HYBE Co., Ltd. (A352820) Q4 FY2025 Earnings Call Transcript & Summary

[Interpreted] Good morning, and good evening. Thank you all for joining the conference call for the HYBE earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we will begin the presentation on HYBE's Fourth Quarter of Fiscal Year 2025 Earnings Results.

[Interpreted] Greetings. Thank you for joining us for HYBE's 2025 Q4 Earnings Call. This is [ Kim Jinwoo ], Head of Financial Strategy. I'll be moderating today's conference, which will proceed through consecutive interpretation. Today, CEO, Lee Jaesang will present fiscal year 2025 highlights, including Q4 results and future plans; and CFO, Lee Kyung-Jun, will present earnings highlights followed by a Q&A session. Please note that, today's earnings call is based on preliminary consolidated estimates under K-IFRS and subject to change during an external audit.

[Interpreted] Good afternoon. This is Lee Jaesang, CEO of HYBE. Thank you for joining today's earnings call. In 2025, artists of HYBE Music Group demonstrated outstanding musical influence in the global market, signifying further evolution of the company's global business model. After completing their military service, j-Hope and Jin successfully came back and conducted solo activities. In 2025, major HYBE artists, including SEVENTEEN, TOMORROW X TOGETHER and ENHYPEN held a combined total of 279 large-scale global concerts, thereby dramatically expanding touch points with their fans. 2025 was also a year when HYBE multi-home multi-genre strategy delivered substantial results. In addition to KATSEYE, where they already been producing unparalleled results, key artist IPs in the respective regions, including CORTIS in Korea and Santos Bravos and Low Clika in their Latin region gained significant market influence and led qualitative growth of the artist portfolio. Thanks to these wide-ranging activities and enhancement in business structure, fiscal year 2025 revenue posted KRW 2,649.9 billion, a solid Y-o-Y growth trend and yet another record-breaking revenue demonstrates sustainable growth potential of HYBE. Let me present the planned activities of BTS, who will provide the strongest growth momentum for HYBE in 2026. As of June 2025, all BTS members have completed their military service and announced an upcoming comeback as a whole group. On the 20th of March, they will open the prelude to a new journey, with their fifth regular album ARIRANG. The new album to be released in about 4 years will be immediately followed by the largest world tour ever by mobilizing HYBE's global operational capabilities. The first confirmed schedule alone includes 82 shows in 34 cities around the world, which is the most ever for a single tour by a K-Pop artist. When additional shows are confirmed for Japan and the Middle East, the impact of the BTS tour will be further amplified. This tour is a large-scale stadium tour to be held in about 4 years after the BTS permission to dance on stage tour in 2022. So we expect it to mark an emotional reunion bringing global fans of BTS together again through music. Let me now report on recorded music results. In 2025, amid overall stagnation in the album market, HYBE maintained solid influence in the market, accounting for approximately 30% of the total album sales, the highest share following last year with cumulative annual sales of approximately 19.6 million copies based on Circle Chart statistics. The energy of the fandom maintained through album activities served as a catalyst for overall revenue growth, including concert and merch sales. Since the last earnings call, meaningful results have been delivered by major artists. First, SEVENTEEN increased its artist IP utilization, with a special unit activity by DK and Seungkwan showcasing unique charm and appeal of individual members. TXT demonstrated their influence in the Japanese market yet again with their Japanese regular album Starkissed ranking first on the Oricon Weekly and Combined Chart. In addition, Yeonjun confirmed his strong competitiveness as a solo artist IP with his first album selling more than 600,000 copies during the first week and landing on the 10th place on Billboard 200. And ENHYPEN achieved the fourth double million seller in their history with their mini sixth (sic) [ seventh ] album, THE SIN : VANISH, selling 2.07 million copies during the first week. Furthermore, CORTIS became a million seller in their debut year, adding to HYBE's already strong artist lineups. These achievements are well reflected in the streaming performance as well. HYBE Music Group's artists enjoyed a total of 3.7 billion streams in 2025, accounting for about 3% of the total streams in the year according to the Global Spotify 200 chart. As a result, in 2025, the share of streaming sales is approximately 37% of the total recorded music revenue, showing that music by HYBE artists continues to be consumed in the global streaming market, serving as a stable revenue stream. Let me now report on the results of the global concerts by HYBE Music Group artists. In 2025, 250 concerts and 29 fan meetings were successfully held in total, resulting in the highest concert revenue in the company's history. According to the 2025 Boxscore annual report by the Billboard, our global ranking in the Top Promoter category rose 5 places from the prior year to the fourth place, making HYBE one of the Big 4. In addition, in the Top Tour category, 3 out of 4 K-Pop teams belong to HYBE, reaffirming the strong ticket power of HYBE artists. With the first solo tours in 20 years -- in 12 years since debut, j-Hope was ranked 14th on Pollstar's Global Concert Tour Chart, the highest place as