[instiz] SM'S Q&A AT THEIR CONFERENCE CALL YESTERDAY

Financial report of SM entertainment

■ Key Financial Highlights

- Revenue: 302.9 billion won (YoY +19.3%, QoQ +30.9%)

- Operating Profit: 47.6 billion won (YoY +92.3%, QoQ +46.1%)

Exceeded market expectations due to strong MD sales from RIIZE and WISH, and a return to profitability in subsidiaries.

Breakdown:

[Albums] 99.0 billion won (YoY +38.1%, QoQ +46%), Met expectations
- 5.79 million albums sold

RIIZE: 1.93M
WISH: 1.34M
aespa: 0.9M

[Concerts] 33.6 billion won (YoY -9.7%, QoQ -13.8%), Beat expectations

- Events held: TVXQ (3), 127 (6), Taeyeon (8), SMTOWN (3), Ten (15), WISH (10), SHINee (3), Kai (6)

Maintained levels similar to last year

[MD (Merchandise)] 63.9 billion won (YoY +45.8%, QoQ +62.3%), Significantly exceeded expectations

- Driven by strong sales at RIIZE and WISH pop-up store

■ Planned Activities for 3Q25–4Q25

- 3Q Comebacks: NCT DREAM, aespa (early Sep), WISH, Super Junior, WayV

- 4Q Comebacks: Taeyeon, NCT DREAM, WayV, Hearts2Hearts

- Concerts: 100 events planned in 3Q, 86 in 4Q

■ Strategic Partnership: SM Entertainment x Tencent Music (TME)

- Beyond just music distribution: partnership covers content planning, fan data analysis, and concert execution

- Tencent's local marketing/distribution strengths expected to help rapidly establish new IP in China and monetize Chinese fandom

■ Q&A Highlights

 
1. MD Sales Boom: Breakdown between concert vs non-concert MD? RIIZE and WISH contributions?

Not disclosed.

2. SM Japan improved to ~10% OPM, can it be sustained?

Profitability improved due to more artist activities in Japan.
ROI-focused investment in broadcasting.
Expecting similar trends in 2H, depending on concert scale.

3. Why is RIIZE's comeback cycle longer than other IPs?

It's true their cycle is long, but it's planned and performance-focused.
2026 will shift focus to Japan and US, with fewer domestic activities.

4. Heart2Heart MD guidance and direction?

Recent gains driven by cost-efficient pop-ups and character MD from new IPs.
MD sales strength likely to continue. Working on optimizing concert MD and expanding scale
Weakness remains in overseas MD sales, aiming for improvement by next year.

5. DearU & PPA size?

PPA (purchase price allocation) from DearU acquisition is still being assessed.
Expected to reflect accurately by year-end.
PPA amount expected to be ~70% of DearU’s operating profit.

6. North America fandom expansion strategy & music sales upside?

Focus is on expanding fandom through quality music/content.
aespa's fandom grew post-‘Supernova’; similar strategy to be applied to other IPs.

Physical album sales not in high-growth phase, so volume expansion via new IPs.

7. Concert MD strategy shift, does it mean increasing supply?

MD divided into on-site sales and pre-orders (heavily purchased by overseas fans).

Preparing to expand on-site sales via better product lineups and demand forecasting.

8. Album vs Digital Music Revenue?

Digital: 26.7 billion won

Physical Albums: 62.3 billion won

9. Rookie group debuts, including SMTR25?

Next 3 years already planned.
- SMTR25 to debut at least 2–3 teams
- One group planned for 2026
- One girl group expected within 3 years

- Japanese localized group under preparation
- Tencent-linked group may debut within 2–3 years

original post: here

1. RIIZE hasn’t released that many songs to begin with, so I get that they can tour overseas. But honestly, I don’t get this strategy at all ㅎㅎ Groups that debuted around the same time or even later have released way, way more songs. So what am I supposed to feel? The music? The performances They’ve had 8 comebacks in 10 months, but they were all single, and then they just bundled them up into a so-called “mini” with full album volume? I’ve never seen a company hold back songs like this, or refuse to release a proper mini album like this. And SM hoarding songs like this? First time I’ve seen it. SM is treating domestic fans like they don’t matter, they’re really gonna get karma for that. I’m not trying to curse them, I’m just frustrated with the company. Everyone has their limits. It’s not like I’m saying “don’t make money,” but I don’t understand the arrogance of treating the domestic fandom as if they’ll always be there. This self-grandiosity coming from SM is really too much. Since when did being a fan mean just watching videos that overseas fans post from concerts all the time?

2. So they're not pushing anyone aside from aespa in North America? There's not a single group being mentioned 

3. Stop shoving us MD!!!!

3. SMTR25 are basically all going to debut 

4. Can they cut it down on the pop-ups 

5. You really can tell that center 5 can't work for sh*t ㅋㅋㅋ Of course the fans are gonna complain 

6. This is already stressing me out 

7. No but RIIZE needs to settle their own domestic fandom first... Stop saying nonsense like that 

8. They need to start promoting RIIZE domestically 

9. So they're releasing new boy groups every 3 years. Do you think it makes any sense?

10. Stop with the US 

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