4772.T

• Overall Financial Performance

  • Cumulative first half 2025 total revenue: 4.867 billion yen, down 6.3% year-over-year; cumulative operating profit: 138 million yen, down 56.4% year-over-year. This decline is fully planned due to a shift to a second-half heavy concert schedule this fiscal year, compared to a first-half heavy schedule in 2024.
  • Standalone Q2 2025 achieved year-over-year growth in both revenue and operating profit, with the year-over-year revenue decline improving from 28.7% in Q1 to 6.3% in cumulative H1, which is in line with plan.
  • Revenue progress vs full-year plan is 49.3%, and operating profit progress is 34.3%, which is consistent with the second-half heavy structure.

• Entertainment Segment Strategy & Operations

  • The company is strategically expanding non-concert business to reduce reliance on concert artist scheduling and drive long-term revenue growth. Non-concert business grew 18% year-over-year in H1 2025, exceeding expectations.
  • Key non-concert initiatives include POPUP stores, new CM endorsement contracts, and expanding unit/solo artist activities beyond full group activities. The full-year target is to increase non-concert business revenue share from 49% in 2024 to 55% in 2025, which is progressing on schedule.
  • For 2025 full year, the company targets 1.7 million total concert attendance, up from 1.57 million in 2024. H1 2025 had more total concerts than 2024, but far fewer large-venue shows, leading to 640,000 cumulative H1 attendance (down from 850,000 year-over-year), which aligns with the planned second-half heavy schedule.

• Rights & Media Segment Strategy & Operations

  • KNTV, the company's linear K-content channel, is on track to air 20 premium K-POP/K-drama content titles in 2025 (up from 15 in 2024), with 10 titles completed as of H1. The business remains profitable but operates in a challenging market, so the company is prioritizing strict cost control to improve margins.
  • The segment has shifted its rights sales strategy from the traditional sequential broadcast → DVD/streaming window model to an exclusive first-window streaming distribution model with major OTT platforms. This shift enables better pricing negotiations and new collaboration opportunities, improving overall revenue and profitability, which delivered positive results in Q2.

• Corporate Updates

  • The company changed its corporate name from Stream Media Corporation to SM ENTERTAINMENT JAPAN effective June 1, 2025, to leverage the SM ENTERTAINMENT group brand power, which has already shown early positive effects on trading activity.
  • The company recorded 220 million yen in special income from the expiration of stock acquisition rights, but has not yet issued an upward full-year guidance revision, and will review results through Q3 before updating guidance as needed.

• Full-year 2025 total revenue is projected to reach 9.866 billion yen, representing a 1.5% year-over-year increase from 2024 full-year results. Full-year revenue and operating profit are projected to exceed 2024 levels.
• Full-year total concert attendance is projected to reach 170,000, an 8% year-over-year increase from 2024's 157,000 attendance.
• The company maintains full-year guidance of increasing non-concert business revenue share to 55% from 49% in 2024, with the target progressing on schedule.
• Management confirms that overall H1 performance is in line with their original plan for a second-half heavy fiscal year.

For the 2025 2nd quarter cumulative period (first half of the fiscal year):

1. Entertainment segment: Total revenue of 3.673 billion yen, a 0.3 billion yen decrease year-over-year. Operating profit was 273 million yen, a decrease year-over-year. The segment accounts for 75.5% of total cumulative company revenue.
2. Rights & Media segment: Total revenue of approximately 1.2 billion yen, a 30 million yen decrease year-over-year. Operating profit was 134 million yen, a decrease year-over-year. The segment accounts for 24.5% of total cumulative company revenue.

Standalone Q2 2025 performance: Both the Entertainment segment and Rights & Media segment achieved year-over-year revenue and profit growth. Non-concert business within the Entertainment segment grew 18% year-over-year, outperforming plan.

• The broadcast/rights media industry in Japan continues to face challenging market conditions that pressure profitability.
• Concert business growth is constrained by limited capacity to rapidly scale total artist activity and attendance to very large levels (such as 3 million or 5 million attendees annually), creating structural growth limits for the core concert business that the company is addressing via non-concert expansion.
• Most full-year profit and revenue will be generated in the second half, so any operational disruptions in H2 could impact full-year results.

Q: Why is the full-year 2025 schedule heavily weighted to the second half? / A: The shift to a second-half heavy schedule is a deliberate planning choice based on the availability and scheduling of large-venue concerts for major SM artists this year. Large venue shows (including the sold-out 2-day SMTOWN LIVE at Tokyo Dome planned for Q3) are concentrated in the second half, so the H1 revenue and profit decline is expected and not a sign of underperformance.

A: Full-year performance is still on track to exceed 2024 results, in line with original guidance.

Q: Why is the company prioritizing growth in non-concert business? / A: The core concert business has natural growth limits, as it is heavily dependent on artist availability and the number of active touring groups.

A: It is not feasible to rapidly scale concert attendance to several million people per year, so diversifying into non-concert business allows the company to drive stable long-term revenue and profit growth while reducing reliance on fluctuating concert schedules.

A: The 18% year-over-year growth achieved in H1 2025 confirms this strategy is working, and the company is on track to hit its 55% non-concert revenue share target for the full year.