Hybe Aktie

Good morning, and good evening. Thank you all for joining the conference call for the HYBE earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we will begin the presentation on HYBE's Second Quarter of Fiscal Year 2026 Earnings Results.

Greetings. Thank you for joining us for HYBE's 2026 Q2 Earnings Call. This is [ Oh Youngmin, ] Director of IR. I'll moderate today's conference call, which will proceed through consecutive interpretation. Today, CEO, Lee Jaesang, will present Q2 highlights and future plans; and CFO, Lee Kyung-Jun, will present earnings highlights, followed by a Q&A session. Please note that today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during external review.

Good afternoon. This is Lee Jaesang, CEO of HYBE. Thank you for joining today's earnings call. In Q2, HYBE clearly demonstrated the expansion of its global influence and its entertainment ecosystem. On the back of BTS World Tour ARIRANG that caught the attention of the world and the overall growth of the entire artist portfolio, HYBE posted KRW 1.450 trillion in consolidated revenue and KRW 170.9 billion in operating profit, both breaking record high quarterly results. Furthermore, the company posted a double-digit operating profit margin of 11.8%, which represents a significant improvement in profitability.

As a result, the cumulative revenue in the first half of 2026 came in at KRW 2.1483 trillion with KRW 229.4 billion in adjusted operating profit, thereby demonstrating that HYBE has solidified its earnings base by leading global entertainment trends and producing exceptional results. ARIRANG, the fifth regular album released by BTS on March 20, drove the global music market growth. According to Luminate's 2026 midyear report, ARIRANG served as a key driver behind the revival of the physical album market with record high sales of the vinyl record and CD edition of the album in the U.S. as well as outstanding streaming performance. Thanks to ARIRANG's success, Korea's ranking in terms of music exports rose from the fourth place last year to the third following the U.S. and the U.K., proving the group's direct contribution to elevating the nation's brand and music exports.

A new term called BTS-nomics was sparked to describe the ongoing ARIRANG World Tour after witnessing the massive economic benefits the tour brings to every city it visits. The ripple effects of the tour continue to extend well beyond the concert itself, creating a broader cultural phenomenon. Furthermore, BTS reaffirmed their status and influence as global icons by performing in the first ever halftime show at the World Cup finals last week.

In the first half of the year, all HYBE artists released albums, resumed activities, posting impressive results not only in Korea but around the world. In particular, 5 of the top 10 artists with the highest physical album sales in the U.S. during first half were HYBE artists, proving the effectiveness of HYBE's multi-label strategy. First, CORTIS is producing unprecedented results in the K-pop scene and the global market with their single REDRED released on April 20 and the second mini album GREENGREEN released on May 4. GREENGREEN attracted massive attention with 2.31 million copies sold in the first week, and its merch album editions continue to enjoy popularity with the sales expected to continue until the end of the year.

As a result, the album has sold more than 3 million copies cumulatively, and CORTIS has sold a staggering 5.25 million copies in total in just 11 months after debut. With the release of the new album, the number of monthly Spotify listeners of CORTIS began to increase, surpassing 12.7 million. The title track REDRED surpassed 100 million streams on Spotify in just 57 days and 150 million streams in 90 days of release, which are exceptional accomplishments as a new act.

The album is charted for 11 consecutive weeks on Billboard 200 after charting in as #3. And given that the most streams on Spotify are coming from the U.S., the group has attracted a more diversified and solid global fan base compared to other rookie groups. Moreover, in a bold move, CORTIS embarked on a world tour after less than a year of debut, starting with a concert in Incheon in July and their performance at the Lollapalooza Chicago at the end of this week as well as planning to meet with their fans in major cities in North America and Japan.

The Boy Band has been successfully pioneering a new growth trajectory in the global entertainment market that breaks away from the traditional glamour of K-pop's growth. We ask for your continued support for CORTIS as the group plans to offer their unique color and energy through diverse activities.

On June 12, Le Sserafim, Illit and Katseye released their collaboration digital single ICONIC BY MISTAKE. The song entered the Billboard Hot 100 at #38 by immediately capturing the hearts of global fans. It has shown remarkable staying power remaining on Billboard and Spotify Global charts for more than a month. The collaboration created synergy among the 3 acts with their own unique appeals and fandoms and despite a short promotional period, generated significant buzz through the widespread circulation and amplification of short-form content, including dance challenge videos.

Moreover, the project led to a significant crossover among the 3 fan bases as well as new fan acquisition, thanks to the buzz created by the project. This case is illustrative of HYBE's advantage with a multi-label structure that allows complementarity and synergy between labels and generation of differentiated content. We will continue to create synergies through unique collaborations among artists across geographies and fan bases.

Le Sserafim came back with their second regular album Pureflow Part 1 on May 22. The title track Boompala enjoyed much popularity, thanks to its infectious beat, rhythm-driven lyrics and the catchy intro that went viral. The group is currently on a world tour scheduled to entertain fans in major cities in Japan, North America, Europe and Asia until the end of the year.

The first regular album released by BoyNextDoor on June 8 sold more than 1.08 million copies in its debut week, making it the fourth consecutive million seller. They kicked off their first large-scale world tour on July 19 with 35 concerts scheduled for 24 cities in Japan, North America and Asia, starting with shows in Seoul and Busan.

Enhypen started their world tour Blood Saga in Seoul in May, which includes 35 performances in 22 cities. The band performed for the first time in Latin America during this tour. Their stadium concert with more than 40,000 seats in Sao Paulo, Brazil was quickly sold out, demonstrating their global popularity. In addition, their performance at Campo Marte 26, the festival held in Mexico City, along with HYBE's Latin group Santos Bravos was met with an overwhelming response from local audiences.

Recent unit and solo projects by HYBE artists also produced significant results. On June 22, Evan made its solo debut with a digital single album Ride or Die in which he took part in songwriting composition and production, showcasing his unique music style and artistic direction.

The8, a unit of SEVENTEEN consisting of Vernon and The8, released their first mini album on June 29 with a title track singasong offering experimental electronic sounds that are different from typical K-pop music styles. TXT's Yeonjun released its second mini album, no Labels Part 2 on July 10, which landed at #16 on the Billboard 200.

Following last year's debut solo album, this new album entered the charts as well, which became the best-performing release by a Korean solo artist this year.

As a group formed through HYBE's first localization project, Katseye has demonstrated a unique growth model in the global market with outstanding success across major music charts and award shows. They emerged as a new global pop icon as they received 3 awards, including the prestigious New Artist of the Year at the American Music Awards in May.

Riding this momentum, they expanded their musical spectrum with a new digital single Animal released on July 24 to build anticipation for their upcoming third mini album Wild. Katseye achieved their highest ever ranking with Animal, ranking the fourth and the ninth on Spotify Daily Top Songs USA and Global, respectively, on the release day.

And the music video surpassed 10 million views on YouTube in just a day, demonstrating their prowess. The group is scheduled to embark on their North American and European tour the Wild World Tour in September. The tour sold out just 48 hours after tickets went sale, demonstrating the immense support of their fans around the world.

As a result, 4 performances were added to the tour, resulting in a total of 31 concerts in 27 cities in 10 countries. To celebrate the second anniversary of their debut, the group's first documentary film titled Katseye: Wild Hearts will be released in theaters around the world on August 12 to share with their fans the story of Katseye transformation into global Pub Group.

The new label ABD launched in May announced the name of its first girl group, Tuide on July 20. The new group has 7 members whose faces and profiles have not been revealed yet. They will showcase performances of every track under debut album for the first time at the Tuide's exclusive preview playground. As suggested by the meaning of the group's name Tune the Tide, they will offer new entertainment by tuning diverse tides around the world. We ask for your continued interest in and support for Tuide.

Finally, on Weverse. Weverse has continued to evolve as a platform that connects artists with their fans by introducing new services for fans since its launch in 2019. In addition to K-pop artists, the global artist lineup has expanded as many global artists have joined Weverse, including representative K-pop groups such as BINI, a Filipino Girl Group and SB19, a Filipino boy group, who opened fan communities on the platform in the first half of 2026.

As a result, the number of Weverse communities surpassed 200 in the second quarter this year with an 8% growth in MAU Q-o-Q to 14.43 million. Successfully positioned as an all-in-one global superfan platform that supports communication between artists and fans, album and merch purchases, concert viewing, music streaming and off-line events, Weverse has reached a critical point where it needs to grow to the next level.

Against this backdrop, Yang Zooil was appointed as new CEO of Weverse, who is a platform business expert with extensive experience across the IT platform and content industries. Under the new leadership, Weverse aims to focus on further improving its services and strengthening business execution capabilities as a leading brand in the field of fandom platform business.

The first half of the year was a significant period as the efforts we have made over many years translated into tangible results. BTS historic comeback, which fans had long awaited, drove the growth of the global music market and reaffirmed the power and status of K-Pop and BTS.

Iconic by Mistake, a collaboration project featuring 3 girl groups created an opportunity to scale up the unique appeal of each group while maintaining creative independence and originality of the HYBE Music Group labels involved, thereby enjoying tremendous popularity across regions.

Debuted less than a year ago, CORTIS is writing a new history in terms of album sales and music streaming by applying a completely different grama from other traditional K-pop idle groups to attract fans from around the world.

These achievements are the result of HYBE's relentless execution of a strategy to redefine the familiar and maturing market and pioneer into completely new territories. Guided by a clear vision of becoming a global entertainment lifestyle platform company based on music and technology, HYBE is selflessly pursuing new ambitious initiatives. We ask for your continued interest as we continue to push boundaries and deliver even greater growth.

Now I will hand over to CFO, Lee Kyung-Jun, who will report on the financial results for Q2.

Good afternoon. This is CFO Lee Kyung-Jun. Let me report on HYBE's consolidated financial results for the second quarter. We posted KRW 1.450 trillion in consolidated revenue, which is a record high quarterly result. Revenue with direct artist involvement, including recorded music, concerts, advertisement and appearances was KRW 1,039.9 billion, accounting for 72% of the total revenue, while revenue with indirect artist involvement, including merchandising, licensing, content and fan club sales was KRW 410.1 billion, taking up the remaining 28%.

HYBE also posted the highest quarterly operating profit of KRW 170.9 billion, demonstrating solid profitability.

Q2 saw a significant growth in revenue with Direct Artist involvement on the back of combat by major HYBE artists and the beginning of a large-scale world tour by BTS. As our artists are actively promoting their music and several teams are conducting world tours, a revenue growth trend is expected to continue well into the second half of the year.

Let me give you more details by revenue category. In Q2, recorded music sales posted KRW 326.8 billion, a record high quarterly result. Most artists under HYBE Music Group made a comeback and 7 teams recorded million sellers in the first half of the year according to Circle charts. HYBE artists accounted for 41.3% of the combined album sales of the top 100 artists. Outstanding streaming performance of our artists also drove the overall revenue growth.

In Q2, streaming accounted for 30% of the recorded music sales, thanks to HYBE artists, including BTS and Katseye entering global charts.

Concert sales also reached a record high of KRW 647.7 billion, thanks to the recognition of sales from BTS World Tour. The tour drove revenue growth by expanding touch points with fans around the world through online streaming and live viewing in addition to off-line concerts in Korea, Japan, North America, Mexico and Spain.

Furthermore, SEVENTEEN Fan meetings and concerts by [indiscernible] TOMORROW X TOGETHER and ENHYPEN also contributed to record high concert revenue.

Within the category of revenue with Indirect Artist involvement, merchandising and licensing revenue reached an all-time high of KRW 310.6 billion. In Q2, BTS tour-related merch items were logged by fans online and offline and licensing revenue from The City projects in cities that hosted concerts also contributed to the revenue.

In addition, tour merch and character items of HYBE Music Group artists such as SEVENTEEN, TOMORROW X TOGETHER and ENHYPEN recorded steady sales. Content sales in Q2 fell year-over-year to KRW 41.6 billion, mainly due to the absence of new large-scale events, even though Artists YouTube and DVD content as well as existing published games generated steady sales.

Diverse content offerings are scheduled for the second half, including Katseye's documentary film and Artist Seasons greetings.

Moving on to the KPIs of Weverse, average MAU in Q2 broke the record again following Q1 with 14.43 million, up 8% quarter-over-quarter. Total paying amount and monthly ARPPU increased by 12% and 24% Q-o-Q, respectively, showing a solid growth trend. More fans have visited the platform more frequently, thanks to a wide range of activities by HYBE Music Group artists and their time spent on the platform led to an increase in membership subscriptions and paid content purchases, creating a virtuous cycle.

Furthermore, along with the increase in tours, we're actively promoting a service where fans can purchase merchandise online and pick it up at the concert venue, which improves the fan experience while also enhancing profitability.

In the second half of the year, Weverse will continue to improve its services and strengthen business execution capabilities to further drive profitability.

The first half of 2026 showcased tangible results for HYBE's ecosystem with the start of whole group activities of BTS. To ensure continuation of positive results into the second half of the year, HYBE will deliver unique entertainment that fans have never seen before.

