Hive, enabling multi-label systems
Breaking the record for the biggest ever
Thanks to the performance of musicians from the group BTS to Seventeen, Le Seraphim, and New Jin's, Hive renewed its highest sales ever.
Hive posted an operating profit of 237.7 billion won on consolidated sales of 1.778 trillion won in 2022. Sales grew 42% year-on-year, and operating profit rose 25%. The average annual sales growth rate over the past three years was 49.4%, and the operating profit growth rate was 27.8%, respectively.
Adjusted EBITDA, a gauge of actual cash-generating power, rose 24 percent on-year to 328.8 billion won. The ratio of Adjusted EBITDA to sales was 18.5%. Adjusted EBITDA, which means net operating profit that limits both tangible and intangible amortization costs and equity method gains and losses without cash outflow, has increased by 43% on average over the past three years. Hive judged that it was a possible result because not only the music business that corresponds to the main business but also the businesses that are carried out through collaboration with major partners showed significant results.
On a quarterly basis, it recorded consolidated sales of 535.3 billion won and operating profit of 51.7 billion won in the fourth quarter. Sales in the fourth quarter of 2022 increased 17% year-on-year, and increased 20% compared to the previous quarter. Adjusted EBITDA in the fourth quarter was KRW 76.8 billion, and the profit margin of Adjusted EBITDA was 14.4%.
This achievement is the result of Hive Labels artists' all-round activities throughout 2022. Hive Labels artists stood out in the album charts, as well as performances and MDs.
In the case of the album, the performance abroad stood out. In Japan, Hive artists were the only Korean artists to be listed on the chart among the top 15 artists in annual album sales on the Oricon Chart. Among them, album sales by SEVENTEEN, BTS, and ENHYPEN were notable. Le Serafim recorded 220,000 initial sales of its Japanese debut single "Fearless," setting a new record for the debut of the K-Pop girl group in Japan. In the United States, BTS and TOMORROW X TOGETHER were the only K-pop artists to be listed in the top 10 Billboard annual album sales charts.
Performance activity was particularly active in the fourth quarter. Thanks to tours by SEVENTEEN, TOMORROW X TOGETHER, and ENHYPEN, it recorded 64.7 billion won in performance sales in the fourth quarter alone. The City Project-themed SEVENTEEN Japan Dome Tour sold out all seats, while the world tour of TOMORROW X TOGETHER and ENHYPEN was also a box office hit. Thanks to such explosive response, the scale of the three groups' performances in 2023 is expected to more than double compared to the previous year.
Such various teams were able to engage in independent activities simultaneously because of Hive's multi-label system, which began in 2019. The multi-label system does not only secure an independent organizational structure that is apparent, but also has a completely independent creative foundation and infrastructure that can support business ideas. On top of that, creators such as Min Hee-jin, CEO of Adore, who created artist New Jin's, who introduced two million-selling albums within a year of his debut, as well as the presence of talented members, boosted the completeness of the multi-label strategy.
Various new artists are also set to make their debut in 2023. Producer Zico, who leads KOZ Entertainment, will debut a new boy group in the first half of the year. Pledis Entertainment will also introduce a new boy group consisting of members selected through global auditions within this year. A local girl group audition project in the U.S., which is underway by Hive and Universal Music Group, is also cruising.
The outline of the BTS's action plan has also been outlined. BTS The members plan to continue their individual activities, and Jimin's solo album will be released in March, and Suga's world tour will begin in April. Other members' activities will also take place soon.
Park Ji-won, CEO of Hive, said, "Hive is systematically carrying out this by planning detailed activities until the members of the BTS fulfill their national defense obligations and return to the full body." "We will continue to support BTS to make a monumental history in the global music industry," he said.
With the acquisition of hip-hop label QC Media Holdings, Hive is accelerating the advancement of its multi-label strategy in the U.S. as well. QC Media Holdings is a strong player in the hip-hop field with artists such as Lil Baby, who won one Grammy and eight nominations, and Migos, who caused a sensation in the trap genre in the North American music market, Lil Yati, and City Girls.
Through this earnings announcement, Hive also announced a shareholder return plan to proceed with dividends or treasury stock purchases within 30% of the net profit of consolidated controlling shareholders. To this end, the government plans to propose an agenda to transfer profit reserves at the regular shareholders' meeting, and if the agenda is passed, it plans to start buying dividends and treasury stocks from 2024.
"We will provide transparency and predictability regarding financial performance and profit distribution, and increase Hive's corporate value by attracting a wider range of investors," CEO Park Ji-won said.