SM Entertainment Earnings Report Reveals Mixed Bag for Q2 2024

Another K-pop earnings report, another mixed bag: SM Entertainment achieved modest revenue growth during Q2 2024 but experienced a material decline in net income amid sizable sales falloffs from multiple subsidiaries.

The publicly traded (KOSDAQ: 041510) K-pop business, which serves as the professional home of Aespa, Riize, Red Velvet, and more, generated $184.76 million (₩253.9 billion) during April, May, and June of this year, according to the breakdown.

This sum represents a 5.9% YoY increase, though as usual, SM distinguished between the showing of its core operations and the performances of various sub-divisions.

On the former front, revenue attributable to the SM “parent” came in at $126.64 million (₩174.1 billion) in Q2, up nearly 28% on a quarterly basis and 25.4% YoY.

Behind the total, SM identified a more than 30% YoY and quarterly sales spike in the joint physical album and digital music category ($52.15 million/₩71.7 billion). As a whole, the Seoul-based company’s roster sold a whopping 3.86 million new-album units during the three-month stretch, per the resource. That’s up from 3.56 million units in Q2 2023 and includes 2.44 million units moved by Riize and Aespa.

Revenue from TV, advertising, and event appearances slipped YoY but grew 3.7% quarterly ($14.98 million/₩20.6 billion), against an 86.1% YoY and 50.7% quarterly increase in the concerts category ($27.06 million/₩37.2 billion). NCT Dream, Aespa, and Super Junior were among the contributors to the latter surge.

Rounding out the overarching SM’s Q2 2024 revenue was $31.89 million/₩43.8 billion from licensing (up 3.6% YoY and 21.7% quarterly) as well as $509,580/₩700 million from other sources (down 52.3% YoY and up 43% quarterly).

All told, operating profit grew quarterly and yearly ($21.33 million/₩29.3 billion) for the SM parent as net income fell 22.5% YoY to $9.83 million/₩13.50 billion; execs chalked up the latter “to an increase in income tax.”

Shifting the focus to “major subsidiaries,” there were fewer positive takeaways for SM on the quarter, when substantial lost ground for each unit except KeyEast and SM Brand Marketing fueled an overall decrease of 10.2% quarterly and 18.5% YoY to $82.12 million/₩112.8 billion.

Predictably, the points translated into YoY declines in areas including net income, which fell from $3.13 million/₩4.3 billion during Q2 2023 to a loss of $4.72 million/₩6.5 billion in the same period this year. Worth mentioning in passing, however, is that some of these subsidiaries’ activities (like the travel-agency services of SM Culture & Contents) fall well outside the music space.

During today’s trading, SM Entertainment shares parted with less than 1% of their value to finish at $51.17 (₩70,400) apiece. Despite the comparatively mild post-earnings movement, the current price is 25% less than at 2024’s start and 48% less than at the same point in August of 2023.