HYBE, the agency behind BTS, posted the best quarter in its history last week, with third-quarter revenue up 109.8% from a year earlier to 1.53 trillion won (about US$1.08 billion) and operating profit of 188.5 billion won. A day later, rival SM Entertainment reported that revenue fell 9.5% to 291.1 billion won and that it slipped to a small net loss.

The split shows how far South Korea's music business now depends on a few touring acts. HYBE's results rest on one stadium tour, and SM's show what happens to a label in a quarter without million-selling albums or big domestic shows. For investors holding Korean entertainment stocks, the two reports also point to a shared problem: a stronger won cut into both companies' net profit through currency losses.

HYBE Becomes a Concert Company

HYBE's operating profit compared with an operating loss of 42.2 billion won in the same quarter of 2025, and it beat the 166 billion won consensus compiled by Yonhap Infomax by 13.6%, Yonhap reported. Revenue and operating profit both topped the records set in the second quarter, of 1.45 trillion won and 170.9 billion won. The operating margin was 12.4%, according to Music Business Worldwide (MBW).

Concerts did most of the work. Live revenue reached 726.8 billion won, up 196.7% from a year earlier and 12.2% from the second quarter, as BTS played its European and U.S. legs to about 70,000 fans a show, MBW reported. Tours by Enhypen, Le Sserafim, Boynextdoor, TWS, Illit, Katseye and Cortis also contributed, according to Yonhap.

Merchandise and licensing set its own record at 334.6 billion won, up 98.7%. That included about 107 billion won from North American tour merchandise, or roughly 2 million items sold across 31 shows in 12 cities, MBW said. Recorded music brought in 282.8 billion won, up 49.0% from a year earlier but down 13.4% from the second quarter.

The bottom line was thinner. Net profit was 11.3 billion won, down 89.7% from 109.8 billion won in the second quarter, and the figure attributable to shareholders of the parent was a loss of 6.8 billion won. Non-operating expenses rose to 142.8 billion won from 43.7 billion won. Chief Financial Officer Lee Kyung-jun said the jump came mostly from foreign exchange valuation losses as the won strengthened, MBW reported.

Nine-month revenue reached 3.674 trillion won, according to Yonhap. Chief Executive Lee Jae-sang told analysts that HYBE plans to announce more BTS tour dates and is preparing for the group's activities after the tour, which runs through the first half of 2027.

SM Entertainment Loses Its Million-Sellers

SM's operating profit fell 26.4% to 35.5 billion won, and its operating margin narrowed to 12.2% from 15.0%, according to figures reported by MBW. A non-operating loss of about 32.3 billion won, against a gain of about 8.7 billion won a year earlier, left a net loss of 1.1 billion won, compared with net income of 44.7 billion won. SM also blamed currency losses from the won's rise.

The weakness was in its core business. At the parent company, revenue from albums and digital music fell 51.3% to 47.1 billion won. New-release album sales dropped to 1.67 million copies from 5.50 million a year earlier, a fall of about 70%. No third-quarter release reached 1 million copies; NCT 127's "Blingy" led with 970,000. A year earlier, NCT Wish, aespa and NCT Dream all sold more than a million, MBW reported.

Parent concert revenue fell 34.2% to 34.5 billion won. SM said its focus on overseas shows and smaller fan events reduced domestic release activity. Merchandise and licensing was the bright spot, rising 23.5% to 62.1 billion won to become the parent's largest revenue line, helped by pop-ups and brand tie-ins such as aespa with the game PUBG. Revenue from subsidiaries rose 12.1% to 164.6 billion won, led by concert producer Dream Maker, whose sales more than tripled. Revenue for the first nine months was still up 7.5%, at 919.8 billion won.

What Comes Next for K-Pop Agencies

SM is counting on a heavier release slate. NCT Wish's mini album "I Spy," released Oct. 12, sold 1.56 million copies in its first week, according to Hanteo Chart data cited by MBW. A full-length NCT Dream album is due on Nov. 9, with albums from Taeyeon and an EXO unit also planned for the fourth quarter. Aespa has nine European shows set for the first quarter of 2027, including London, Paris and Berlin.

HYBE's next growth markets are farther afield. Katseye starts an 11-city arena tour of Asia and Oceania in January, and the company plans its first Weverse Con Festival outside South Korea in New Delhi in March 2027, MBW reported. Its fan platform Weverse averaged 14.22 million monthly active users in the third quarter, slightly below the second quarter's record of 14.43 million.

Investors have also watched JYP Entertainment, whose shares jumped on an unverified takeover claim in October. For HYBE, Weverse's user count and the length of the BTS tour will decide how long HYBE can hold its new profit level once the stadium dates end in mid-2027.