We ask for your unwavering support as we strive to stay one step ahead of changing times in generations and create new next-level experiences.

Thank you. Now we would like to have a Q&A session.

[Operator Instructions].

The first question will be provided by Eric Cha from Goldman Sachs Securities.

I'm Eric Cha from Goldman Sachs Securities. I'd like to ask you 2 questions. First of all, I appreciate that the company has posted revenue, which has exceeded the expectation by a big margin, but we saw a decline on a quarter-over-quarter basis in terms of GP margin, and this has led to a dilution of the leverage to a certain extent. So I'd like to understand the drivers behind the decline in the GP margin quarter-over-quarter. And what is your outlook for GP margin in the second half of the year?

The second question has to do with your profitability outlook. In the second quarter, as you mentioned, your operating profit margin recorded a double-digit figure, which seems to have finally normalized in terms of its level. But going into the second half of the year as well as 2027, do you believe that this double-digit operating profit margin will be sustained? And what will enable for that to happen? And I'd also like to understand the company's mid- to long-term goal for your operating profit margin.

Thank you for your question. Let me address your first question regarding the quarter-over-quarter decline in our gross profit margin. Compared to the first quarter where we had a smaller share of concert revenue, we have seen an increase in the concert revenue in the second quarter, which is about threefold. You may see that there is a higher percentage of costs related to concert activities, including the paid cost for the revenue, the concert venue as well as the sharing of revenue with artists because it is -- it falls under the category of revenue with Direct Artist involvement.

As a result, we have seen an increase in the cost percentage in the total revenue. However, when we look at the overall GP margin across different business models, we can see a steady trend. Therefore, please understand that the quarter-over-quarter decline in the second quarter for the GP margin is mainly because of the increase in concert revenue in the second quarter.

And moving on to your question on the profitability in the second half and going forward. As I mentioned, we are maintaining stable level of profitability across different business models. Of course, depending on the mix of these business models in our entire revenue structure, profitability may vary slightly. However, we are taking efforts in order to maintain the level of profitability that we posted in the second quarter.

In particular, we may not be able to dramatically change the mix of the business models in our business portfolio, but we're trying to continue to reduce the percentage of cost in each of these revenue categories.

In particular, when it comes to concerts and merge production, we continue to increase profitability by reaching the economies of scale.

And I'd like to also comment on our outlook on operating profit margin into the second half of the year as well as 2027. We're making a lot of effort to continue to improve the operating profit margin, in particular, as the growth of the Young Artists, including CORTIS and Katseye continue to materialize and as we continue to diversify our portfolio, we expect our operating profit margin to continue to improve.

The following question will be presented by Ki-hoon Lee from Hana Securities.

I'm Lee Ki-hoon from Hana Securities. I'd like to ask 2 questions that are quite similar in line with the previous questions. First of all, when we look at the fact sheet, especially the labor costs, even though we exclude KRW 250 billion of one-off labor costs that incurred in the first quarter, we can see that there's an increase of the labor cost by about KRW 30 billion in the second quarter. I'd like to understand whether this has to do with any one-off factors such as incentive payments or whether this increase is a recurring phenomenon.

And I'd also like to understand if there are any cost that were recognized in the second quarter that we need to be aware of.

And moving on to business risks, that was -- it was reported in the media about your business in the U.S. as well as issues with Supertone. So going into the second half of the year as well as 2027, I'd like to know if there are any risks to your businesses that are other than the core business in your portfolio, whether there's any caution that we need to take. I believe that most of the risks have been addressed, but if there's any risk that we need to be aware of, please share with us.

Let me comment on your first question about the increase in labor costs. This is partly attributable to incentive payment as a result of successful business performance. And also there was increase in cost of labor as we hired some global talent.

And as for expenses that were preemptively recognized in the second quarter, according to our accounting standards, if there are any costs or expenses that we anticipate to incur in the third quarter and the fourth quarter, some of them have been preemptively recognized in the second quarter in a conservative manner.

And we do not see any major nonbusiness expenses that we anticipate in any -- in the near future. So if we continue to manage our business in the way that we do, I believe that we can maintain this level of profitability.

The following question will be presented by Junhyun Kim from HSBC.

Kim Junhyun From HSBC. I'd like to ask you 2 questions. First of all, you already provided some explanation on your outlook on the margin going forward. But for the past 2 to 3 years, we can see an increase in costs related to new talent acquisition and production cost increases, which have led to a decline in the overall profitability.

And at the same time, as there is a growing contribution of top-tier artists in your portfolio to overall revenue, this will lead to a damp on your margin, and this will lead to uncertainty in terms of margin outlook. So from the management's perspective, what do you think has to be improved in order to improve the overall margin and profitability so that we can continue to expect your margin outlook to improve even though there is a greater contribution of earnings from top-tier artists.

Secondly, when you're not only doing K-Pop business, but also non- K-Pop IP acquisition, but I'd like to understand your OP margin and GP margin outlook in the medium to long run for your K-Pop business.

I wonder if we can expect a high-teen margin that we had in 2019 and 2021. And secondly, what are the long-term growth drivers of HYBE? This is a question that I'd like to understand. Obviously, BTS activities may decline going forward. In the next 2 to 3 years, you need additional growth drivers. So if you can add some color on when or how new genes will make a comeback or whether you have any new group in your pipeline as well as non-K-Pop IP acquisition plan?

I'm CEO, Lee, Jaesang. Let me comment on your very important question. So it boils down to the issue between margin and volume. As I previously communicated through earnings conference calls, if HYBE just wants to stay in Asia, then we can just focus on margin and profitability. However, if we want to become a top-tier entertainment company in the global market, then we need to increase the volume as well. This is a very important necessity.

And in order to increase our volume and presence in the global market, the role of top-tier artists is very important. Of course, as they continue to mature, their revenue sharing ratio may go up, which may have a negative impact on our overall margin. But it is very much because of the top tiers, we can increase our volume and presence in the global market, which will give us an upper hand in negotiating in terms of infrastructure and of services. So we are now in a transition to be able to do so.

And we should, of course, not take for granted the lowering of margin for top-tier artists, and this should never be justified or taken for granted. But what we are trying to do is to continue to generate profit, not just from their music, but also from other business models, so that even though they are not active in their music promotion, their contribution to revenue will continue to be generated. And a good example is a recent collaboration with lifestyle brands.

Moving on to talent acquisition or debut processes. For the past couple of quarters, we have had many debut groups that came out in the market. But when you remember about 3 years ago, when there's a new group that debuts, then it takes 3 to 4 years for that group to contribute to profitability. However, when you look at the recent examples of Katseye, CORTIS and Santos Bravos, they're doing really well and their contribution to profitability is materialized really quickly in just less than a year.

So we do not provide artist-by-artist breakdown of profitability contribution, but I'd like to say that we continue to have success in these new groups because we made uncompromising investments in content production and quality enhancement, so that we can monetize from them. And at the same time, quality standards may vary in different markets. So we have been adjusting the level of investment depending on the market.

And for the past 2 years, we have been implementing the multi-home strategy, which has given us a lot of lessons. So in some of the markets, we can reduce investment in new group debut preparation because there are different quality expectations by different markets. So what matters is how we are approaching this whole business. And at the same time, we're building up our infrastructure capabilities through HLS, which is high label services. And so that we can maintain high levels of profitability, whether we deal with top-tier artists, mid-tier or groups. And so this is a long -- mid- to long-term vision so that we can increase profitability down the road.

And finally, for our upcoming plans, the BTS work toward is still ongoing, and there are many concerts to be held in the near future. And so we are trying -- we will not be able to give you any specific details as for future plans, but I can assure you that there are many concerts that are ready and to be scheduled. And as for new chains, I cannot really confirm anything at this moment, but Evan will communicate with investors directly later.

We will take one last question.

The last question will be presented by Hyok Joong Lee from Daiwa Securities.

Lee Joong From Daiwa Securities. I'd like to ask a question about your concert business. Back in 2024 and 2025, there weren't many K-Pop concerts that were held in North America. And so concerts in North America provided a good opportunity to acquire light fans so that they can become enthusiastic K-pop fans. But in 2026 today, there are so many K-pop concerts held in North America in addition to local pop artist concerts. Of course, BTS as a top-tier group will do fine. But as for mid-tier or rookie artists, I'd like to know if the company feels that competition or intensifying competition in North America.

Thank you for this insightful question. I do agree back in 2024 and 2025, there was room for us to acquire light fans. But now in 2026, we already have so many K-pop concerts held in North America. So some say that there may be a cap or the potential fan acquisition has reached the limit. However, I'd like to beg to differ because when it comes to light fans, why are there light fans in North America? Is it because they are just interested in K-pop content or whether they're because they really love the music and performance and storytelling by K-pop artists regardless of their nationalities and culture.

I believe that the second case is really what is happening. So compared to the past, some may say that there's not much room for us to grow in this market. But I believe that this is all about implementing a strategy to increase our pie itself. K-pop concert tickets are selling really well, but are we taking away fans for other K-pop groups to HYBE idle groups? Well, there may be some fans that love or support many different K-pop fan or K-pop groups, but I do not think that, that is the way for us to go because I see that there's potential for growth.

And the K-pop accounts for 5% compared to 2.6% in the past, which means that there's a lot of room for us to grow the pie itself. And these K-pop artists can be classified now as local pop groups or even crossover or Latin. And there are many different ways to classify them. And given the genres and fan characteristics, we can pursue social marketing and collaboration and many other activities.

For instance, supporters of Katseye, is Katseye or K-pop group or not. It is already positioned as a pop girl group in North America, and their monthly active listeners on Spotify is world-class. And in the beginning, [indiscernible] Katseye was labeled as K-pop Girl Group now is recognized as a pop girl group that is loved by local fans in the U.S., Canada and Europe. And so that is what we've been pursuing through our multi-home, multi-genre strategy.

And thanks to your question. I'm reminded again of the importance of this strategy, and we will continue to think about ways to remove potential caps and continue to grow the pie. Thank you.

One last message that I want to share with the investors and shareholders before we close this earnings call. As you have seen in the earnings report, we have posted record high results since the foundation of the company. And I've been doing about 7 quarterly earnings calls, and I've been mentioning how we've been able to eliminate any inefficiencies in our business portfolio. So what's left for us is growth.

And for us to achieve this growth, we may need to make some investments and spend some money, and we may also be able to generate growth based on our infrastructure. And I'm not saying this because I'm CEO of HYBE, but I'd like to argue that HYBE is on track -- and the fact is the issue currently is that all of these efforts may not be valued easily because we are pioneering into new territories.

So I'd like to ask for your continued support and unwavering interest in HYBE as we continue to build and strengthen our business and earnings fundamentals and continue to manage our business in a sound manner. We will never be complacent with record high results, and we will continue to strive to achieve the best record. Thank you.

With this, we would like to conclude HYBE's Second Quarter 2026 Earnings Conference Call. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[Interpreted] Good afternoon. Thank you for joining us for HYBE's 2026 Q1 Earnings Call. This is Lee Nyeon Jung, Head of IR. I'll be moderating today's conference, which will proceed through consecutive interpretation. Today, CEO, Lee Jaesang will present Q1 highlights and future plans; and CFO, Lee Kyung-Jun will present earnings highlights, followed by a Q&A session. Please note that today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during external audit.

[Interpreted] Good afternoon. This is Lee Jaesang, CEO of HYBE. Thank you all for joining today's earnings call. In Q1, HYBE posted a record high Q1 revenue of KRW 698.3 billion, thanks to the comeback of BTS. Adjusted operating profit recorded KRW 58.5 billion, which is also the highest Q1 result.

In March this year, BTS came back to Army with their fifth studio album Arirang in 3 years and 9 months. Following the album release, the group held a comeback concert in Kwangaonsoou to greet fans in person as well as through live streaming, which recorded a viewership of 18.4 million globally. On April 9, BTS kicked off the long-awaited world tour Arirang. Allow me to share with you the strategic significance of this comeback.

Comeback allowed BTS to demonstrate their musical authenticity and artistic excellence, receiving overwhelming critical acclaim and reinforce their position as a global icon that can create concert demand in every part of the world. HYBE has been doing its utmost for exceptional musical quality and immersive global concert infrastructure to ensure that BTS just goes beyond being a pop star but becomes a truly unique artist group admired by audiences around the world.

According to Polestar's analysis on the global concert industry, 2/3 of the artists who have taken up the top 20 spots in the global concert market over the past 5 years are legendary musicians like Imagine Dragons and Gun on Roses who debuted more than 20 years ago. Based on this type of data, we are convinced that the success of BTS is not a short-term phenomenon, but the group will maintain their status as a legendary brand that can lead the global market for a very long time. As this is a new year where BTS will start their new chapter, I'd like to present some major achievements of BTS.

BTS new album Arirang has completely taken over the daily listening routines of fans worldwide and demonstrated its absolute influence in the digital streaming market. Upon release, the title Trex Twin landed at #1 on the Billboard Tot 100, making it the seventh hot 100 #1 song by BTS. All 13 local songs, except #29, swept the charts globally from the first place to the 13th place except the U.S. and it is almost unprecedented as a non-English-speaking group in the billboard history that all the songs in one album entered Hot 100 chart simultaneously.

