SM Entertainment Faces 73% Decline in Q3 Operating Profit, Looks to Upcoming Group Comebacks for Financial Recovery

SM Entertainment Announces Q3 Financial Results

On November 5, SM Entertainment (SM) reported its consolidated financial figures for the third quarter, revealing a total revenue of 242.2 billion KRW and an operating profit of 13.3 billion KRW. When compared to the same quarter last year, there was a 9.0% decline in revenue and an alarming 73.6% drop in operating profit. These changes were primarily driven by a decrease in album sales, a reduction in revenue from key affiliates, and increased production costs associated with the launch of Dear Alice, their first British boy band.

Separately, SM’s standalone performance indicated a revenue of 172.1 billion KRW and an operating profit of 27.1 billion KRW, marking losses of 8.8% and 43.6% respectively compared to the previous year. This revenue contraction in music and album sales was somewhat offset by a surge in concert revenues, which benefitted from more scheduled performances and an expansion of concert-related merchandise sales. For the quarter, the net income stood at 16 billion KRW, reflecting a 56.8% year-on-year decline.

Looking Ahead: New Releases and Strategic Initiatives

SM Entertainment is gearing up for an active fourth quarter and the start of the new year, with plans to unveil a host of activities for its artists. A highly anticipated highlight is the debut of SM’s first new girl group in five years, following the success of aespa, scheduled for the first quarter of next year. This initiative is part of the SM 3.0 roadmap, which aims to broaden their intellectual property (IP) portfolio, recently launching several new global projects including RIIZE, NCT WISH, and the virtual artist nævis.

In Q1, the new girl group is set to release a single accompanied by a comprehensive promotional campaign targeted at engaging fans globally.

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Upcoming Album Releases and Celebrations

Aespa’s recent mini-album Whiplash, which launched on October 21, has met with enthusiastic reviews, following numerous hits this year including Supernova. Fans can also anticipate a solo album by SHINee’s Minho set for release on November 4, alongside NCT DREAM’s upcoming fourth full album.

Additional releases in the pipeline include:

TVXQ’s Japanese album and 20th-anniversary tour
NCT WISH’s Japanese album
A mini album by NCT Yuta
Red Velvet’s Irene’s debut solo album
Mini albums from Taeyeon, WayV, and nævis

Celebrating 30 Years of SM Entertainment

Next year marks SM’s 30th anniversary, and fans can look forward to a series of exciting events including the SMTOWN LIVE concert, the release of a commemorative SMTOWN album, and various anniversary-themed projects. Notable anticipated releases include:

NCT Mark’s first full album
EXO Kai’s awaited mini album
Red Velvet Seulgi’s mini album
New music from NCT WISH and NCT Ten

Co-CEO Jang Cheol-hyuk emphasized the company’s focus on nurturing a multi-generational artist lineup while celebrating its impressive legacy. “We are excited to introduce new artists alongside our well-loved groups. Our planned projects for the 30th anniversary will span concerts, albums, and merchandise, and we hope fans will share in our enthusiasm for what’s to come,” he stated.

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