<Summary>

1. ’23 4Q Quarter and Annual Performance

- [Annual] Achieved record-high REV 566bn (yoy+63%) OP 169bn (yoy+75%)

  : Growth in 1) physical REV, 2) structural global streaming REV, 3) overseas concert capacity, 4) MD REV  

- [Quarter] Recorded robust REV growth, 157.0bn (yoy+36%) OP 37.8bn (yoy+47%) 

  : Continuous growth in global streaming REV, overseas concert REV increased based on global partnership, MD business expanded

- 4Q decreased NP 2.1bn (yoy-83%)

  : Non-operating expenses from a decrease in NAVER Z value (measured at fair value) and BEIJING SHINSUNG goodwill impairment loss

- Expansion in margin - 4Q GPM 43.9% (yoy+4.0%pt), OPM 24.1% (yoy+1.8%pt), annual OPM 29.9% (yoy+2.0%pt) 

  : Increased margin from overseas REV expansion despite 1) Increase in COGS (content production cost & artist fee), 2) JYP360 margin dilution

2. Notes on REV growth

- Growth driven by diversified segments : 1) Global streaming REV (yoy+22%) 2) Concert REV upsurge (yoy+608%) 3) MD REV increase (yoy+96%) 

  : [Physical] 4Q Stray Kids album and catalogue sales reflected, Republic Records contributed 14bn

  : [Streaming] Global streaming 11.4bn (yoy+22%) domestic streaming (yoy+9%), Structural growth of global streaming continued.

  : [Concert] Achieved a record high quarterly REV 30bn (yoy+608%), including Live Nation overage profit R/S

  : [MD] MD REV 33bn, doubled compared to last year, coming from sizeable tours (JYP360 MD REV 12.8bn) 

  : [Others] Declined due to non-operational factors 1) Japan’s overtime REV recognition, 2) 360 REV reclassified (shipping fee Others -> MD)

- REV growth across all regions, recording the highest overseas REV proportion ('23 cml. oversea REV proportion 56%, yoy+8%pt) 

  : [Japan] quarterly REV 26bn (cml. yoy+75%) 

  : [NA/Others] recorded the highest quarterly REV 48bn (yoy+71%)

  : [China] quarterly REV 4bn (yoy+36%) 

3. Notes on increased cost

- Increase in COGS, SG&A, and one-off non-operating expenses 

  : [COGS] Content production cost and artist fee increased

  : [SG&A] JYP360 shipping fee reclassification (COGS > SG&A), increasing fulfillment fee

  : [Non-operating expenses] One-off non-operating expense from NAVER Z value decrease 9bn (measured at fair value) & BEIJING SHINSUNG goodwill impairment loss and devaluation of share acquisition 

-  Both annual/quarterly margin improved despite increasing COGS and SG&A

<Outlook>

1. Strengthening market presence in Japan

- Increased penetration of K-POP due to the scandal of a major Japanese entertainment/management company

- Planned activities from TWICE / TWICE JP unit / Stray Kids / NiziU / NEXZ 

2. Diversification of REV Segment based on mass-power 

- In early stage, artists monetize from physical sales -> segmentation diversified as mass power increases

  : [Streaming] Expect continuous structural growth from oversea streaming

  : [Concert] Plan to increase sizeable tours in Japan and total concert capacity

  : [MD] Expect an increase in MD coming from sizeable tours in Japan, JYP360 online MD sales expected to expand

  : [Ads/Appearances/Others] Prospect increase in IP value based on mass power expansion, leading to the growth of guarantee and IP Licensing

3. Increase in concert capacity and sizable tours in Japan (*based on REV reflection)

- '23 audience capacity 1.4 million -> '24 audience capacity 1.9 million

- Expect concert margin growth coming from sizable tours in Japan, considering net-based revenue reflection

  cf) Only confirmed concerts are reflected in '24, can be modified as additional concerts occur.

  cf) '23 deferred Japan concerts (29 times) -> reflected in '24 / '24 concerts expected to be deferred -> excluded from ‘24

4. Expansion of Artist Line up

- Expect NEXZ/LOUD REV contribution due to shortened ramp up period of boy groups

  : '24 2Q NEXZ – to be positioned as a global group

  : '24 2H LOUD, PROJECT C

  : '25 plan to launch NEW PROJECT 

5. Strengthening the value chain of core business

- Invest in album/MD OEM/ODM companies

- Plan a vertical integration through JYP360 platform internalization and fandom DB utilization