Such an impressive performance in the digital streaming market led to strong album sales results. Arirang sold 3.98 million copies on the first day and topped the Billboard 200 chart for 3 consecutive weeks and 3 major Oregon charts as well as on domestic charts. The vinyl sales were impressive as well with 208,000 copies sold during the first week, the highest weekly vinyl sales record for a group since 1991 when Luminate began compiling the data. The industry highly regards this achievement as it helps repopularize the trend of full album listening by owning and appreciating the entire album rather than listening to certain hit tracks.

The Gwanghwamun Comeback Live held right after album release was an opportunity to confirm the power of BTS fandom after a long break. For safety reasons, only a limited number of fans were allowed to be on site, but the live streaming on Netflix resulted in a record high viewership of 18.4 million for 24 hours worldwide. Given that multiple viewers may share one device for viewing, we believe that the live streaming reached far more people. Afterwards, this live video entered the Netflix weekly top 10 chart in 80 countries.

Along with BTS return, a behind-the-scenes documentary about how BTS members participated in the production of Arirang after finishing their military service, BTS has demonstrated an unparalleled buzz on the content platform that surpassed large global sporting events. Globally, Critics made positive comments that BTS has clearly imprinted their identity on the whole world with this Comeback and that the group has firmly maintained their cultural identity even as they have become a name that everyone around the world knows.

The long-awaited world tour, Arirang finally kicked off in Kuang on April 9. For this tour, a 360-degree open-type stage design is used for all shows to provide an unprecedented and unique immersive experience for the audience by eliminating blind spots to accommodate more fans, thereby quenching the thirst of Army who have waited for their comeback for a long time. Being the largest scale world tour in the K-PAC history, Arirang is scheduled to include 85 shows in 34 cities as of today, shows that when on sales sold out quickly, so we are adding more dates in certain regions.

The fact that there are shows to be held in stadiums with more than 5,000 seats in average are quickly selling out is the strongest indicator that BTS is an unmatched IP with global market dominance. In addition, this tour will be an opportunity to confirm the significance of BTS as a cultural phenomenon. Global army will gather across North America, Europe, Latin America and Asia, thereby also helping to accelerate the global expansion of K-Pop. As indicated by the name of the tour, Arirang, this tour will also help promote Korean culture around the world, going beyond the so-called BTS to enhancing the national brand of Korea.

Having been part of the force to expand the global influence of K-Pop, HYBE is making diverse attempts to secure future competitiveness of K-Pop. We're not complacent with the success that we have made with artists from multiple labels under HYBE, but we're striving to enhance the value of our music business by offering more differentiated content through countless experiments and new attempts. As a result, in April, TOMORROW X TOGETHER released their eighth mini album seventh year, a moment of stillness in the Thorns, demonstrating a solid growth trend with 1.8 million copies sold during the first week, making it the seventh first week million seller. The Serafin announced the launch of the second regular album PureFlow in May and prereleased celebration on the 24th of this month.

Elite will make a comeback tomorrow with the fourth mini album Mamilainaapa. In addition, Cortes has seen their fandom continue to grow since their debut late last year, thanks to their one-of-a-kind music and content. And their second album Green-Green to be released in May has more than 2 million copies in preorder, showing an explosive growth. The pre-released single Red-Red was charted on the Spotify Daily Top Songs global chart as well. Going forward, HYBE will continue to lead the change in the K-Pop scene to promote diversity in music and introduce new marketing and promotion strategies. We ask for your support as we strive to produce high-quality outcomes to take the K-Pop industry to the next level.

Having made a surprise announcement of contract renewal at the last tour, all 13 members of 17 renewed their exclusive contract second time following the first contract renewal in 2021 and promised a comeback. Along with the second contract renewal of BTS in 2023 and a contract renewal with TOMORROW X TOGETHER last year, the second time contract renewal with Seventeen means that the company continues to support the growth of these artists across longer periods of time based on strong trust. Considering that typical lifespans of past K-Cup groups were only 4 to 7 years, HYBE has expanded the life cycle of K-Pop fans fundamentally and structurally through superb content production capability and infrastructure.

Moving on to Katseye. They have secured an unmatched status of being the world's #1 girl group with Spotify monthly listeners surpassing 32 million recently, which has exceeded what other leading K-Pop groups have achieved so far. Furthermore, Pinky Up, a single released in April, reached 40 million streams in just 2 weeks, demonstrating an explosive appeal in their second year of their career. The song garnered more than 6.3 million views after being uploaded on the official Coachella channel, exceeding that of Sabrina Carpenter, the headliner of this festival. Headside's influence in the North American mainstream market was officially proven with their nominations for 3 categories at the 2026 American Music Awards.

In particular, the company highly regards that Katseye is showing a solid album sales trend, even though this group was debuted in the U.S. The combined cumulative sales of their first and second albums are nearly 1 million copies, thanks to the stable growth of their fandom. Given the preorder trend of their third EP to be released in August, we expect that this new album will sell more than the previous 2 albums combined, which is an extraordinary result in the local music market. Considering that average album sales by artists that have topped the Billboard 200 chart this year are around 190,000 copies, the exclusive album sales of Katseye far exceed those of leading local artists such as Sabrina Carpenter and Olivia Rodrigo. These unprecedented results prove that HYBE's localization strategy is now on a stable track, changing the dynamics of the U.S. music market. The album release and the world tour of Katseye scheduled for the second half of the year will drive an explosive growth in revenue in the U.S. and further improve the bottom line of our North American business.

Encouraged by the success case of Katseye, we are preparing for new girl group through the second global project between HYBE and Geffen Records with the goal of a debut in the second half of 2026. Emily, Samara and LEXI are confirmed members of the group with proven talent. World Scout, the final piece, the edition show is currently on Ameba in Japan, which is gaining huge traction being at #1 spot on the K-Pop program chart for 8 consecutive weeks. After the final member is decided on May 12, full-scale preparations for the group's debut will begin. We expect that this new group will become a key asset of our multi-home multi-genre strategy following the footsteps of Katseye to secure fandom from both North America and Japan.

BMLG, a country music label, has recently changed its name to Blue Highway Records and appointed Jake Bison as new CEO, thereby laying the groundwork for a new leap forward. Amid these changes, the labels artists have dominated the chart. Thomas Red's new song, Ano Bad Life resulted in a significant achievement of topping the radio chart for the 25th time in his career. Justin Moore also topped the chart with times ticking, the first since the renaming of the label and the 11th time in his career. Lil Baby by QC Music, a Hiphop Music label, topped the Urban Radio chart with Mrs. Trendsetter, making it the 11th time in his career to lead the chart.

Songwriter Jesse Joe Dillon with the Publishing business unit of HV America received the Songwriter of the Year Award again at the AINP Nashville Awards in April. This prestigious award represents a recognition by independent music publishers who lead the North American industry. This award, his third overall and second consecutive win since 2025, once again underscores his unparalleled creative excellence.

In our management business, Tyla's performance as a global pop icon has been strong. Tyla made history by winning the Best African Music Performance Award for two consecutive years at the Grandy Awards. Also by being nominated in April for 4 awards at the AMAs, she has become the most nominated African artist in the history of the AMAs. Her strong momentum in the global market will continue well into the second half of the year with a new album to be released on July 24. Like this, HYBE America continues to diversify revenue streams and strengthen its position in North America through strong label operation and activities by top-tier artists in the respective genres.

Let me now move on to &TEAM, who debuted in Japan through a localization project. The group released the third mini album, We on fire, on April 21, which sold 1.09 million copies on the first day and became the third consecutive million seller. Previously, the group became the first Japanese artist to have 1 million seller in both Korea and Japan. This new album sold more than 0.5 million copies on the first day in Japan, up 35% compared to the previous album, demonstrating a rapid growth of the fandom. &TEAM is scheduled to be on tour in 11 cities in Asia. They will maintain the growth of their fandom in Japan and around the world, showcasing the success of HYBE's localization project in Japan.

Finally, on Q1 results of Weverse, which achieved a turnaround on a full year basis last year and began its lead to become a super fan platform. In Q1, Weverse proved its competitiveness by achieving the highest activity indicators and profit growth since its launch on the comeback -- on the back of the comeback of BTS as well as activities by major artists. Q1 MAU grew 20% Q-o-Q to 13.37 million, a record high.

The Fan Club membership also saw an explosive growth from the end of 2025, thanks to the presale demand for BTS concert tickets after the announcement of the World Tour. Also, the Weverse Con festival slated for June has confirmed the largest lineup of 30 artist teams that encompass generations and genres, featuring not only HYBE artists, such as ENHYPEN and LE SSERAFIM, but also diverse artists, including a leading j-hope Group and Reign, who will take on the tribute stage, the event will solidify its position as a global music festival that can appeal to different generations and different genres. Weverse will continue to offer expanded fan experiences by linking online and off-line and strengthen its leadership as a global super fan platform.

Now I'd like to turn to CFO, Kyung-Jun, who will report on the financial results.

[Interpreted] Good afternoon. This is CFO, Lee Kyung-Jun. Let me report on HYBE's consolidated financial results for Q1. We posted KRW 698.3 billion in consolidated revenue, up 40% year-over-year on the back of the comeback of BTS. Revenue with direct artist involvement, including recorded music, concerts, advertisements and appearances, was KRW 403.7 billion, accounting for 58% of the total revenue, while revenue with indirect artist involvement, including merge, licensing, content and fan cost sales was KRW 294.7 billion, taking up the remaining 42%.

Adjusted operating profit recorded KRW 58.5 billion, up 170% year-over-year. Typically, in Q1, HYBE artists would wrap up their year-end activities, take a short break and prepare to work on new albums and projects. And the first quarter this year was no different, but we were able to post a record high revenue, thanks to BTS comeback. Starting from the second quarter, most artists will resume their activities, including album releases and BTS tour will kick off in full swing. So we expect both the top line and the bottom line to further grow.

I'd like to provide additional explanation on the adjusted operating profit to the investors who might have seen our preliminary earnings disclosure. During Q1, the controlling shareholder of the company has gifted shares to the company for employee compensation, and the company used the shares to provide compensation to the employees in the first quarter. The gifting of shares by the controlling shareholder to the company is unrelated to business performance, but it is treated as cost for accounting purposes. As a result, KRW 255 billion was recognized as expense in the consolidated financial statements in Q1. It is one-off expense that must be recognized for accounting purposes despite the absence of net outflow of assets. Therefore, the company also disclosed the adjusted operating profit, excluding the one-off cost impact. So please regard this number as the actual business result of HYBE.

Let me give you more details by revenue category. In Q1, recorded music sales and concert sales were KRW 271.5 billion and KRW 88.7 billion, respectively. Recorded music sales grew significantly by 99% year-over-year, thanks to the unprecedented success of BTS comeback album, Arirang, which broke their own past album sales records. But concert sales were down 43% year-over-year because the tours by major artists, including BTS did not begin in full swing.

Within the category of revenue with indirect artist involvement, merchandise and licensing revenue recorded KRW 137.4 billion, up 29% year-over-year, while content sales were KRW 105.9 billion, up 157% year-on-year. In Q1, tour-related merch items, including BTS Light 6 were loved by fans worldwide and character merchandise inspired by artists also contributed to merch sales. Content sales were attributable to the BTS comeback live streaming, the documentary BTS the return as well as the previously released BTS DVDs.

Moving on to KPIs of Weverse. Average MAU in the first quarter was record high with 13.37 million, up 20% Q-on-Q. Total payment volume grew 80% Q-on-Q and the monthly ARPPU also rose by 8%. Based on the expanded active user base, we are diversifying monetization streams such as concert online streaming and digital membership subscription. Having turned the profit last year, Weverse is expected to further improve its profitability based on merch sales growth, Fan Club membership growth and improved performance of Weverse America.

2026 is a monumental year when BTS whole group activities that our shareholders and global fans have been looking forward to finally resume in earnest. We are deeply grateful to everyone who has stood by us with unwavering support over the years. We promise to repay your trust and support with outstanding activities and performances defitting the reputation of BTS. Furthermore, along with the BTS comeback as a strong engine, HYBE is continuing to create success stories across the board by further improving our multi-home multi-genre strategy established for each label and region. This year, we are ready to produce record high results through a balance between qualitative growth of the existing artists and quantitative growth of new global artist IPs. We ask for your continued support for our journey to go beyond the boundaries of K-Pop and transform the paradigm of the global entertainment industry. Thank you.

[Interpreted] [Operator Instructions] The first question will be provided by Dayun Kang from Goldman Sachs.

[Interpreted] I'd like to ask you two questions. First of all, as we have the comeback of BTS, your mega IP, their contribution to revenue will continue to increase. And there are concerns that there will be an increase in artist fees, which may have a negative impact on your overall margin. So -- but when we look at the Q1 results, it seems that the numbers are decent. And I wonder if this is because of the higher share of album sales from -- share of album sales in your revenue or whether the artist fee levels are okay, much better than what a lot of people have concerned. And also, we have concert revenues expected for the second quarter. So we would appreciate it if you can give us some color.

