[The Price Tag of Content: Entertainment] HYBE ③ 2025 Clears Out All Potential Bad Debts... 2026 'Return of BTS' to Test Profit-Generating Capability

Behind the record-breaking sales in 2025, operating profit decreased by 73% year-on-year

Overcoming the Q3 'deficit shock' to turn a profit in the core business in Q4... Clearing out potential bad debts through a 'Big Bath' at year-end

BTS full-group world tour 'ARIRANG' to kick off in Goyang in April 2026... A testing ground to prove profit-generating capability

HYBE, which has expanded its external growth through aggressive M&A, faced the challenge of slowing profitability and embarked on a massive structural improvement in 2025. This article analyzes the restructuring process of 2025, which involved preemptively reflecting poor performance in the books to reorganize finances, and the key variables for normalizing profitability in 2026.

Having experienced its first net loss transition in 2024, HYBE carried out cost restructuring throughout 2025, including merging and abolishing its bloated organizations. As a result, it achieved a turnaround to surplus in its core business operating profit in the fourth quarter of 2025, while simultaneously executing a 'Big Bath' on its year-end books to clear out potential bad debts all at once, thereby resolving future performance uncertainty. In 2026, the plan is to maximize the profitability of its core business centered around the full-group tour of BTS.

Annual Operating Profit Decreases by 73%... The Paradox of External Growth and Profitability

HYBE's 2025 performance showed a structural characteristic where external growth and a decline in profitability occurred simultaneously. HYBE's cumulative annual sales for 2025 reached KRW 2.6498 trillion, increasing by 17.5% year-on-year and breaking its all-time record, but its annual operating profit plummeted by 72.9% year-on-year to KRW 49.9 billion.

HYBE, which had turned to a deficit in the third quarter of 2025 with an operating loss of KRW 42.2 billion, successfully turned a profit in its core business compared to the previous quarter by recording sales of KRW 716.4 billion and an operating profit of KRW 4.6 billion in the fourth quarter. However, it recorded a massive net loss of KRW 274.5 billion in the fourth quarter. This is the result of executing a so-called 'Big Bath,' which clears out past accumulated potential bad debts (such as impairment of goodwill) all at once on the year-end books. Through this financial closing, HYBE alleviated the burden of its cost structure ahead of 2026 and firmly established a financial foundation to normalize profitability.

Organizational Slimming via Subsidiary Merger... Core IP Risk Awaits Merits Lawsuit

Along with financial adjustments, efforts to slim down the bloated organizational structure were also carried out. To improve management efficiency in 2025, HYBE absorbed and merged its 100% wholly-owned subsidiary, BINARY KOREA Co., Ltd., into the headquarters. This was a decision by management to consolidate the corporation established for new business expansion, thereby reducing unnecessary fixed costs and increasing focus on the core business.

In addition, the question of full-group activities for NewJeans, a group belonging to the subsidiary ADOR that significantly impacts corporate value, has still not reached a conclusion as of 2026. ADOR has established itself as a core cash cow within HYBE, recording sales of KRW 135.2 billion and a net profit of KRW 26.1 billion in 2024. Following a court ruling last October validating their exclusive contracts and the NewJeans members giving up their appeal, they returned to HYBE. However, as ADOR notified member Danielle of the termination of her exclusive contract and filed a lawsuit for damages in the KRW 43 billion range, the 'five-member full group' activities became uncertain. Former CEO Min Hee-jin, who recently won the first trial of the put option lawsuit, proposed, "I will give up the KRW 25.6 billion put option, so reinstate Danielle," but HYBE has appealed the put option defeat, running parallel lines. Resolving the risk of this core IP, which has entered a prolonged phase, remains the trickiest task HYBE faces in 2026.

Financial Improvement Through Large-Scale CB Conversion to Shares... Global Breakthrough of Junior IP

At the same time, a positive 'capital expansion' signal emerged, radically improving the financial structure. According to a disclosure in January 2026, about KRW 100 billion of the KRW 400 billion 4th convertible bonds (CB) issued by HYBE in October 2024 were requested to be converted into shares. As a portion of the massive debt (liabilities) was replaced by capital, the company successfully relieved its interest cost burden and quickly stabilized its damaged financial health. The fact that investors chose share conversion over principal recovery demonstrates the capital market's positive outlook on the performance rebound in 2026.

Furthermore, even during a period of intensive cost control, the global achievements of junior IPs produced by the multi-label system played a core role in defending foundational strength. ENHYPEN, &TEAM, and BOYNEXTDOOR ranked high on the Japanese Oricon album chart, and ILLIT and LE SSERAFIM made their names on the US physical album chart, proving the expansion of the global fandom even during BTS's hiatus.

The Core of Profitability Normalization in 2026: BTS Full-Group World Tour 'ARIRANG'

Having undergone cost restructuring and organizational reorganization, HYBE's 2026 performance depends on the full-group activities of its strongest intellectual property (IP), BTS.

According to HYBE's Q4 2025 IR data, BTS will hold a massive world tour, 'BTS WORLD TOUR ARIRANG,' starting in Goyang, South Korea, on April 9 and 11-12, 2026. This tour will be held on a scale of 82 shows in 34 cities across 23 countries worldwide . Entering 14 new cities for the first time, including Madrid, Munich, Bogotá, Lima, and Buenos Aires, as well as existing major hubs like Tokyo and Las Vegas, it plans to dramatically expand the base of its global fandom.

[Source : HYBE 2024 Q4 IR]

The tour, which will be held on a stadium scale for all shows, is expected to generate massive cash flows not only from ticket sales but also from overall indirect-participation revenues such as official merchandise (MD) and live streaming. Consequently, the deficit transition in 2024 and the Big Bath in 2025 were processes to alleviate financial burdens ahead of the return of the flagship IP, and BTS's tour performance in 2026 is expected to become the final testing ground to prove HYBE's profit-generating capability to the market.