SM Entertainment (041510.KS) extended its growth momentum in the first quarter, driven by core businesses including concerts and merchandise.
SM said Tuesday that its consolidated first-quarter revenue rose 20.6% year-on-year to 279.1 billion won ($203 million). Operating profit over the same period increased 18.5% to 38.6 billion won.
On a non-consolidated basis, first-quarter revenue climbed 14.4% year-on-year to 189.3 billion won. Concert revenue surged 56.0%, while merchandise and licensing revenue grew 20.3%, demonstrating steady growth on a standalone basis as well. Non-consolidated operating profit fell 5.9% to 38.8 billion won due to the high base effect from one-off music revenue in the same period a year earlier. Excluding that one-off factor, earnings rose from a year earlier, and net profit increased 20.9% year-on-year to 38.9 billion won.
The growth was driven by higher album sales from core intellectual property (IP), concert revenue growth from expanded performance scale, growth in the merchandise and licensing segment, the consolidation effect of DearU, and revenue expansion at major subsidiaries. The continued diversification of the revenue structure, with a growing share of concert and IP-based revenue, also drove growth.
In particular, global tours by core mega IPs including Super Junior, NCT DREAM, aespa, RIIZE, and NCT WISH continued in the first quarter, contributing to concert revenue growth. In the merchandise and licensing segment, sales of light sticks and planned merchandise increased, boosted by pop-up events tied to EXO's regular album release, the NCT WISH project, and the aespa tour effect.
Earnings at major subsidiaries also improved. SM C&C saw revenue growth from advertising and management, while SM Japan posted higher revenue on expanded overseas activities by the company's artists, and DearU has continued to contribute stable earnings since its consolidation. Operating profit at subsidiaries also turned to a surplus from a year earlier, improving profitability.
SM is building a foundation for mid-to-long-term growth by strengthening IP competitiveness and expanding into global markets under its 'SM NEXT 3.0' strategy. In particular, it is focused on further enhancing content production capabilities and expanding its artist-centered IP portfolio.
The results of this strategy are particularly evident in the rookie girl group Hearts2Hearts. Debuting as SM's first girl group in about five years since aespa, they have quickly built a presence in overseas markets since their debut. Their representative songs "The Chase" and "STYLE" each surpassed 100 million cumulative streams on Spotify globally, while "RUDE!" has a particularly high share of global consumption, with approximately 85% of total streams generated overseas. The group also proved its competitiveness by recording the highest ranking on the Spotify Global Top 200 among K-pop girl group releases in 2026.
Future earnings are also expected to remain solid. SM plans to continue growth in the album, music, and concert segments in the second and third quarters based on a strong artist lineup. The second quarter will see sequential releases including regular albums from Taeyeon, aespa, and NCT WISH, mini-albums from SHINee, RIIZE, and Hearts2Hearts, and a single from Ryeowook.
Comebacks from major artists will continue in the third quarter. Regular albums from Taeyeon and NCT 127 are planned, along with mini-albums from Super Junior-S-83z, Red Velvet, and WayV, and new releases from Yesung, Minho, and Yunho.
The concert business will also expand with a global focus. In the second and third quarters, aespa will embark on a new world tour starting in Seoul and touring North and Central America and Europe, while EXO's tour concerts are also scheduled. Expectations are also high for the performance lineup, with Yunho and Irene each holding their first solo tours since debut.