a Korean solo artist and Jin was ranked fifth place on the Asia Focus Chart being the only solo artist to be ranked. SEVENTEEN held 49 concert shows in 22 cities demonstrating increased audience mobilization power compared to the previous year, while TXT and ENHYPEN solidified their status as global touring artists, attracting a total of 550,000 people and 480,000 people, respectively. In addition, LE SSERAFIM's first North American tour, &TEAM's first Asia tour and BND's first solo tour since debut were all concluded successfully, showcasing global concert competitiveness of HYBE artists. Let me now move on to major achievements made by artists of labels and management under HYBE America in the mainstream market. First, in the fourth quarter of 2025, BMLG reaffirmed its unrivaled position in the industry as a powerhouse of country music, capturing both critical and popular acclaim. Riley Green made history by becoming the first artist since Taylor Swift in 2013 to top Billboard's Country Airplay with 2 consecutive self-written songs. Furthermore, at the prestigious 2025 CMA award, he achieved major success by winning 3 awards, which is the most awards on the day, including Single of the Year. Our global artist IP portfolio has been expanding for management and label business. HYBE America signed a management contract with Tyla, who broke the daily streaming record of the previous hit "Water" with her new song "Chanel" and set a new record for the most streamed African artist. She filled out her Tokyo Arena concerts and worked with Bratz, a global fashion doll brand for character collaboration, further expanding her artist IP business and solidifying her position as a global pop icon. EJ Jones, a new artist by hip-hop label QC is gaining traction in the local market by focusing on melodic hip-hop and R&B with sensual melodies over hip-hop beats. He's contributing to expanding the musical scope and diversifying the fan base of the label by adding pop sounds to the strong hip-hop colors that characterize QC Music. His recent single Gas Station Love has been included in the major playlist of Amazon Music, and he made the 2026 Artist To Watch list by Pandora. Positive evaluation by local critics and industry experts allows us to look forward to his future activities. Likewise, HYBE America is continuing to expand its influence in the North American market through record-breaking achievements by top-tier artists in diverse genres and solid label operation. Let me now move on to KATSEYE, the group that has achieved the most overwhelming growth in the global music industry. Their success in 2025 is significant in 2 major aspects. First, they have secured unrivaled popularity and musical status in the local mainstream pop market. As of the fourth quarter, KATSEYE has gained 36 million Spotify monthly listeners, one of the highest among the global girl groups. With the title track, Gabriela, staying on Billboard's Hot 100 for 28 weeks in a row, the group recently had 2 songs in the Top 30 at the same time. As a girl group, this is the first since Destiny's Child, which means that KATSEYE has established itself as a mainstream artist following in the footsteps of legendary girl group in the North American market. Their popularity resulted in nominations for major categories at the 68th Grammy Awards and entry into the U.K. Official Chart, further solidifying their position as a key IP in the global pop market. Second, KATSEYE has proven the scalability of their artist IP to go beyond the typical pop artist by applying HYBE's fandom business know-how. This approach has produced significant financial returns as well. Their first solo tour, The Beautiful Chaos Tour sold out every single show and the amount of tour merch purchased per person not only exceeded other pop artists, but also achieved a top-tier level comparable to that of K-Pop groups who tour extensively in North America. Furthermore, their album sales are solid, far exceeding those of other local artists who mainly rely on large retail channels in North America. These achievements suggest that KATSEYE is creating differentiated results in both markets based on their popularity as a global pop artist and the strong fandom characteristic of K-Pop artists. Having enjoyed great success in 2025, KATSEYE is expected to serve as a sustainable growth driver for HYBE through a significant expansion of the tour scale. In particular, CORTIS clearly represents qualitative growth of artist IPs that HYBE is pursuing. Despite being a debut group, CORTIS has set new standards in the market with music, content and performance that showcases their identity as a young creator crew. What sets CORTIS apart from other teams is that the members participated in the entire production process, including music, choreography and video, and this created their own unique color. The stories that a teenage group can share and high-quality content that reflect their genuine sincerity have resonated with listeners, creating a momentum for extended life of their music and sustainable value creation. Their unique and original identity has made a great appeal to diverse global industries beyond music. Recently, CORTIS became the first K-Pop artist to be selected as a headliner for the NBA Crossover Concert Series, and they became the first Korean group to sign a partnership with Red Bull. They also carried out cross-genre collaborations, including sports, gaming and film. CORTIS was invited to sing a new original soundtrack for a major Hollywood animation. One of the tracks in their debut album titled Go was used as a soundtrack for popular game NBA 2026 Season 4. This rapid growth is the