SM Entertainment, home of such K-pop groups as NCT 127, SuperM and Girls’ Generation, had revenue of 238.1 billion KRW ($165 million at the Sept. 30 exchange rate) from July 1 to Sept. 30 — up 65.4% year-over-year and a 29.1% improvement from the previous quarter, the company announced Monday (Nov. 14).
Operating margin — operating profit as a percentage of revenue — improved to 12.5% in the third quarter of 2022, up from 6.9% in the prior-year period. Net income was 29.2 billion KRW ($20.2 million), up 129.5% year-over-year and 15% higher than the second quarter.
The company’s multi-pronged business, which generates revenue across all facets of its artists’ careers, improved across the board: Recorded music revenues grew 46.6% to 135.1 billion won ($93.6 million). SM Entertainment’s album sales improved from 3.25 million units in the prior-year period to 4.7 million units. It had two standout releases in the quarter: NCT 127’s 2 Baddies peaked at No. 3 on the Billboard 200 albums chart and Aespa’s Girls: The 2nd Mini Album topped Billboard’s Top Album Sales chart.
Concert revenues climbed to 10.9 billion won from virtually nothing a year ago. In the quarter, Revenue from appearances — including television, advertising and events — grew 96.4% to 24.3 billion KRW ($16.8 million). Licensing revenue improved 76.1% to 26.4 billion KRW ($18.3 million).
Revenue at SM Entertainment’s subsidiaries grew 119.5% to 136.9 billion KRW ($94.9 million). These companies include Dream Maker, a Hong Kong-based concert booking agency; SM Culture & Contents, a content production and advertising business; and Keyeast, a Korea-based merchandising and licensing business. According to the release, these subsidiaries benefitted from the reopening of domestic and international touring and increased demand for advertising promotion and business-to-business travel.
Several SM Entertainment artists are on tour in the fourth quarter: NCT 127 has nine dates in Korea, U.S., Thailand and Indonesia; Super Junior has six concerts in Indonesia, Hong Kong and Taiwan; and Ryeowook and NCT Dream have six and five concerts in Japan, respectively.
The company’s fourth-quarter release schedule includes new mini albums by Chen, BoA and Red Velvet and Red Velvet member Seulgi. Red Velvet’s Feel My Rhythm album peaked at No. 20 on the Billboard Global Excl. US chart in April; it also landed on the Indonesia Songs (No. 3), Malaysia Songs (No. 5), Phillippines Songs (No. 15) and Taiwan Songs (No. 16) charts. The group’s The ReVe Festival: Finale EP reached No. 40 on Billboard’s Top Album Sales chart in January 2020.
SM Entertainment’s shares rose 0.5% on Monday to 65,800 KRW. Down just 11.3% in 2022, SM Entertainment’s share price has fared better than Korean music companies HYBE (down 61.2%) and YG Entertainment ( down 26.4%) but lags behind JYP Entertainment (up 12.0%), home of Twice, Stray Kids and iTZY.
SM Entertainment’s shares rose 19% on Sept. 16 after the company announced would prematurely end a contract with a production company owned by the company’s founder and largest shareholder, Lee Soo-man. Its share price, however, has fallen 14% since then.