4%.) Now, with live music's immediate future still uncertain, HYBE is considering holding “hybrid” concerts that would mix in-person and live-streaming experiences, although company executives did not elaborate on their exact substance or timing.

But HYBE -- which changed its name from Big Hit Entertainment in March -- depends less on BTS’ touring business after it purchased Ithaca Holdings, the Scooter Braun-led conglomerate, in April. Ithaca Holdings contains SB Projects, the artist management home of Justin Bieber and Ariana Grande, and Big Machine Label Group. Ithaca’s results after May 6 helped drive a 76.9% increase -- 9.4 billion KRW, or $8.2 million -- from the previous quarter in HYBE’s “ads, performances and management” category.

HYBE diversifies its business with its online social platform, WeVerse, which attracted 5.3 monthly average users, up 9% from 4.9 million MAUs in the previous quarter and 3.5 million from Q2 2020. The group BlackPink was responsible for 1 million new MAUs in Q2 2021. The company expects WeVerse MAUs “to increase considerably” after integrating with V Live, a streaming platform HYBE will acquire following the approval of Korea’s Fair Trade Commission in May.

Album sales increased 105.4% year over year to 107 billion KRW ($93.7 million) and 96.2% from the previous quarter. Tomorrow x Together’s album The Chaos Chapter: FREEZE sold 780,000 copies, a 55% increase from its previous album, and the highest ever sales total for a third-year K-pop group, according to HYBE. A repackaged version of The Chaos Chapter: FREEZE also sold 390,000 pre-orders that will count toward Q3 sales when they ship.

HYBE’s slate of upcoming titles includes the debut of a multinational boy band in late 2021 or early 2022 that will be released through HYBE Japan. In the second half of 2022, HYBE’s Source Music Group will debut a new girl group and its joint venture with Universal Music Group will produce a new boy band that will showcase “K-pop’s full production system encompassing not just music but performance, fashion, video and fan communication,” CEO Park Ji-won said during the earnings call.

HYBE has transformed itself since its IPO on the Korean Exchange in October 2020. In July, HYBE named Park Ji-won its CEO, replacing founder Bang Si-Hyuk, who remains as chairman of the board. Yoon Seok-jun and Braun lead HYBE America, for which Jaesang Lee moved to the U.S. to be the chief operations officer. Braun continues to lead Ithaca Holdings.

On Tuesday, news broke that HYBE has bid against Kakao Entertainment and CJ ENM for a nearly 20% share of Korean entertainment company SM Entertainment, a hybrid business that combines record label, talent agency, concert production and music production businesses. SM Entertainment’s largest shareholder, founder Lee Soo-man, is selling his stake at a $2.2 billion valuation.

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 encompass HYBE Edu and Superb; and WeVerse is HYBE’s social media platform

The below metrics are provided in Korean won (KRW) and converted at 1,141.61 won to $1.

Financial metrics:

  • Revenue: 278.6 billion KRW ($244.1 million) in Q2 2021 -- up 79.3% from 155.4 billion KRW ($136.1 million) in Q2 2020; up 56.2% from 178.3 billion KRW ($156.2 million) in Q1 2021.
  • Operating profit: 28 billion KRW ($24.5 million) in Q2 2021 -- down 6.2% from 29.9 billion KRW ($26.2 million) in Q2 2020; up 23% from 22.8 billion KRW ($19.9 million) in Q1 2021.
  • Net profit: 20.8 billion KRW ($18.3 million) in Q2 2021, up 9.9% from 19 billion KRW ($16.6 million) in Q2 2020; down 8.5% from 22.8 billion ($19.9 million) in Q1 2021.

Revenue streams metrics:

  • Albums: 107 billion KRW ($93.7 million) in Q2 2021 -- up 105.4% from 52.1 billion KRW ($45.6 million) in Q2 2020; up 96.2% from 54.5 billion KRW ($47.7 million) in Q1 2021.
  • Concerts: 0 KRW in Q2 2021 -- down 100% from 1.4 billion ($1.2 million) KRW in Q2 2020; even with Q1 2021.
  • Ads, performances and management: 21.6 billion KRW ($18.9 million) in Q2 2021 -- up 96.5% from 11 billion KRW ($9.6 million) in Q2 2020; up 76.9% from 12.2 billion KRW ($10.7 million) in Q1 2021.
  • Merchandise and licensing: 50.1 billion KRW ($43.9 million) in Q2 2021 -- down 12.5% from 57.2 billion KRW ($50.1 million) in Q2 2020; down 22.7% from 64.8 billion KRW ($56.7 million) in Q1 2021.
  • Content: 91.3 billion KRW ($80 million) in Q2 2021 -- up 236.9% from 27.1 million KRW ($23.7 million) in Q2 2020; up 145.6% from 37.2 billion KRW ($32.6 million) in Q1 2021.
  • Fan clubs and other: 8.6 billion KRW ($7.5 million) in Q2 2021 -- up 29.8% from 6.6 billion KRW ($5.8 million) in Q2 2020, down 10.8% from 9.6 billion KRW ($8.4 million) in Q1 2021.

Additional information from the earnings call:

  • BTS 2021 Muster Sowoozoo, an online fan meeting to celebrate the 8th anniversary of the first BTS album, attracted 1.33 million viewers from 195 countries over two days.
  • Nine artists joined the WeVerse platform in Q2. In Q1 WeVerse had 18 artists.
  • HYBE expects to release a new game in early- or mid-2022 that was developed by an in-house team.

Stock market:

  • Market capitalization on August 5, 2021: $11.66 trillion KRW ($10.2 billion).
  • Year-to-date change in HYBE’s share price: 88.8%