result of the vision of BigHit Music, a label within HYBE Music Group to provide the best musical experience by respecting artist creativity and actively supporting their creative activities. In addition, Aoen topped the charts as soon as their debut in Japan and new lineups, including Santos Bravos made a successful debut in the Latin market, further demonstrating how HYBE system can be applied in a flexible manner to other genres and regions. Based on these solid achievements in 2025, HYBE aims to further diversify its territory in the global music industry in 2026. First, in the new year, a new girl group will debut in Korea and a global girl group is being prepared to follow the successful model of KATSEYE. Also, as was previously mentioned, efforts are being made in full swing to debut a local boy group in collaboration with legendary producer, Ryan Tedder. Furthermore, we're trying an innovative artist IP growth model by combining storytelling and music through the project with Alan's Universe that has more than 100 million subscribers. We are also working on a project optimized for local culture in India to further expand our global influence. In short, 2026 will be an important year for HYBE when these diverse global artist IPs are successfully established in addition to the resumption of BTS activities. Finally, I'd like to report on Weverse HYBE's platform business. In 2025, Weverse achieved a significant return to profitability on an annual basis by strengthening business fundamentals through improvement in profit structure and operational efficiency. This achievement was driven by bringing in diverse artists, operating e-commerce in a strategic manner and diversifying its revenue model through digital business expansion such as advertising and subscription services. At the same time, the platform fundamentally improved its cost structure by streamlining the organizational structure and SG&A expenses, thereby establishing a solid financial foundation. Furthermore, BTS resuming their activities, key artists achieving growth and the accompanying e-commerce revenue growth and digital business growth are expected to drive improved financial performance of Weverse in 2026. Now CFO, Lee Kyung-Jun will report on the financial results.ing that music by HYBE artists continues to be consumed in the global streaming market, serving as a stable revenue stream. Let me now report on the results of the global concerts by HYBE Music Group artists. In 2025, 250 concerts and 29 fan meetings were successfully held in total, resulting in the highest concert revenue in the company's history. According to the 2025 Boxscore annual report by the Billboard, our global ranking in the Top Promoter category rose 5 places from the prior year to the fourth place, making HYBE one of the Big 4. In addition, in the Top Tour category, 3 out of 4 K-Pop teams belong to HYBE, reaffirming the strong ticket power of HYBE artists. With the first solo tours in 20 years -- in 12 years since debut, j-Hope was ranked 14th on Pollstar's Global Concert Tour Chart, the highest place as a Korean solo artist and Jin was ranked fifth place on the Asia Focus Chart being the only solo artist to be ranked. SEVENTEEN held 49 concert shows in 22 cities demonstrating increased audience mobilization power compared to the previous year, while TXT and ENHYPEN solidified their status as global touring artists, attracting a total of 550,000 people and 480,000 people, respectively. In addition, LE SSERAFIM's first North American tour, &TEAM's first Asia tour and BND's first solo tour since debut were all concluded successfully, showcasing global concert competitiveness of HYBE artists. Let me now move on to major achievements made by artists of labels and management under HYBE America in the mainstream market. First, in the fourth quarter of 2025, BMLG reaffirmed its unrivaled position in the industry as a powerhouse of country music, capturing both critical and popular acclaim. Riley Green made history by becoming the first artist since Taylor Swift in 2013 to top Billboard's Country Airplay with 2 consecutive self-written songs. Furthermore, at the prestigious 2025 CMA award, he achieved major success by winning 3 awards, which is the most awards on the day, including Single of the Year. Our global artist IP portfolio has been expanding for management and label business. HYBE America signed a management contract with Tyla, who broke the daily streaming record of the previous hit "Water" with her new song "Chanel" and set a new record for the most streamed African artist. She filled out her Tokyo Arena concerts and worked with Bratz, a global fashion doll brand for character collaboration, further expanding her artist IP business and solidifying her position as a global pop icon. EJ Jones, a new artist by hip-hop label QC is gaining traction in the local market by focusing on melodic hip-hop and R&B with sensual melodies over hip-hop beats. He's contributing to expanding the musical scope and diversifying the fan base of the label by adding pop sounds to the strong hip-hop colors that characterize QC Music. His recent single Gas Station Love has been included in the major playlist of Amazon Music, and he made the 2026 Artist To Watch list by Pandora. Positive evaluation by local critics and industry experts allows us to look forward to his future activities. Likewise, HYBE America is continuing to expand its influence in the North American market through record-breaking achievements by top-tier artists in diverse genres and solid label operation. Let me now move on to KATSEYE, the group that has achieved the most overwhelming growth in the global music