<Q3 Earning's call summary> # Achieved global-led revenue growth (yoy+47%) and OP (yoy+59%) - Global streaming revenue growth driven by 1) market factors (i.e.paid subscription rate) 2) accumulating JYP IP (songs) catalogue, and 3) expanding K-Pop M/S in global music industry ○ Concert : TWICE SEA & EU / SKZ 1Q NA tour, 2PM, etc. reflected (yoy +4.8 billion) - TWICE/Stray Kids/NiziU Q2, Q3 concerts in Japan are expected to be reflected in 4Q. ○ Merchandise: MD revenue upsurged significantly due to SKZ/NiziU MD cut-off sales and JYP 360'S online MD revenue. - JYP 360 achieved 12.6 bn KRW revenue with OPM 19.2% ('23 3Q). ○ Others : Continuous growth in IP licensing revenue (Dear U, etc.) and Japan fan club sales. (yoy+8bn krw)
# Improved OPM (31.4%, yoy+2.5%pt). Margin increased due to growing proportion of overseas revenue, reduction in content production cost, and JYP 360 margin improvement. ○ Expanding overseas revenue will drive higher margin, as they are mostly net revenue and royalty/guarantee base. ○ COGS - Content production cost decreased (yoy -8%), however, production cost can fluctuate quarter to quarter base. Artist fees rose (yoy +91.4%) as management revenue expanded. However, top-line growth would structurally offset increasing COGS. ○ Increase in JYP 360 margin (15% OPM, 3Q23 cumulative vs. 19% OPM, 3Q23 only) contribute to JYP's quarterly margin expansion - JYP 360's blended operating margin which considered to be significantly lower than JYP margin level, JYP would still have shown meaningful margin expansion this year.
# Overseas Revenue Trends ○ Japan reached its record high revenue despite of deferred reflection while internally taking actions to improve Japan's lagging accounting process to provide better finance visibility from next year. ○ Other region incl. NA growth is driven by republic records sales contribution and an increase in concert capacity (yoy +24.8 bn) # Expected revenue growth in both content segment and management segment 1) Content Segment Growth Driver ○ Physical Album : in FY24, album release increases by double in FY24 as the artist pipeline expands and continued activities from existing artists. ○ Streaming : growth driven by 1) market factors such as internet/mobile penetration, paid subscription rate, etc 2) accumulating JYP IP (songs) catalgue, and 3) expanding K-Pop M/S in global music industry ○ Merchandise : Increase in concert capacity, JYP 360's online commerce expansion with diversified merchandise, and artist popularity will lead the growth continuously. ○ Others : IP licensing revenues (incl. DearU)keep growing through IP diversification (game, etc.)and increasing IP demand based on artists' popularity growth
2) Management Segment Growth Driver ○ Concert : Closed a long-term strategic partnership with Live Nation : the contract structure has shifted from MG (Minimum Guarantee) only to MG plus R/S (overage profit revenue share) in NA region. ○ Ads (Commercial) : As artists gain popularity, both global ad portfolio diversifies and artist guarantee increases accordingly.
# Affiliates Update ○ JYP Partners (CVC) is expected to raise funds and begin VC investment after acquiring license from 1Q24. Making synergy with JYP's PI investment. ○ JYP 360 plans to add customized goods service function through 'WEBLING' platform and expand IP revenue stream.