My second question is regarding your concert sales revenue. It seems that in the first quarter, the number of people who went to concerts were similar to -- on a year-over-year basis, but the size of the concert sales revenue seems to be smaller. So I'd like to understand the reason behind this.

[Interpreted] I'm CFO, Kyung-Jun. Let me first address your first question. I appreciate that you speak highly of the first quarter results of HYBE. As for last year versus this year, you can see that there were a lot more elements that had impact on our gross profit margin last year in addition to business performance-related elements. But however, the gross profit margin in the first quarter is relatively good. It's not just because of the album sales of BTS, but also album sales by other artists, including ENHYPEN.

And moving on to your second question, whether the situation or the GP margin will deteriorate in the second quarter, I do not believe so because we not only have BTS concerts scheduled, but also other artists will resume their activities. So just because we have concerts for BTS doesn't mean that this will have a negative impact on the gross profit margin, but rather, we have other artists and their activities. And all combined together, we expect that our gross profit margin will not deteriorate going forward.

[Interpreted] I'm CEO, Lee Jaesang. Let me add some comments. As the essence of our Business is music management and artist management, there seem to be concerns that the shifting of profit sharing ratio between the company and the artists may have direct impact on the gross profit margin. It does have an impact on our margin. However, if we manage our company in a way that the shifting of profit sharing ratio will have direct and significant impact on our gross profit margin, it will mean that the company is not doing a good job in terms of defending its business from these types of risks. But as you have seen the BTS concert, we have applied a 360-degree stage setup, which means that fans can enjoy their performance at post and personal. And LED panels are installed very high so that people who are seated on the second and the third floor can enjoy the concert in an immersive way.

And the fact that we have the center stage means that we have eliminated blind spots, allowing to accommodate more fans. In other words, while we have the basically same cost elements and the same special effects for these types of concerts, we're able to add 4,000 or 5,000 more seats which is part of our efforts to increase our gross profit margin. And also revenue with indirect artist involvement, as was explained by CFO, accounts for about 45% of the total revenue, which is another way of HYBE trying to work on improving gross profit margin. In other words, we continue to put efforts to lower basic cost units as well as enhancing efficiency in sourcing. So all of these efforts are combined together to improve our gross profit trend. So we do not expect this trend to deteriorate any further in the future and we will only be able to improve.

And moving on to your second question on the relationship between the number of concert goers and the size of the revenue, I don't have the number with me as to how many people went to concerts this quarter versus last quarter. But as far as I know, the number of people who went to concerts in the fourth quarter last year was bigger than that of the first quarter. But there are many different factors that have impact on the revenue side, including where such a concert was held and who performed in such a concert. For instance, in North America, if one of the BTS members held a concert, then we can price these tickets much higher, which will have an impact on the revenue side.

[Interpreted] the following question will be presented by Junhyun Kim from HSBC.

[Interpreted] Junhyun from HSBC. I would like to ask two questions. The first question is related to your margin management. In 2025, there were some unexpected factors that had put downward pressure on your margin. And one of them will be definitely overseas investment. So compared to 2025, I'd like to understand your overall plans for overseas IP investment and related spending for 2026 as well as 2027. Because of the increasing contribution of BTS to your earnings, there are concerns that HYBE may decide to increase investments for overseas IP acquisition. So I'd like to get some guideline on this and how you're going to manage your profit margin?

Secondly, my question is related to the Weverse situation. I can see that there is an upward trend of MAU, and this may have to do with new concerts and new fans coming to the platform. So is it correct to understand that the MAU trend will continue to be on the upward trend? And I can see that there is a stable increase in the payment and transaction volume, but it seems that the HYBE artist lineup on Weverse platform is not as expanding as expected. So if you can add some color on this aspect, I would appreciate it.

[Interpreted] I'm CFO, Kyung-Jun. Let me answer your first question. We will continue to make investments overseas. However, the total size of the investment slated for this year will be similar than last year for two reasons. First of all, when we enter a new market and start our business, naturally, it will incur a larger amount of investment. But in doing so, we learn our lessons and we accumulate our know-how, thereby being able to be more cost effective in debuting the second and the third teams in that respective region. Likewise, when we debuted the first group in the U.S., it was quite costly, but the second time and the third time, it becomes more cost effective.

The same goes for the Latin American region. Initial investments and initial expenses would be quite large in the beginning. However, they continue to decline as we continue to accumulate our experience. And secondly, we already are producing meaningful results in the respective regions that we have entered. For instance, Katseye's performance and results are far exceeding what we originally expected. And Francos Bravos that we debuted in Latin America visited Korea and was able to reduce -- produce good results. As we see more and more of such positive results coming out from our initial investments, I believe that the total investment size for this year and onward will not be as big as what we had last year.

[Interpreted] I'm CEO, Lee Jaesang. Before I answer your second question, I'd like to add my comments on the first question. As the CFO just mentioned, the total size of the investment for 2026, according to our plan as of now is going to be smaller than 2025. However, I'd like to mention that when we make investment decisions and execute them, it takes a lot of consideration. And we already have a list of options and opportunities that we have been eye on for different regions and different genres to wait for the right moment and wait for the right opportunities. Even if we see that there is a great genre or region that we can go in and succeed, if the market is not ready, then it will not make sense for us to go there and make investment.

Likewise, when we started our investment in India last year, it took 3 years for us to ponder upon and look for -- wait for the right moment, and that was last year. And for the U.S. and also for Japan, there are certain genres and certain types of business that we're looking at right now, but we're not ready to execute on them right now because we do not see that the markets are not ready. However, as you know, market situations may shift really quickly. So if we see that there is a right timing, then we will have to execute our plans accordingly. So please be aware that there may be potential changes to our investment plans going forward.

And moving on to your question on Weverse KPIs. First of all, the continuous growth of MAU is critical for the survival and the success of any platform. And how can we grow the MAU? There are several ways to do so. First of all, we may increase traffic of users for the existing artists. We may also include new artists and cover new genres to increase the MAU. As for the first approach, the fans will continue to use the platform on a daily basis, but then the way fans use the platform may vary by categories and the ways they're coming in and out of the platform vary as well. And we continue to track the portion of new users versus returning users. And according to our tracking data, we have an increasing percentage of new users joining the HYBE -- Weverse platform. This means that the existing artists will continue to attract new fans and these new fans come to the Weverse platform to enjoy HYBE artists. And at the same time, other artists as well as HYBE artists will continue to expand their activities and increase their brand value, which will lead to the growth of their fan base, which will naturally lead to a growth in the MAU for Weverse as well.

And secondly, we may include new genres and new artists. And so we have been doing that as well, and we've been focusing on Japan, but for selective and strategic reasons, we have included BINI and SB19 from Southeast Asia. For instance, BINI has been really doing well and performed at Kochlla. And the fans of BINI continue to use Weverse services in various ways. So these are some of the strategic ways that we have recruited new artists who have joined Weverse to contribute to the growth of the MAU continuously.

And in addition to that, we may increase the activities of the existing fans for the existing artists. In other words, we may encourage them to spend more time on the platform and make it a routine to use the Weverse platform, thereby increasing their own MAU level. And to do so, we not only work with the Weverse, but also work with the labels and artists to produce content. But that's not only it, but rather fans and their activities are critical in increasing the activity level of fans on the platform. So we are currently developing various service models to increase the level of MAU for existing artists and existing fans.

And as for your question on the utilization of DM and why certain HYBE artists are not using DM while some others are using it. Of course, DM is a great service model. It allows fans to directly communicate with their artists. However, this cannot be applied to all artists in the same manner because depending on the artists, depending on the labels and the team colors, their preferred ways of communicating with their fans may be very different. And indeed, some fans do not favor DM method of communicating with their artists.

Therefore, we are in constant communication with the labels and artists to see whether they are ready or whether they want to utilize DM as a service to interact with their fans. And the same goes for the listening party. So basically, this can be applied to all types of Weverse services. We need to cater to the characteristics of fans and artists and launch or apply services in the right manner, in the right time by communicating with the labels and management.

[Interpreted] This concludes the 2026 First Quarter HYBE Earnings Conference. Thank you very much.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Good morning, and good evening. Thank you all for joining the conference call for the HYBE earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions]

Now we will begin the presentation on HYBE's Fourth Quarter of Fiscal Year 2025 Earnings Results.

[Interpreted] Greetings. Thank you for joining us for HYBE's 2025 Q4 Earnings Call. This is [ Kim Jinwoo ], Head of Financial Strategy. I'll be moderating today's conference, which will proceed through consecutive interpretation.

Today, CEO, Lee Jaesang will present fiscal year 2025 highlights, including Q4 results and future plans; and CFO, Lee Kyung-Jun, will present earnings highlights followed by a Q&A session.

Please note that, today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during an external audit.

[Interpreted] Good afternoon. This is Lee Jaesang, CEO of HYBE. Thank you for joining today's earnings call.

In 2025, artists of HYBE Music Group demonstrated outstanding musical influence in the global market, signifying further evolution of the company's global business model. After completing their military service, j-Hope and Jin successfully came back and conducted solo activities.

In 2025, major HYBE artists, including SEVENTEEN, TOMORROW X TOGETHER and ENHYPEN held a combined total of 279 large-scale global concerts, thereby dramatically expanding touch points with their fans. 2025 was also a year when HYBE multi-home multi-genre strategy delivered substantial results.

In addition to KATSEYE, where they already been producing unparalleled results, key artist IPs in the respective regions, including CORTIS in Korea and Santos Bravos and Low Clika in their Latin region gained significant market influence and led qualitative growth of the artist portfolio.

Thanks to these wide-ranging activities and enhancement in business structure, fiscal year 2025 revenue posted KRW 2,649.9 billion, a solid Y-o-Y growth trend and yet another record-breaking revenue demonstrates sustainable growth potential of HYBE.

Let me present the planned activities of BTS, who will provide the strongest growth momentum for HYBE in 2026. As of June 2025, all BTS members have completed their military service and announced an upcoming comeback as a whole group.

On the 20th of March, they will open the prelude to a new journey, with their fifth regular album ARIRANG. The new album to be released in about 4 years will be immediately followed by the largest world tour ever by mobilizing HYBE's global operational capabilities.

The first confirmed schedule alone includes 82 shows in 34 cities around the world, which is the most ever for a single tour by a K-Pop artist. When additional shows are confirmed for Japan and the Middle East, the impact of the BTS tour will be further amplified. This tour is a large-scale stadium tour to be held in about 4 years after the BTS permission to dance on stage tour in 2022. So we expect it to mark an emotional reunion bringing global fans of BTS together again through music.

Let me now report on recorded music results. In 2025, amid overall stagnation in the album market, HYBE maintained solid influence in the market, accounting for approximately 30% of the total album sales, the highest share following last year with cumulative annual sales of approximately 19.6 million copies based on Circle Chart statistics. The energy of the fandom maintained through album activities served as a catalyst for overall revenue growth, including concert and merch sales.

Since the last earnings call, meaningful results have been delivered by major artists. First, SEVENTEEN increased its artist IP utilization, with a special unit activity by DK and Seungkwan showcasing unique charm and appeal of individual members. TXT demonstrated their influence in the Japanese market yet again with their Japanese regular album Starkissed ranking first on the Oricon Weekly and Combined Chart.

In addition, Yeonjun confirmed his strong competitiveness as a solo artist IP with his first album selling more than 600,000 copies during the first week and landing on the 10th place on Billboard 200. And ENHYPEN achieved the fourth double million seller in their history with their mini sixth (sic) [ seventh ] album, THE SIN : VANISH, selling 2.07 million copies during the first week.

Furthermore, CORTIS became a million seller in their debut year, adding to HYBE's already strong artist lineups. These achievements are well reflected in the streaming performance as well. HYBE Music Group's artists enjoyed a total of 3.7 billion streams in 2025, accounting for about 3% of the total streams in the year according to the Global Spotify 200 chart.

As a result, in 2025, the share of streaming sales is approximately 37% of the total recorded music revenue, showing that music by HYBE artists continues to be consumed in the global streaming market, serving as a stable revenue stream.

Let me now report on the results of the global concerts by HYBE Music Group artists. In 2025, 250 concerts and 29 fan meetings were successfully held in total, resulting in the highest concert revenue in the company's history.

According to the 2025 Boxscore annual report by the Billboard, our global ranking in the Top Promoter category rose 5 places from the prior year to the fourth place, making HYBE one of the Big 4. In addition, in the Top Tour category, 3 out of 4 K-Pop teams belong to HYBE, reaffirming the strong ticket power of HYBE artists.

With the first solo tours in 20 years -- in 12 years since debut, j-Hope was ranked 14th on Pollstar's Global Concert Tour Chart, the highest place as a Korean solo artist and Jin was ranked fifth place on the Asia Focus Chart being the only solo artist to be ranked.

