YG’s Q3 Operating Profit Plunges 56.8%: Can Its Younger Artists Lead a Comeback?

Profitability softens amid a high tour-driven base; company looks to its rookie pipeline for a way forward

YG Entertainment, a KOSDAQ-listed company, reported on the 9th that its consolidated operating profit for the third quarter of this year was 13.5 billion won, down 56.8% from a year earlier.

The result was 28.9% below the market consensus of 18.9 billion won, compiled by financial data provider Yonhap Infomax. Revenue for the quarter was provisionally tallied at 156.7 billion won, down 9.4% from the same period last year, while net profit fell 73.8% to 6.4 billion won.

The slowdown in profitability reflected a combination of a high comparison base following major concerts and other costs. YG Entertainment said, “Operating margin declined from a year earlier as the high base created by large-scale tours by key artists, including BLACKPINK, was compounded by BIGBANG world tour operating expenses, distribution fees and other costs, all of which were recognized at once.”

Compared with the previous quarter, however, the company posted a gradual recovery. YG Entertainment said, “Revenue and operating profit both rose 22.7% from the second quarter,” adding that “strong concert ticket revenue and merchandise sales, driven by world tours by key artists, led to a rebound from the previous quarter.”

The company plans to focus its efforts on activities by next-generation artists and expanding its pipeline to secure future growth. Girl group BABYMONSTER is currently undertaking its second world tour, CHOOM, with 31 shows across 18 cities on five continents. Boy group TREASURE released its fourth mini album, NEW WAV, in June and successfully completed a fan concert tour spanning 22 shows in 10 cities. On the 2nd of this month, the group released the digital single SHOCK, further broadening its musical range.

A YG Entertainment representative said, “We are currently accelerating our debut project for a next-generation new group,” adding, “Along with building a new lineup, we plan to support the systematic growth of our younger intellectual property (IP) and maintain solid earnings momentum over the medium to long term.”