With BTS on hiatus since June and its members pursuing solo projects, HYBE’s solid second-quarter earnings announcement was as much about what happens next than what already happened.
HYBE’s total revenue improved by 83.8% to 512.2 billion KRW (397.7 million USD) from April to June. The biggest growth came from the company’s “direct artist involvement” segment, which rose 153%. Concert revenue grew to 85 billion KRW (66 million USD) from nothing in the previous year due to BTS’ four concerts in Las Vegas and Seventeen concerts in Japan. Revenue from ads, appearances and administration grew 39% to KRW 30 billion (USD 23.3 million)
While merchandising and licensing improved 97.2% to KRW 98.8 billion (US$78.7 million), content fell 22.6% to KRW 70.7 billion (US$54.9 million), partly because online concerts were categorized under content in the previous period. The fan club’s revenue increased by 96% to KRW 16.9 billion (US$13.1 million).
Adjusted earnings before interest, tax, depreciation and amortization rose 146% to KRW 107.4 billion (USD 83.4 million), although the EBITDA margin (as a percentage of revenue) fell from 22.4% to 21.0%.
With BTS touring and releasing music, the second quarter looked like any other quarter for HYBE. BTS’ “hiatus” announcement came on June 14 — two weeks before the end of the quarter and four days after the release Proofa retrospective compilation that debuted at No. 1 on the Billboard 200 with 314,000 album-equivalent units, including 266,000 album sales and 52.8 million on-demand streams.
That helped HYBE’s album revenue — essentially its recorded music sales — jump 97.1% to KRW 210.9 billion (USD 163.7 million at the June 30, 2022 exchange rate) year-over-year. Any lingering effects of BTS’ hiatus won’t be apparent on HYBE’s finances until the second half of the year.
BTS’s decision to take a break rocked HYBE’s share price and raised questions about the company’s ability to maintain revenue from members’ solo projects and releases and tours by other HYBE artists. Although HYBE is a larger, more diversified company following its acquisition of Ithaca Holdings in 2021, some analysts downgraded HYBE’s stock following the announcement.
However, HYBE’s offered little information in its earnings call that would help ease concerns about the financial impact of BTS’ hiatus. Little information was given about the individual band members’ solo projects. Nothing constructive was offered about the possible conscription of the members. And no details were offered about upcoming BTS projects that would boost HYBE while the members are otherwise on hiatus.
Manager Park Ji-won began Wednesday’s earnings call by looking ahead to the second half of 2022. BTS member J-Hope released a solo album, Jack in the boxon 15 July. IN USA, Jack in the box debuted in the top 20 of the Billboard 200 and reached No. 5 on the Top Album Sales chart with 10,000 units sold—small by BTS standards, but it was not available on CD. Other BTS members “are also working hard on their solo projects to show their individual perspectives on music,” Park said. He noted that BTS will hold a concert in Busan, Korea, in October to help South Korea’s bid to host the 2030 World Expo. As if to ease minds, Park added, “I would like to reiterate that BTS will perform these team projects and solo projects in a harmonious matter.”
Otherwise J-Hope’s much hyped performance at Lollapalooza will make only a small contribution to HYBE’s third-quarter financials, the CFO said Lee Kyung-joon. But Lee believes it’s best to take a long-term view here. J-Hope’s 70-minute performance was streamed live through HYBE’s WeVerse social media platform, garnering 14.9 million views from fans in 223 countries, according to Lee. “This was an opportunity to once again enhance and prove the status of HYBE artists, and I believe a lot of intangible value was created,” he told investors on the call.
HYBE succeeded in highlighting the diversity of its roster, suggesting that artists such as Seventeen, Tomorrow X Together and The hype can do some of the heavy lifting. First-week sales of Tomorrow X Together’s last three albums rose from 300,000 to 1,250,000 – a compound growth rate of 103%. Seventeen’s last trio of albums improved from 1,360,000 to 2,070,000 in their first week of release. Actually Seventeens Face the sunpublished May 27, and 4th album repackage: Sector 17, released on July 18, made it the first HYBE band since BTS with two albums to surpass one million sales in the first week, Park said. Enhype’s last three albums improved from 380,000 to 1,240,000 – 80% compound growth rate.
These acts will also be touring soon, impacting HYBE’s concerts and merchandise revenue. Seventeen Be the Sun tour will hit 27 dates in 20 cities in Korea, North America, Southeast Asia and Japan. Tomorrow X Together’s first offline world tour, Act: Lovesick, has 20 concerts in 14 cities and has sold out dates in the US Enhypen’s Manifesto tour – also its first offline world tour – kicks off in September and reaches 14 dates in 10 cities in South Korea, Japan and the US
HYBE shares rose 2.9% to 175,500 in early trading on Thursday (August 4) morning in Seoul. Investors are more optimistic than when BTS broke the news of its hiatus in mid-June: the share price has recovered 68.2% of its losses and is 27.6% above the 2022 low of KRW 138,000.