SM, Earnings Surprise..Q4 Operating Profit Jumps 62.2% "Taeyong and Espa Comeback"

*This content was translated by AI.

SM Entertainment (hereinafter, SM, CEO Jang Chul-hyuk and Tak Young-joon) achieved its highest performance in the fourth quarter of 2025 on a consolidated basis.

SM announced on the 11th that it recorded ▲319 billion won in sales and ▲54.6 billion won in operating profit in the fourth quarter of 2025 on a consolidated basis. This is a 16.6% increase in sales and 62.2% increase in operating profit compared to the same period last year, and it realized an earnings surprise that exceeded market expectations, and the operating profit ratio was 17.1%, up 4.8 percentage points from the same period last year, proving improved profitability. Its net profit also turned into a surplus of 27.4 billion won, increasing corporate value.

On a separate basis, it recorded ▲ sales of 202.2 billion won and ▲ operating profit of 39.5 billion won, up 12.1% and 10.2% year-on-year, respectively, and net profit of 29.3 billion won, up 106.5% year-on-year.

This achievement is the result of the global tour expansion of core IPs such as NCT DREAM, Aespa, RIZE, and NCT WISH, and the MD and licensing business using artist IP were reflected in the performance in earnest, and the performance improvement of major subsidiaries such as SM C&C and SM Japan and the effect of incorporating DeeU in connection also had a positive effect on the consolidated performance.

SM then shared the specific implementation direction of its "SM NEXT 3.0" strategy, which focuses on a sustainable growth structure, along with the earnings announcement.

Regarding "SM NEXT 3.0," co-CEO Tak Young-joon said, "It is not a short-term external expansion or speed competition, but a strategy focused on building a sustainable growth structure. We are creating more predictable and reproducible results in IP planning and production through a multi-creative system that increases the autonomy and efficiency of production organizations." He added, "We will simultaneously strengthen external growth, profitability, and long-term competitiveness of IP while promoting new IP development and global expansion strategies in a balanced way."

"The global expansion of 'SM NEXT 3.0' is designed to value sustainability and efficiency," said Jang Cheol-hyuk, co-CEO. Accordingly, SM plans to maximize performance visibility and execution efficiency in the expansion process by actively utilizing strategic partnerships and segmenting target regions according to IP-specific characteristics and market conditions.

SM is expected to continue to grow its sales of albums, songs and performances in the first half of 2026, with a strong lineup of artists. In the first quarter, EXO and Irene's regular albums, as well as NCT JNJM and Hearts2Hearts, will be released one after another, while in the second quarter, Taeyong, Espa, NCT WISH's regular albums, Rise, Hearts2Hearts' mini albums, and Ryeowook's single are expected.

The concert sector will also be actively engaged in activities centered on the global stage. In the first quarter, NCT DREAM, Espa, Rise, NCT WISH, and Taeyong will perform throughout Asia, starting with the 20th anniversary tour of Super Junior, which has continued since last year, while in the second quarter, Exo Tour, TVXQ Nissan Stadium performance, and Harts-to-Harts' first U.S. showcase will be held.

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*This content was translated by AI.