SEVENTEEN held 49 concert shows in 22 cities demonstrating increased audience mobilization power compared to the previous year, while TXT and ENHYPEN solidified their status as global touring artists, attracting a total of 550,000 people and 480,000 people, respectively.

In addition, LE SSERAFIM's first North American tour, &TEAM's first Asia tour and BND's first solo tour since debut were all concluded successfully, showcasing global concert competitiveness of HYBE artists.

Let me now move on to major achievements made by artists of labels and management under HYBE America in the mainstream market.

First, in the fourth quarter of 2025, BMLG reaffirmed its unrivaled position in the industry as a powerhouse of country music, capturing both critical and popular acclaim. Riley Green made history by becoming the first artist since Taylor Swift in 2013 to top Billboard's Country Airplay with 2 consecutive self-written songs.

Furthermore, at the prestigious 2025 CMA award, he achieved major success by winning 3 awards, which is the most awards on the day, including Single of the Year. Our global artist IP portfolio has been expanding for management and label business. HYBE America signed a management contract with Tyla, who broke the daily streaming record of the previous hit "Water" with her new song "Chanel" and set a new record for the most streamed African artist.

She filled out her Tokyo Arena concerts and worked with Bratz, a global fashion doll brand for character collaboration, further expanding her artist IP business and solidifying her position as a global pop icon.

EJ Jones, a new artist by hip-hop label QC is gaining traction in the local market by focusing on melodic hip-hop and R&B with sensual melodies over hip-hop beats. He's contributing to expanding the musical scope and diversifying the fan base of the label by adding pop sounds to the strong hip-hop colors that characterize QC Music.

His recent single Gas Station Love has been included in the major playlist of Amazon Music, and he made the 2026 Artist To Watch list by Pandora. Positive evaluation by local critics and industry experts allows us to look forward to his future activities.

Likewise, HYBE America is continuing to expand its influence in the North American market through record-breaking achievements by top-tier artists in diverse genres and solid label operation.

Let me now move on to KATSEYE, the group that has achieved the most overwhelming growth in the global music industry. Their success in 2025 is significant in 2 major aspects. First, they have secured unrivaled popularity and musical status in the local mainstream pop market. As of the fourth quarter, KATSEYE has gained 36 million Spotify monthly listeners, one of the highest among the global girl groups.

With the title track, Gabriela, staying on Billboard's Hot 100 for 28 weeks in a row, the group recently had 2 songs in the Top 30 at the same time. As a girl group, this is the first since Destiny's Child, which means that KATSEYE has established itself as a mainstream artist following in the footsteps of legendary girl group in the North American market. Their popularity resulted in nominations for major categories at the 68th Grammy Awards and entry into the U.K. Official Chart, further solidifying their position as a key IP in the global pop market.

Second, KATSEYE has proven the scalability of their artist IP to go beyond the typical pop artist by applying HYBE's fandom business know-how. This approach has produced significant financial returns as well. Their first solo tour, The Beautiful Chaos Tour sold out every single show and the amount of tour merch purchased per person not only exceeded other pop artists, but also achieved a top-tier level comparable to that of K-Pop groups who tour extensively in North America.

Furthermore, their album sales are solid, far exceeding those of other local artists who mainly rely on large retail channels in North America. These achievements suggest that KATSEYE is creating differentiated results in both markets based on their popularity as a global pop artist and the strong fandom characteristic of K-Pop artists. Having enjoyed great success in 2025, KATSEYE is expected to serve as a sustainable growth driver for HYBE through a significant expansion of the tour scale.

In particular, CORTIS clearly represents qualitative growth of artist IPs that HYBE is pursuing. Despite being a debut group, CORTIS has set new standards in the market with music, content and performance that showcases their identity as a young creator crew.

What sets CORTIS apart from other teams is that the members participated in the entire production process, including music, choreography and video, and this created their own unique color. The stories that a teenage group can share and high-quality content that reflect their genuine sincerity have resonated with listeners, creating a momentum for extended life of their music and sustainable value creation. Their unique and original identity has made a great appeal to diverse global industries beyond music.

Recently, CORTIS became the first K-Pop artist to be selected as a headliner for the NBA Crossover Concert Series, and they became the first Korean group to sign a partnership with Red Bull. They also carried out cross-genre collaborations, including sports, gaming and film. CORTIS was invited to sing a new original soundtrack for a major Hollywood animation. One of the tracks in their debut album titled Go was used as a soundtrack for popular game NBA 2026 Season 4.

This rapid growth is the result of the vision of BigHit Music, a label within HYBE Music Group to provide the best musical experience by respecting artist creativity and actively supporting their creative activities.

In addition, Aoen topped the charts as soon as their debut in Japan and new lineups, including Santos Bravos made a successful debut in the Latin market, further demonstrating how HYBE system can be applied in a flexible manner to other genres and regions. Based on these solid achievements in 2025, HYBE aims to further diversify its territory in the global music industry in 2026.

First, in the new year, a new girl group will debut in Korea and a global girl group is being prepared to follow the successful model of KATSEYE. Also, as was previously mentioned, efforts are being made in full swing to debut a local boy group in collaboration with legendary producer, Ryan Tedder.

Furthermore, we're trying an innovative artist IP growth model by combining storytelling and music through the project with Alan's Universe that has more than 100 million subscribers.

We are also working on a project optimized for local culture in India to further expand our global influence. In short, 2026 will be an important year for HYBE when these diverse global artist IPs are successfully established in addition to the resumption of BTS activities.

Finally, I'd like to report on Weverse HYBE's platform business. In 2025, Weverse achieved a significant return to profitability on an annual basis by strengthening business fundamentals through improvement in profit structure and operational efficiency. This achievement was driven by bringing in diverse artists, operating e-commerce in a strategic manner and diversifying its revenue model through digital business expansion such as advertising and subscription services.

At the same time, the platform fundamentally improved its cost structure by streamlining the organizational structure and SG&A expenses, thereby establishing a solid financial foundation.

Furthermore, BTS resuming their activities, key artists achieving growth and the accompanying e-commerce revenue growth and digital business growth are expected to drive improved financial performance of Weverse in 2026.

Now CFO, Lee Kyung-Jun will report on the financial results.ing that music by HYBE artists continues to be consumed in the global streaming market, serving as a stable revenue stream.

Let me now report on the results of the global concerts by HYBE Music Group artists. In 2025, 250 concerts and 29 fan meetings were successfully held in total, resulting in the highest concert revenue in the company's history.

According to the 2025 Boxscore annual report by the Billboard, our global ranking in the Top Promoter category rose 5 places from the prior year to the fourth place, making HYBE one of the Big 4. In addition, in the Top Tour category, 3 out of 4 K-Pop teams belong to HYBE, reaffirming the strong ticket power of HYBE artists.

With the first solo tours in 20 years -- in 12 years since debut, j-Hope was ranked 14th on Pollstar's Global Concert Tour Chart, the highest place as a Korean solo artist and Jin was ranked fifth place on the Asia Focus Chart being the only solo artist to be ranked.

SEVENTEEN held 49 concert shows in 22 cities demonstrating increased audience mobilization power compared to the previous year, while TXT and ENHYPEN solidified their status as global touring artists, attracting a total of 550,000 people and 480,000 people, respectively.

In addition, LE SSERAFIM's first North American tour, &TEAM's first Asia tour and BND's first solo tour since debut were all concluded successfully, showcasing global concert competitiveness of HYBE artists.

Let me now move on to major achievements made by artists of labels and management under HYBE America in the mainstream market.

First, in the fourth quarter of 2025, BMLG reaffirmed its unrivaled position in the industry as a powerhouse of country music, capturing both critical and popular acclaim. Riley Green made history by becoming the first artist since Taylor Swift in 2013 to top Billboard's Country Airplay with 2 consecutive self-written songs.

Furthermore, at the prestigious 2025 CMA award, he achieved major success by winning 3 awards, which is the most awards on the day, including Single of the Year. Our global artist IP portfolio has been expanding for management and label business. HYBE America signed a management contract with Tyla, who broke the daily streaming record of the previous hit "Water" with her new song "Chanel" and set a new record for the most streamed African artist.

She filled out her Tokyo Arena concerts and worked with Bratz, a global fashion doll brand for character collaboration, further expanding her artist IP business and solidifying her position as a global pop icon.

EJ Jones, a new artist by hip-hop label QC is gaining traction in the local market by focusing on melodic hip-hop and R&B with sensual melodies over hip-hop beats. He's contributing to expanding the musical scope and diversifying the fan base of the label by adding pop sounds to the strong hip-hop colors that characterize QC Music.

His recent single Gas Station Love has been included in the major playlist of Amazon Music, and he made the 2026 Artist To Watch list by Pandora. Positive evaluation by local critics and industry experts allows us to look forward to his future activities.

Likewise, HYBE America is continuing to expand its influence in the North American market through record-breaking achievements by top-tier artists in diverse genres and solid label operation.

Let me now move on to KATSEYE, the group that has achieved the most overwhelming growth in the global music industry. Their success in 2025 is significant in 2 major aspects. First, they have secured unrivaled popularity and musical status in the local mainstream pop market. As of the fourth quarter, KATSEYE has gained 36 million Spotify monthly listeners, one of the highest among the global girl groups.

With the title track, Gabriela, staying on Billboard's Hot 100 for 28 weeks in a row, the group recently had 2 songs in the Top 30 at the same time. As a girl group, this is the first since Destiny's Child, which means that KATSEYE has established itself as a mainstream artist following in the footsteps of legendary girl group in the North American market. Their popularity resulted in nominations for major categories at the 68th Grammy Awards and entry into the U.K. Official Chart, further solidifying their position as a key IP in the global pop market.

Second, KATSEYE has proven the scalability of their artist IP to go beyond the typical pop artist by applying HYBE's fandom business know-how. This approach has produced significant financial returns as well. Their first solo tour, The Beautiful Chaos Tour sold out every single show and the amount of tour merch purchased per person not only exceeded other pop artists, but also achieved a top-tier level comparable to that of K-Pop groups who tour extensively in North America.

Furthermore, their album sales are solid, far exceeding those of other local artists who mainly rely on large retail channels in North America. These achievements suggest that KATSEYE is creating differentiated results in both markets based on their popularity as a global pop artist and the strong fandom characteristic of K-Pop artists. Having enjoyed great success in 2025, KATSEYE is expected to serve as a sustainable growth driver for HYBE through a significant expansion of the tour scale.

In particular, CORTIS clearly represents qualitative growth of artist IPs that HYBE is pursuing. Despite being a debut group, CORTIS has set new standards in the market with music, content and performance that showcases their identity as a young creator crew.

What sets CORTIS apart from other teams is that the members participated in the entire production process, including music, choreography and video, and this created their own unique color. The stories that a teenage group can share and high-quality content that reflect their genuine sincerity have resonated with listeners, creating a momentum for extended life of their music and sustainable value creation. Their unique and original identity has made a great appeal to diverse global industries beyond music.

Recently, CORTIS became the first K-Pop artist to be selected as a headliner for the NBA Crossover Concert Series, and they became the first Korean group to sign a partnership with Red Bull. They also carried out cross-genre collaborations, including sports, gaming and film. CORTIS was invited to sing a new original soundtrack for a major Hollywood animation. One of the tracks in their debut album titled Go was used as a soundtrack for popular game NBA 2026 Season 4.

This rapid growth is the result of the vision of BigHit Music, a label within HYBE Music Group to provide the best musical experience by respecting artist creativity and actively supporting their creative activities.

In addition, Aoen topped the charts as soon as their debut in Japan and new lineups, including Santos Bravos made a successful debut in the Latin market, further demonstrating how HYBE system can be applied in a flexible manner to other genres and regions. Based on these solid achievements in 2025, HYBE aims to further diversify its territory in the global music industry in 2026.

First, in the new year, a new girl group will debut in Korea and a global girl group is being prepared to follow the successful model of KATSEYE. Also, as was previously mentioned, efforts are being made in full swing to debut a local boy group in collaboration with legendary producer, Ryan Tedder.

Furthermore, we're trying an innovative artist IP growth model by combining storytelling and music through the project with Alan's Universe that has more than 100 million subscribers.

We are also working on a project optimized for local culture in India to further expand our global influence. In short, 2026 will be an important year for HYBE when these diverse global artist IPs are successfully established in addition to the resumption of BTS activities.

Finally, I'd like to report on Weverse HYBE's platform business. In 2025, Weverse achieved a significant return to profitability on an annual basis by strengthening business fundamentals through improvement in profit structure and operational efficiency. This achievement was driven by bringing in diverse artists, operating e-commerce in a strategic manner and diversifying its revenue model through digital business expansion such as advertising and subscription services.

At the same time, the platform fundamentally improved its cost structure by streamlining the organizational structure and SG&A expenses, thereby establishing a solid financial foundation.

Furthermore, BTS resuming their activities, key artists achieving growth and the accompanying e-commerce revenue growth and digital business growth are expected to drive improved financial performance of Weverse in 2026.

Now CFO, Lee Kyung-Jun will report on the financial results.

