South Korea-based entertainment giant SM Entertainment reported a 20.6% year-over-year jump in first-quarter revenues to 279.1 billion South Korean won (approx. USD $191.7 million).
That’s according to the company’s latest quarterly report published today (May 6). Despite the upbeat revenue growth, SM Entertainment’s shares closed 4.8% lower in Seoul trading to the lowest level in over two weeks.
SM, whose roster of artists includes K-Pop stars like SUPER JUNIOR, Girls’ Generation, SHINee, EXO, Red Velvet, KANGTA, BoA, TVXQ!, NCT, and aespa, attributed the revenue growth to strong sales from its Concert/MD & Licensing segment, an improvement in earnings from its subsidiaries, and the consolidation of superfan app DearU.
In the quarter ended March 31, SM’s revenue from concerts surged 56% YoY to KRW 60.8 billion ($42m), driven by tours from SUPER JUNIOR, NCT DREAM, aespa, RIIZE, and NCT WISH.
SM’s MD (merchandise)/licensing segment was its second-largest revenue source, generating KRW 47.4 billion ($33m), up 20% YoY. SM attributed the increase to strong merch sales from pop-up events, particularly EXO’s REVERXE THE WORLD pop-up event held during its latest comeback tour, as well as the WISH BAKERY pop-up event by NCT WISH.
Fan-light sales during aespa‘s world tour and the launch of Hearts2Hearts’ new fan-light also delivered a boost to the segment. (For those unfamiliar: Fan-lights are handheld torches bearing the brand of an act, that fans can wave around at shows.)
Strong revenue from concerts and MD/licensing offset the 15% YoY drop in revenue from physical album and digital music sales in Q1 to KRW 57.5 billion ($40m). SM said the decline was due to a high base effect from a one-time digital music revenue item recognized in the same period last year.
Despite the drop in album sales volume nearly doubled in Q1 to 1.79 million copies from 920,000 copies a year earlier. In Q1, a total of 1.01 million copies of EXO’s REVERXE were sold, while NCT JNJM sold 520,000 copies of its Both Sides record. Red Velvet member Irene‘s solo album Biggest Fan sold 220,000 copies.
Meanwhile, the company’s consolidated operating profit posted healthy double-digit growth, rising 18.5% YoY to KRW 38.6 billion (27m), which SM partly attributed to the impact of the DearU consolidation.
DearU operates Bubble, a messaging service that connects artists with fans. SM consolidated DearU into its balance sheet in 2025 after taking a larger stake in the platform. SM now controls 45.1% of DearU.
DearU accounted for KRW 23.4 billion ($16m) of SM’s revenue in Q1, down 1.7% from the fourth quarter of 2025. The platform first appeared in SM’s earnings in Q2 2025. SM Entertainment CFO Jungmin Jang said: “DearU has continued to deliver stable earnings contributions ever since its consolidation.”
“DearU has continued to deliver stable earnings contributions ever since its consolidation.”
Jungmin Jang, SM Entertainment
However, the company’s consolidated net income fell 85.5% YoY to KRW 36.7 billion ($25m). Jang noted that the decline was mainly due to a high base effect from Q1 2025, which included a one-time gain from the acquisition of additional shares in DearU, as well as an increase in corporate tax expenses.
On a standalone basis, SM Entertainment, the parent company pulled in KRW 189.3 billion ($131m) in revenue, up 14.4% YoY, with operating profit falling 5.9% YoY to KRW 38.8 billion ($27m) and net income jumping 20.9% YoY to KRW 38.9 billion ($27m).
SM’s Q1 figures also broke down revenues from SM’s major subsidiaries. Combined revenues from SM’s subsidiaries climbed 31% YoY to KRW 136.8 billion ($94m) on the back of double-digit revenue growth at SM Culture & Contents, SM Entertainment Japan, SM Brand Marketing, album printing unit SM LDG, and actor management subsidiary KEYEAST. Their robust revenue growth offset the 68% YoY drop in revenue at DREAM MAKER, SM’s production company focusing on concert production, festivals, and live entertainment.
Looking ahead, SM’s upcoming release pipeline for Q2 and Q3 2026 features a full-length album for artists including TAEYONG, YESUNG, aespa, and NCT 127. New mini-albums and singles are also dropping from SHINee, RIIZE, Hearts2Hearts, Super Junior, MINHO, Red Velvet and more.
On the live music front, SM has lined up concerts for SUPER JUNIOR, NCT WISH, aespa, EXO, TAEYONG, TVXQ! and more across Asia. aespa will be performing in Brazil, Chile, Peru, Mexico, the US and Canada in the third quarter.
According to an exclusive report from South Korean outlet Business Post about three weeks ago, SM Entertainment, along with rivals HYBE, JYP Entertainment, and YG Entertainment are preparing to establish a joint venture to launch a ‘global’ music festival as K-pop concert revenues rise.
The four companies, which collectively represent K-pop’s so-called ‘Big Four’, recently submitted a business combination report to South Korea’s Fair Trade Commission (FTC) as part of the JV formation process, the report said.
Earlier this year, SM unveiled its “SM NEXT 3.0” strategy, with plans to ramp up M&A activity within music. SM Entertainment Co-CEO Daniel Jang said: “We will pursue M&A opportunities within music and related industries more actively than in the past three years, and increase capital investment to accelerate growth.”
Music Business Worldwide
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