[Interpreted] Good afternoon. This is CFO, Lee Kyung-Jun. Let me report on HYBE's consolidated financial results for fiscal year 2025. The consolidated revenue posted KRW 2,649.9 billion, up 18% year-over-year.

HYBE has once again broken its sales record, building on its market dominance. Yet we posted KRW 49.9 billion in operating profit, with the OP margin of 1.9%. This decline in OP margin is mainly due to preemptive investments for mid to long-term growth and costs incurred in the process of improving the profit structure.

The first factor that affected our bottom line was preemptive expansion of our global artist IP portfolio. In 2025, HYBE has clearly proven that its production systems do work in basically all parts of the world with successful debut of CORTIS in Korea, Aoen in Japan and new artists in the Latin market.

As costs tend to be recognized mainly in the beginning of debut, they put pressure on the operating margin in the short-term. However, just as you can see in the cases of KATSEYE and &TEAM, these new artists will become a valuable key asset that will further enhance HYBE's profit structure.

The second factor is the process of improving operational efficiency of our U.S. business. We have been transitioning from the management centered business structure to a label-based integrated IP business model to reduce volatility in business performance and generate more stable profit.

One-off costs incurred during this process were recognized in the second half of 2025. However, these were necessary measures aimed at improving mid to long-term profitability of the North American business through business restructuring, which in turn, will start to produce visible financial impact in 2026.

In short, HYBE focused on realigning the business structure and improving business fundamentals in 2025 to achieve medium to long-term growth, and we will do our utmost to ensure that these efforts will be aligned with the resumption of BTS activities and growth of other major artist IPs to deliver more solid and stable financial performance in 2026.

Let me now give you more details on the Q4 results. The consolidated revenue remained at a solid level, similar on a year-over-year basis with KRW 716.4 billion. Revenue with direct artist involvement, including recorded music, concerts and appearances was KRW 436.3 billion, accounting for 61% of the total revenue, while revenue with indirect artist involvement, including merch, licensing and content recorded KRW 280.1 billion, taking up the remaining 39%.

In Q4, we posted KRW 4.6 billion in operating profit, which was affected by the initial marketing and operational costs for Architect: Land of Exiles, a game which was released in October last year, costs for debut of Santos Bravos, our new artist IP in Latin America, and costs incurred during our North American business restructuring that began in Q3.

Next, allow me to provide more details on the impairment losses recognized as nonoperating losses to help our shareholders better understand the situation. As was explained through the third quarter earnings call and the letter to shareholders, HYBE has been restructuring its U.S. business model from a management centered structure to a label-centered model. In this process, approximately KRW 200 billion of impairment losses were recognized in the fourth quarter, which has resulted from a more conservative and strict revaluation of HYBE America currently in the middle of business restructuring.

Please note that, these are accounting losses with no actual cash outflow. The new business structure is expected to deliver greater financial rewards compared to the previous artist management centered business. The value change that HYBE has established in the U.S. including talent development, production and marketing is proven to be competitive as demonstrated by the global success of KATSEYE.

Based on the proven success formula, HYBE will pursue a full-fledged expansion of local artist IP lineups in the U.S. Preparations are underway for the next global girl group based on the production system of KATSEYE and a boy group project in collaboration with legendary producer, Ryan Tedder and a project with Alan's Universe, capitalizing on its 100 million subscriber base.

When these global IPs become fully operational, HYBE America will emerge as a key growth driver of HYBE. We will do our utmost to return the trust of our shareholders and investors, not through vague expectations, but through solid performance and tangible results that will be proven over time.

Let me now give you more details by revenue category. In the fourth quarter, recorded music sales and concert sales were slightly down year-over-year to KRW 218 billion and KRW 175.1 billion, respectively, because we had fewer artist comebacks and tours in the quarter.

Recorded music sales were driven by &TEAM whose Korean debut album became a million seller as well as BOYNEXTDOOR, KATSEYE, and CORTIS and Lin Yanjun, while concert sales were mainly led by SEVENTEEN, who successfully concluded their tour in the U.S. and Japan as well as TXT, LE SSERAFIM and KATSEYE.

Within the category of revenue with indirect artist involvement, merch and licensing revenue recorded KRW 142.9 billion, down 6% year-over-year, while content sales were KRW 100.6 billion, up 61% year-over-year.

In the fourth quarter, merch sales were driven by increased tour activities and content sales were contributed by Season 2 of Are You Sure?!, starring Jimin and Jung Kook, as well as year-end season greetings by diverse artists.

Moving on to KPIs of Weverse, our global superfan platform. Average MAU fell slightly Q-o-Q to approximately 11.2 million in the fourth quarter, while total transaction volume and monthly average revenue per paying user saw a Q-o-Q growth.

In closing, let me announce a new shareholder return policy for the next 3 years. HYBE considers enhancing shareholder value to be a core management goal and have decided to overhaul its existing dividend policy to achieve this goal in a more practical and transparent manner.

The first shareholder return policy announced at the end of 2023 marked the beginning of our full-fledged shareholder return. In this process, we received valuable feedback from the market that demanded more predictability and transparency around our dividend policy.

As a result, HYBE conducted in-depth review of voices of our shareholders and held internal discussions to establish a new 3-year shareholder return policy. The highlight of the new policy is a shift of the basis for dividend payout from the previous net profit to consolidated free cash flow, reflecting underlying cash generating capacity.

From 2025 till 2027, HYBE will use up to 30% of its free cash flow as distributable income to minimize volatility from noncash profits and losses and establish a predictable policy that allows shareholders to easily estimate the size of dividend.

In addition, we are introducing a minimum dividend system to guarantee a minimum DPS of KRW 500 regardless short-term changes in our earnings. This is to significantly strengthen downside stability and ensure that shareholders have clear visibility into dividends.

HYBE is the first K-content company to introduce this advanced shareholder return model, which signifies the company's commitment to shareholder return amid uncertainties in the external environment.

We will continue to listen to our shareholders and share fruits of growth with them in a transparent manner. We promise to continuously enhance shareholder value based on our solid core business performance and become a more trusted company. Thank you. artist IP lineups in the U.S. Preparations are underway for the next global girl group based on the production system of KATSEYE and a boy group project in collaboration with legendary producer, Ryan Tedder and a project with Alan's Universe, capitalizing on its 100 million subscriber base.

When these global IPs become fully operational, HYBE America will emerge as a key growth driver of HYBE. We will do our utmost to return the trust of our shareholders and investors, not through vague expectations, but through solid performance and tangible results that will be proven over time.

Let me now give you more details by revenue category. In the fourth quarter, recorded music sales and concert sales were slightly down year-over-year to KRW 218 billion and KRW 175.1 billion, respectively, because we had fewer artist comebacks and tours in the quarter.

Recorded music sales were driven by &TEAM whose Korean debut album became a million seller as well as BOYNEXTDOOR, KATSEYE, and CORTIS and Lin Yanjun, while concert sales were mainly led by SEVENTEEN, who successfully concluded their tour in the U.S. and Japan as well as TXT, LE SSERAFIM and KATSEYE.

Within the category of revenue with indirect artist involvement, merch and licensing revenue recorded KRW 142.9 billion, down 6% year-over-year, while content sales were KRW 100.6 billion, up 61% year-over-year.

In the fourth quarter, merch sales were driven by increased tour activities and content sales were contributed by Season 2 of Are You Sure?!, starring Jimin and Jung Kook, as well as year-end season greetings by diverse artists.

Moving on to KPIs of Weverse, our global superfan platform. Average MAU fell slightly Q-o-Q to approximately 11.2 million in the fourth quarter, while total transaction volume and monthly average revenue per paying user saw a Q-o-Q growth.

In closing, let me announce a new shareholder return policy for the next 3 years. HYBE considers enhancing shareholder value to be a core management goal and have decided to overhaul its existing dividend policy to achieve this goal in a more practical and transparent manner.

The first shareholder return policy announced at the end of 2023 marked the beginning of our full-fledged shareholder return. In this process, we received valuable feedback from the market that demanded more predictability and transparency around our dividend policy.

As a result, HYBE conducted in-depth review of voices of our shareholders and held internal discussions to establish a new 3-year shareholder return policy. The highlight of the new policy is a shift of the basis for dividend payout from the previous net profit to consolidated free cash flow, reflecting underlying cash generating capacity.

From 2025 till 2027, HYBE will use up to 30% of its free cash flow as distributable income to minimize volatility from noncash profits and losses and establish a predictable policy that allows shareholders to easily estimate the size of dividend.

In addition, we are introducing a minimum dividend system to guarantee a minimum DPS of KRW 500 regardless short-term changes in our earnings. This is to significantly strengthen downside stability and ensure that shareholders have clear visibility into dividends.

HYBE is the first K-content company to introduce this advanced shareholder return model, which signifies the company's commitment to shareholder return amid uncertainties in the external environment.

We will continue to listen to our shareholders and share fruits of growth with them in a transparent manner. We promise to continuously enhance shareholder value based on our solid core business performance and become a more trusted company. Thank you.

[Interpreted] [Operator Instructions] The first question will be provided by Jung Lee from NH Investment & Securities.

[Interpreted] I'm Lee Hwa-Jung from NH Investment & Securities. I'd like to ask one question. You reported that Weverse has turned profit this year in 2025 on an annual basis. So I'd like to understand which revenue categories contributed to improved profitability of Weverse? And if you expect greater earnings going forward for 2026, what kind of outlook do you have for Weverse?

[Interpreted] I am CEO. Let me address your question. As you may remember from our previous earnings call, since I took office as CEO of HYBE, we've been working with Weverse management and CFO as well for about a year to improve the fundamental business capabilities of Weverse. And as was communicated earlier, as of the third quarter, on a cumulative basis, Weverse already turned to profit.

And this is mainly thanks to the growth of the digital business, including digital membership and Weverse DM, as well as other of these independent profit models that continue to generate profit regardless of artist activities. So the digital business has contributed -- has been growing at an annual rate of 30%, and is accounting for more than 10% of the total revenue of Weverse, thus providing more stability in the profit structure.

Furthermore, we have been increasing efficiency in the commerce operation for several months and this has led to a better profit structure for commerce activities as well. And we were able to continue to recruit artists in Japan, because we already have so many Korean artists on Weverse. So Japan was our next target market where Yoasobi, Mrs. Green Apple and Katori Shingo and other influential Japanese artists have joined the platform.

As you know, Weverse is a global platform, and it is an innovative model, but we do have limited resources. So we were not able to work on all major markets such as Korea, Japan, Europe and North America. But rather, as we have already succeeded in Korea, we've decided to focus on the Japanese market. And as for the traffic, as of the fourth quarter, our MAU is 11.2 million. And in January, it has already increased by 15%.

Moving forward for 2026, we expect a lot of impact -- a positive impact from BTS resumption of activities, which will lead to a dramatic increase in traffic and commerce for Weverse. And as I mentioned earlier, we will continue to increase our Japanese lineup for the platform. As we have already a pool of Japanese artists on Weverse, we will add more services and continue to drive commerce transactions as well.

And for digital business, we will try to increase our profitability as well. And in doing so, we will focus on IPs that can contribute to better commerce and increase transactions.

Now what is important for Weverse from the CEO's perspective is whether we will continue to maintain this profit trend or not. From the very beginning, Weverse was created as a global platform, and we already have a huge lineup of Korean artists. So we are generating profit in Korean market. But we believe that our presence has to expand further in the Japanese market, which means that we have to invest in marketing, and we have to invest in other promotional activities.

So in short, we will continue to go through the cycle of having profit in the already established market, while making some losses in the new markets where we enter for our target markets. So we don't really want to continue to maintain this profit structure as is because we want to grow this platform to be a truly global platform.

So in some of the established markets, we will continue to generate profits. But in the new markets where we enter, we have to make investments for future growth, which may lead to some decline in profits to a certain extent. But this is the cycle that we expect going forward, and this is the intention of the management. Thank you.

[Interpreted] The following question will be presented by Ki-hoon Lee from Hana Securities.

[Interpreted] I'm Lee Ki-hoon from Hana Securities. I'd like to ask one question, which is about CORTIS. I've been analyzing the K-Pop market for the past 10 years, and CORTIS seems to be rather an unprecedented case with huge outbound sales, not just for the first week, but also on an ongoing basis. And as of January, I understand that they have sold more than 1.7 million copies.

So on an annual basis, this will be ranked about fifth or sixth place among the total K-Pop artists. So I wonder, whether the first week sales was lower for some reason or maybe there was some successful promotions in other markets later. And I know that BTS mentioned CORTIS a couple of times, so this may have had an impact. So I'd like to understand your analysis of the success behind CORTIS? And if there's any guidance or any color that you can provide to us regarding the future of CORTIS, we would appreciate it.

[Interpreted] I'm CFO. Let me address your question. First of all, as you mentioned, their album sales have continued even after the first week and which means that there has been an increased growth of the fandom for CORTIS on an ongoing basis. And there are 2 main reasons why.

First of all, CORTIS is a very attractive and talented group of artists. And secondly, we have applied promotional strategies that are quite different from the existing K-Pop approaches. For instance, we produced music videos for all tracks on the album with the participation of the members and all music videos were released. And in addition, a variety of other promotional strategies were applied.

So in short, there was a combination of the appeal and attractiveness of CORTIS members, and the new promotional strategies that HYBE has applied, and these were well received in the market. And that is why since debut, CORTIS has been gaining more and more people to their fandom, and this has been maintained ever since.

[Interpreted] I'm CEO. I'd like to add some comments. CORTIS debuted in September in 2025. And as I'm sure you've been following the K-content industry, this was indeed unprecedented. And when you listen to their music, they have their unique feel and originality. And also, we applied promotional strategies that were quite atypical. And many of our marketing and promotional activities were atypical and unusual, and these were all intentional and planned.

In just 3 months, CORTIS sold more than 1.3 million physical copies, which is unprecedented. And it means that they are a huge debut of group. And indeed, their advertising prices are similar to those who have more than 3 or 4 years of experience. And when you look at the global -- Spotify Global Daily Streaming, you can confirm that CORTIS' popularity in the global market is indeed quite bigger than you would ever imagine. So there are growing popularity in the world as well. And that is why they were invited to an NBA-related show as well as got a partnership with an F&D brand, and they are receiving many calls from global brands as well.

And CORTIS was able to sell more than 1.9 million copies, their first album in just 5 months. And in this process, a lot of works have been made by, for instance, VP Kim Soyoung of Big Hit Entertainment, BIGHIT MUSIC as well as the production team, the management team, and the protocol team and so many producers as well as the guidance and leadership of Mr. Bang himself.

So a lot of resources have been invested, and we were able to employ differentiated and unprecedented marketing approaches. And so you can see that CORTIS was the result of concerted efforts at the company level. And this is also the result of what HYBE can do after accumulating 7 or 8 years of experience in the global market with its network and its know-how. And all of these capabilities has led to the success of KATSEYE in North America and the growth of Santos Bravos in the Latin genre. And so indeed, we believe that we have opened the K-Pop era 3.0.

Thank you. This is the end of the fourth quarter conference call for HYBE. Thank you for joining.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Good morning and good evening. Thank you all for joining the conference call for the HYBE earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions]

Now we will begin the presentation on HYBE's third quarter fiscal year 2025 earnings results.

[Interpreted] Greetings. Thank you for joining HYBE's 2025 Q3 Earnings Call. This is [ Kim Jinho ] Head of Financial Strategy. I'll be moderating today's conference, which will proceed through consecutive interpretation. Today, CEO, Lee Jaesang will present Q3 business highlights and future plans; and CFO, Lee Kyung-Jun will present the earnings highlights, followed by the Q&A session. Please note that today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during an external audit.

[Interpreted] Good afternoon. Thank you for joining today's earnings call. We fully understand the concerns and disappointment our shareholders have about this quarter's performance. It is mainly due to the impact of short-term cost increase associated with the investment for sustainable growth of the company and restructuring of overseas business. CFO, Lee Kyung-Jun will discuss details on specific factors that impacted our earnings.

I would like to note that HYBE has maintained fundamental business competitiveness and basis for growth amid these changes and carried out structural improvements for sustainable growth in a consistent manner. We would like to use this as an opportunity to further enhance our business structure and execution systems and make a new leap forward. Now I'd like to discuss business highlights and major achievements.

Let me report on our album results. First, S.Coups and Mingyu, a new unit of SEVENTEEN launched their first mini-album Hype Vibes, which sold about 890,000 copies during the first week, making it the best-selling K-pop unit album. The success of this album demonstrates that diverse unit activities can fill some vote that SEVENTEEN's fans may feel due to some of the upcoming military services by members. LE SSERAFIM achieved their best results with the first single Spaghetti landing on the Billboard Hot 100 at the 50th place. They also achieved their career high on the U.K. Official Charts and Spotify Global.

This year has been the best year for BOYNEXTDOOR since their debut. They came back with the fifth mini-album, The Action, where all members participated in the production. The album sold 1.04 million copies in the first week based on Hanteo Chart, making it the third consecutive million seller. The title track Hollywood Action entered the Melon weekly chart at the 21st place, which is their best record.

TWS and ILLIT entertained their fans with new music in their second year since debut. First, TWS sold 640,000 copies of the group's fourth mini-album, play hard, in the first week, achieving their best first week sales. With all their album selling more than 0.5 million copies in the first week since debut, the group is continuing their growth momentum. ILLIT made a debut in Japan with the first Japanese single, Toki Yo Tomare, which ranked high on Oricon, iTunes Japan and Apple Music Japan top album charts.

The debut of CORTIS with Color Outside The Lines made quite a stir. It is a young creator crew that was formed for the global market in mind from the very beginning. The first week sale of their debut album was about 440,000 copies, the highest among the rookie artists of this year and the fourth highest of all K-pop group debut albums. The album became 0.5 million seller in just 2 weeks and debuted on the U.S. Billboard 200 at the 15th place. It was charted on major charts such as World Albums, Top Album Sales and Top Current Album Sales for 5 consecutive weeks. In just 1 month, the album scored cumulative 100 million streams on Spotify with more than 7 million monthly listeners; demonstrating a rapid growth of their global fandom.

CORTIS received much attention in North America as well. Appearances on major programs such as iHeartRadio and the Zane Lowe Show as well as indications to large global events in the U.S. have helped expand their reputation in the local market. The share of streaming in the recorded music revenue in the third quarter is around 38%, which shows that music by HYBE artists continue to be streamed globally.

Moving on to concerts. HYBE artists continue to expand their contract -- contacts with global fans through global tours and fan meetings in the third quarter as well. First, Jin of BTS held 20 fan concerts in 10 cities from June to November, attracting more than 330,000 fans. During his tour in Europe, he recorded the largest concert profit as a Korean solo artist entering the Billboard Top Tours Chart and demonstrating his global ticket power.

SEVENTEEN kicked off a global tour New_ with the first show in Seoul in September. The group continues to meet with global fans by expanding their tour to Asia, North America and Japan. TOMORROW X TOGETHER made a surprise announcement at their first concert that all members renewed their contracts. And the group is broadening their global fandom during the ACT: TOMORROW tour by performing in various cities in the U.S., Japan and Asia, including Seoul.

ENHYPEN started the Walk the Line Tour in October last year and successfully concluded 32 shows in 18 cities, selling about 676,000 tickets. With sold-out shows in 14 cities, ENHYPEN held a concert at a Japanese stadium in the shortest period of time after debut among foreign artists, further strengthening their influence in the global market. LE SSERAFIM sold out shows in seven cities of their first North American tour, including Newark, Chicago and Seattle, demonstrating a strong ticket power. Next week, they will stage a show in Tokyo Dome in Japan, the first since their debut.

HYBE's multi-home, multi-genre strategy has resulted in the expansion of artists' IP production and consumption beyond orders. A primary example is &TEAM, an artist group based in Japan. Their Korean debut album, Back to Life, sold 1.14 million copies on the first day of release, topping the charts in both Korea and Japan. They became the first Japanese artist to achieve a million seller in both countries and hit a career high with the album sales more than double their previous album Go in Blind. It is the first time in history that a Korean album by a Japanese artist topped the Oricon Chart, which shows that a new fandom is being created that is different from the existing K-pop fandom because it appeals to Koreans who enjoy listening to Japanese music. This is a concrete example that shows that HYBE's global production capabilities and the multi-home, multi-genre strategy are producing meaningful results by connecting the two markets organically.

In the same vein, another example of how the multi-home, multi-genre strategy is working in the global market is KATSEYE. In their second year since debut, the group is solidifying its position in the mainstream market. As you may have seen in the media this week, KATSEYE was nominated for two main categories of the 68th Grammy Awards, Best New Artist and Best Pop Duo/Group Performance, thus writing a new history. The Grammy nominations mean just more than just getting nominated. In particular, nominees for the Best New Artist category are decided not just based on debut year performance, but based on whether they have gained sufficient popular appeal and have influence on the overall music market during the nominee review period.

It is extraordinary that KATSEYE was nominated considering the fact that this group debuted just a little more than a year ago. This result suggests that the group has built a strong global fandom and achieved commercial success in a short span of time. And it's a symbolic example that shows that HYBE's global production system is competitive in the Western market as well. In other words, K-pop's production model and creative processes has been successfully applied in the U.S. music market, resulting in gaining the recognition at the prestigious Grammy awards. We believe that this is an important example that showcases the success of HYBE's globalization strategy.

Since debut, KATSEYE carried out diverse activities in the U.S. market according to the local playbook. We've strived to strike a right balance between pop and K-pop in terms of not only their albums and music, but also content, promotions and media appearances. Building on the know-how of K-pop, we have attempted to differentiate their music style, visuals and fan engagements based on the needs of the local market and unique identity of the artist group. As a result, Gabriela reached their highest ranking by going up to the 37th place on Billboard Hot 100. And Gnarly reentered the chart being charted for a total of 11 weeks. Both songs achieved these results of upward ranking trend more than 4 months after release, demonstrating their public appeal in the mainstream market.

Building on this momentum, KATSEYE will start their first global tour from next week for 16 shows in 13 cities in North America. Their popularity has been demonstrated by the fact that all concerts have been already sold out. In addition, final members of a four-member sister group under the same label with KATSEYE are currently being selected through a global audition, and their journey will be revealed on a Japanese OTT platform next spring.

Artists of HYBE America also produced outstanding results and continue to expand their influence in the local market. BigXthaPlug of QC Music released I Hope You're Happy in late August, which ranked second on both the Billboard Top Rap Albums and Top Country Albums, demonstrating their appeal across genres. The title track, All the Way ranked fourth on Billboard Hot 100 and topped the Hot Rap Songs chart. During the first month, the song reached more than 300 million streams on Spotify. Riley Green of BMLG sold out the tour in the U.K. and Ireland. Change My Mind, released in October last year, continues to be popular, and achieved the first solo top on the U.K. Country Airplay Chart. In addition, EJ Jones, who joined QC Music last October, is gaining momentum with a single track, Gas Station Love, increasing monthly listeners on Spotify rapidly.

Let me now report on our business in Latin America. In the first half of this year, Pase a La Fama, an audition program aired in the Latin region, was successfully concluded. We signed exclusive deals with three finalist teams, including the winner Musza. The program ended their 3-month journey with the final round of competition on August 18. Afterwards, each team is working under album production through S1ENTO Records, a label under HYBE Latin America. Musza, the winner, is working on their music based on hybrid sound that combines traditional Mexican music, R&B and pop elements. In addition, Destino [indiscernible] as well as Low Clika, a group that enjoyed most popularity during the show, are planning to carry out their activities in the Latin music market with their unique music styles and performances.

HYBE Latin America debuted Santos Bravos, a five-member boy group through its own audition project. The members received a structured training for 6 months based on the K-pop production system and made an official debut with the first single 0% on October 22. It is a hybrid genre that blends original Latin music style with K-pop planning. The group has attracted a meaningful size of the initial fandom even before official debut with more than 100 million cumulative views of social media content and 100,000 Weverse subscribers. All 10,000 tickets for their debut concert were sold out in just 2 hours, demonstrating high expectations in the local market.

Going forward, the group plans to expand brand awareness and fandom base through a variety of activities, including performances at global music festivals and cooperation with leading Latin media platforms such as Telemundo. With the successful debut of Santos Bravos, HYBE has confirmed that our planning and production capability centered on K-pop can be effectively applied to the Latin region. Driven by this experience, we aim to generate new growth drivers in the local music ecosystem.

Other artists under HYBE Latin America continue their strong career. In particular, Daddy Yankee dubbed the King of Reggaeton, signed a management deal with HYBE Latin America this year and made a successful return in the global music market with his new regular album, Lamento En Baile. The music video of the title song, El Toque, was filmed in Mungyeong Saejae Mountain Pass in Korea, attracting much attention from global fans and local Latin media. Dandy Yankee expressed deep satisfaction with HYBE support and partnership throughout this collaboration. This project is an example of expanding collaboration capabilities in the Latin music market based on our global network. We will continue to strengthen music-related synergies with various local artists.

Finally, I'd like to report on Weverse, the global superfan platform, which sustained a growth trend in the third quarter, producing meaningful results. In particular, we're seeing a sustained growth of the size of digital business that generates recording sales, including digital membership, Weverse DM and advertising. While total Weverse revenue tends to fluctuate in line with artist activities, the increasing share of digital business revenue is contributing to the stability of the overall profit structure. Based on this, Weverse turned the profit on a cumulative basis in the third quarter of 2025. Going forward, we expect significant improvement in Weverse earnings for 2026; not only thanks to higher e-commerce sales on the back of resumption of BTS activities and growth of major HYBE artists, but also the growth of Weverse's own digital business.

Furthermore, Japanese artists are increasing their use of Weverse. For instance, since joining Weverse in July, KAWAII LAB is actively utilizing DM service to communicate with their fans. YOASOBI continued their activities on Weverse for the past year. And the vocalist member of the group, Ikuta Lilas, opened her solo channel and introduced digital membership.

Likewise, Japanese artists' usage of the platform has been growing. In addition, the platform is expanding in the Chinese market as well. On November 6, Weverse announced a strategic partnership with QQ Music, China's largest music streaming platform, to allow users to subscribe to Weverse DM service directly from QQ Music platform. Weverse Shop opened a brand shop on Tmall in China, being included in the list of 2025 Supernova Brands which are foreign brands that received most attention from Tmall this year. The platform aims to enhance accessibility for Chinese fans through synergies with China's largest online music and entertainment platform and the e-commerce platform.

In our game business, DRIMAGE published a new MMORPG game Architect. Available on mobile and PC platforms, the game ranked first in terms of Google Play sales in just 8 days from release, and it is still ranked high, a meaningful result for a new game publisher to achieve. Going forward, rather than aggressive business expansion, we will focus on profitability through efficient operations and strategic portfolio composition. Building on the positive momentum of Architect, we will strengthen project results, including Arkheron by the Bonfire Studios scheduled to be released in next year and enhance efficiency in our business structure.

Now CFO, Lee Kyung-Jun, will report on the consolidated financial results.

[Interpreted] Good afternoon. This is CFO Lee, Kyung-Jun. Let me report on HYBE's consolidated financial results for the third quarter. The consolidated revenue posted KRW 727.2 billion, a significant growth year-over-year. Revenue with direct artist involvement, including recorded music sales, concerts, advertisements and appearances, was KRW 477.4 billion, accounting for 66% of the total revenue; while revenue with indirect artist involvement, including merchandise, licensing content and fans club sales recorded KRW 249.8 billion, taking up the remaining 34%.

Let me give you more details by revenue category. In Q3, recorded music sales were down year-over-year to KRW 189.8 billion as we had fewer comebacks this quarter. On the other hand, concert sales more than tripled year-over-year to KRW 245 billion, thanks to the global popularity of large-scale concerts, including Jin's global solo tour and the world tours by T X T and ENHYPEN.

Revenue with indirect artist involvement posted KRW 249.8 billion, up 22% Y-o-Y. Merchandise and licensing revenue recorded KRW 168.3 billion, up 70% year-over-year, while content sales were KRW 46.8 billion, down 40% year-over-year. Merch sales were driven by tour merch and light sticks associated with tours and IP-based character products.

In the third quarter, we posted KRW 42.2 billion in operating loss with a negative OP margin of 5.8%. The decline in Q3 profitability was driven by a combination of two major factors. First, we made preemptive investments for global IP expansion. In Korea, we successfully launched a boy group, CORTIS, to build next-generation global IP. In Latin America, we quickly expanded localized artist IP through Pase a la Fama and Santos Bravos. Initial investments such as marketing and content production costs for these projects were recognized in the third quarter, thereby bringing down our operating profit margin by around 6 percentage points. It had a negative impact on profitability in the short term, but it will contribute to HYBE's future growth in the medium and long run through global fandom growth and profit-based stabilization.

The second factor is one-off expenses related to North American business restructuring. HYBE is in the process of shifting its structure from the management-centered business to an integrated IP business structure led by labels. In this process, expenses that incurred to shift our business focus and improved organizational efficiency further pushed operating profit margin down by around 6 percentage points. These were necessary measures to ensure future profitability of North American business and operational stability. Starting from next year, we expect P&L of North American business to become stable on the back of the effect of business restructuring and the resumption of BTS activities.

Since most of these one-off issues were recognized in the third quarter, we expect our earnings to gradually regain stability in Q4. However, we anticipate initial marketing expenses for large-scale MMORPG game, Architect, launched in Q4 and as well as some remaining investment costs related to the U.S. business restructuring and Santos Bravos of HYBE Latin America that were recognized in Q3. Therefore, short-term profitability recovery is likely to be limited. Nevertheless, our K-pop business is maintaining profitability of around 10% to 15% this year, and most of these cost factors will be fully resolved by the end of Q4. So we expect that improvements in the profit structure will begin in earnest starting next year.

Moving on to KPIs of Weverse. The platform maintained a solid growth trend with the average MAU of approximately 11.6 million in Q3, another record high quarterly MAU; mainly thanks to the return of BTS members using Weverse services after military service and diverse global activities by artists on the platform. On the other hand, Q3 total transaction volume fell 28% Q-o-Q, and the monthly ARPPU also fell by 26% Q-o-Q. It is mainly because major activities by artists were reduced compared to the prior quarter, which shows that Weverse transactions naturally tend to fluctuate according to activity schedules of the artists. But as was mentioned before, such variability is expected to reduce gradually on the back of digital revenue growth.

In closing, HYBE is constantly striving to live up to the trust of our shareholders and making changes to build a more robust business structure while venturing into new markets and new genres. Going forward, we expect the whole group activities of BTS, the come backs of major artists, the full-fledged monetization of new IPs in the early stages of growth and the stable label profitability of our restructured North American operations to gradually have a positive impact on the overall performance. To reduce volatility and evolve into a global music company with a predictable earnings structure, we will continue to implement more sophisticated business operations and balanced resource allocation. We will keep doing our utmost to meet the expectations of our shareholders. Thank you.

[Interpreted] We would now like to start the Q&A session.

[Interpreted] [Operator Instructions] The first question will be provided by Junhyun Kim from HSBC.

[Interpreted] I'm Kim Junhyun from HSBC. I have a question about your expense plans. I understand that you have been making preemptive investments for IP expansion, but there seems to be a potential mismatch between revenue generation and schedule of such investments and expense execution. And there seems to be some concern in the market that, of course, you will continue to debut new groups in order to expand your IP portfolio, and you have a presence in China as well as in India. So we can anticipate additional investments going forward. So next year, when BTS resumes their whole group activities, this will lead to increase in your revenue. But the impact of -- or the positive impact of BTS coming back may not may be offset by additional investments that you are making on that side. So I'd like to understand your investment plan and overall expense guide going forward.

[Interpreted] Thank you for the question. As you mentioned, there are a number of key decisions that the management has to make with respect to when and how much investments will be made and how they will impact our earnings because investments are recognized as cost and expenses. While we disclose our Q3 earnings results, we also disclosed our letter to shareholders. And if you read this letter, you will be able to better understand our approaches to future investments.

As you can see, artist performances are growing, and they are generating good sales and revenue. But at the same time, we are trying to lead changes in the market by applying our fandom business model overseas as well as applying our K-pop methodology. So I believe that there is some time and opportunity that we need to consider as well.

After we went overseas with BTS, we were able to expand our presence. And in the meantime, we've seen the emergence of players who are benchmarking our K-pop methodology and our fandom business. So when these local players emerge that are using our approaches, of course, we have better know-how and experience, we are more competitive. We also need to keep them in check. And so while we continue to defend our earnings, it is very important to continue to make investments. If we slow investments just because we feel that it is important to keep our earnings in check, then we may lose leadership in the market because there are many newcomers coming into the market. And so we are constantly monitoring right timing for investments and looking at the changes in the market and make timely investments because we believe that these timely investments will lead to medium- and long-term business growth.

So that is basically our main principle. That is why we made preemptive investments in the Latin music industry as well as our investment for KATSEYE in the U.S. that started 3 years ago. And these investments are now producing meaningful results, and the same goes for India. So while we continue to try to boost our performance and earnings, we don't want to miss out on opportunities that are opening up in the market, and our CFO will add more details.

[Interpreted] As CEO mentioned, we're not disclosing any guidance. But as a CFO, I can give you some visibility regarding -- for each region. We will continue to expand our global IP portfolio. And as you may know, when we enter a new region and new industry, it incurs initial investments, which are quite a lot in terms of expense amount. But once the IP expansion is more stabilized, then cost efficiency will continue to go up.

In the U.S., we have a new IP plan next year, but we have already learned a lot of lessons through the KATSEYE experience. So we are working on a plan that will be more cost effective and will be able to create better results. In the Latin market, we could have slowed down our IP growth strategy, but we saw a huge potential. And that is why we carried out two projects this year alone. And so we don't have any additional new IP debut plan next year, but we will focus on stabilizing the operations of the IPs that we debuted this year. So this will not incur any major expense increase.

Moving on to India and China. We are also, of course, exploring these markets, but there's no plan for IP debut next year as of now. So it's not going to incur any major investment going forward.

[Interpreted] The following question will be presented by Hazel Lee from NH Investment & Securities.

[Interpreted] I'm Lee Hazel from NH Investment and Securities. I would like to ask two questions. First of all, you mentioned that you went through a North American business restructuring and headcount restructuring and organizational efficiency enhancement and some of the changes to the contract structures. And I'd like to understand how much of these changes will have on your earnings in the medium to long run. And so I'd like to get some guidance on that.

And the second question has to do with the cost of debuting an artist team. This year three teams, and it cost about KRW 40 billion. And so I'd like to understand if this is an ongoing trend, meaning that it takes more than KRW 10 billion to debut a team? Or is this something that we would consider just for this year?

[Interpreted] So your first question was on the implications of North American business restructuring on our future earnings. And unfortunately, I cannot give you any specific guidance, but I'd like to mention that we had to take on and implement these restructuring measures in order to ensure a stable profit structure of the U.S. business starting from next year.

I would like to address your second question. Technically speaking, we have debuted five teams of artists this year because there are three bands -- band groups from Pase a la Fama as well as Santos Bravos and CORTIS. Now we don't have any specific number to share with you regarding how much money it takes to debut a group, but it very much depends on our target market. Because depending on countries and markets, there are different marketing strategies and operational costs that may quite vary.

But the point that I want to make is that when we first enter a new market, even though we go into that market with some network, there are always expenses that incur in the process of learning and trial and error. And as CFO mentioned, as we are prepared for the second group following KATSEYE, there will be less expenses incurred. And also a new boy group that we're preparing together with Ryan Tedder, it's going to be relatively cheaper than the initial costs that were needed to debut new groups. So overall, cost efficiency will continue to improve.

And secondly, depending on markets, there are different price points and price tags. And third, as you may know, different boy groups, different artists and different target groups will require different promotional strategies and different marketing strategies. And we're focusing on preparing for artist groups based on segment analysis. And we also need to take into account media environment and how fans consumption and behavior patterns change. And depending on all these factors, we plan our budget. So there is no uniform formula for this type of approach. But overall, what I can say is that if we continue to expand our IPs in the same region, cost efficiency will continue to improve. But depending on new trends, numbers may change as well.

[Interpreted] The following question will be presented by Eun-Hyung Lee from Hana Securities.

[Interpreted] I am Lee Eun-Hyung from Hana Securities. I would like to ask two questions. First of all, you mentioned that Weverse has a partnership with QQ Music as well as Tmall. And so if you can provide us with some background as to your Chinese business, we will be able to better understand your developments regarding Weverse. And the second question is regarding your gaming business, and you mentioned that you will continue to improve and restructure your portfolio. And so I'd like to understand if there were any one-off costs that incurred in the third quarter related to your game business.

[Interpreted] I'm CEO. It's really nice to talk with you. And you may be quite pleased about our partnerships with QQ Music and Tmall. There are some positive signs coming up from -- coming from the Chinese market, but we understand that there's still a lot of uncertainty surrounding the Chinese market. So rather than putting in our resources directly, we have been utilizing corporate partnerships. And so we have not been trying to maximize profits coming from China, but we understand that there are so many Chinese fans who love and support our artists.

So we've been -- and they've been consuming our artists' content and other content in a variety of ways and there were some voices that we collected. And so we decided to partner with QQ Music, the strongest streaming platform in China, as well as Tmall so that more Chinese fans can engage with our artists more actively. So it was more of a company-to-company partnership. And such partnerships are already receiving very positive responses.

So in addition to the currently available Weverse DM, we're discussing additional services to be available on these platforms. And as you know, these will have direct contribution to our earnings because these are subscription-based. So in China, we're not aggressive yet, but we are continuing to look for and implement solutions that can best serve our fans in China.

And regarding your second question on our gaming portfolio. Since the first quarter of this year, we've been in the process of developing plans for our game business because we need to stay focused. And at the same time, in the next 3 to 5 years, we need to anticipate how the market will change going forward in terms of genres and in terms of user play patterns. So we cannot really disclose in any detail, but we've decided to drop several in the pipelines. These are quite sensitive, so I won't go into too much detail. But what I can say is that we are constantly reviewing our game business strategy.

So we have the Architect and we also are going to publish Arkheron. But in addition, we are considering our in-house titles, whether what we are going to do about them because we are constantly changing our strategy to be able to stay focused.

And in the medium to long run, as you may understand, the genres and preferences and lifestyles in the game industry are quickly changing. In the past, the game industry was mainly led by development game studios, but this space, it is more of an open environment where user feedback is actively incorporated through the alpha and beta versions. So we are trying to improve our business structure so that we can have a better portfolio in the medium to long term. And so we are developing and improving our game business strategy right now.

[Interpreted] Thank you very much. This is the end of HYBE's third quarter earnings call. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]