industry. Their success in 2025 is significant in 2 major aspects. First, they have secured unrivaled popularity and musical status in the local mainstream pop market. As of the fourth quarter, KATSEYE has gained 36 million Spotify monthly listeners, one of the highest among the global girl groups. With the title track, Gabriela, staying on Billboard's Hot 100 for 28 weeks in a row, the group recently had 2 songs in the Top 30 at the same time. As a girl group, this is the first since Destiny's Child, which means that KATSEYE has established itself as a mainstream artist following in the footsteps of legendary girl group in the North American market. Their popularity resulted in nominations for major categories at the 68th Grammy Awards and entry into the U.K. Official Chart, further solidifying their position as a key IP in the global pop market. Second, KATSEYE has proven the scalability of their artist IP to go beyond the typical pop artist by applying HYBE's fandom business know-how. This approach has produced significant financial returns as well. Their first solo tour, The Beautiful Chaos Tour sold out every single show and the amount of tour merch purchased per person not only exceeded other pop artists, but also achieved a top-tier level comparable to that of K-Pop groups who tour extensively in North America. Furthermore, their album sales are solid, far exceeding those of other local artists who mainly rely on large retail channels in North America. These achievements suggest that KATSEYE is creating differentiated results in both markets based on their popularity as a global pop artist and the strong fandom characteristic of K-Pop artists. Having enjoyed great success in 2025, KATSEYE is expected to serve as a sustainable growth driver for HYBE through a significant expansion of the tour scale. In particular, CORTIS clearly represents qualitative growth of artist IPs that HYBE is pursuing. Despite being a debut group, CORTIS has set new standards in the market with music, content and performance that showcases their identity as a young creator crew. What sets CORTIS apart from other teams is that the members participated in the entire production process, including music, choreography and video, and this created their own unique color. The stories that a teenage group can share and high-quality content that reflect their genuine sincerity have resonated with listeners, creating a momentum for extended life of their music and sustainable value creation. Their unique and original identity has made a great appeal to diverse global industries beyond music. Recently, CORTIS became the first K-Pop artist to be selected as a headliner for the NBA Crossover Concert Series, and they became the first Korean group to sign a partnership with Red Bull. They also carried out cross-genre collaborations, including sports, gaming and film. CORTIS was invited to sing a new original soundtrack for a major Hollywood animation. One of the tracks in their debut album titled Go was used as a soundtrack for popular game NBA 2026 Season 4. This rapid growth is the result of the vision of BigHit Music, a label within HYBE Music Group to provide the best musical experience by respecting artist creativity and actively supporting their creative activities. In addition, Aoen topped the charts as soon as their debut in Japan and new lineups, including Santos Bravos made a successful debut in the Latin market, further demonstrating how HYBE system can be applied in a flexible manner to other genres and regions. Based on these solid achievements in 2025, HYBE aims to further diversify its territory in the global music industry in 2026. First, in the new year, a new girl group will debut in Korea and a global girl group is being prepared to follow the successful model of KATSEYE. Also, as was previously mentioned, efforts are being made in full swing to debut a local boy group in collaboration with legendary producer, Ryan Tedder. Furthermore, we're trying an innovative artist IP growth model by combining storytelling and music through the project with Alan's Universe that has more than 100 million subscribers. We are also working on a project optimized for local culture in India to further expand our global influence. In short, 2026 will be an important year for HYBE when these diverse global artist IPs are successfully established in addition to the resumption of BTS activities. Finally, I'd like to report on Weverse HYBE's platform business. In 2025, Weverse achieved a significant return to profitability on an annual basis by strengthening business fundamentals through improvement in profit structure and operational efficiency. This achievement was driven by bringing in diverse artists, operating e-commerce in a strategic manner and diversifying its revenue model through digital business expansion such as advertising and subscription services. At the same time, the platform fundamentally improved its cost structure by streamlining the organizational structure and SG&A expenses, thereby establishing a solid financial foundation. Furthermore, BTS resuming their activities, key artists achieving growth and the accompanying e-commerce revenue growth and digital business growth are expected to drive improved financial performance of Weverse in 2026. Now CFO, Lee Kyung-Jun will report on the financial results.

[Interpreted] Good afternoon. This is CFO, Lee Kyung-Jun. Let me report on HYBE's consolidated financial results for fiscal year 2025. The consolidated revenue posted KRW 2,649.9 billion, up 18% year-over-year. HYBE has once again broken its sales record, building on its market dominance. Yet we posted KRW 49.9 billion in operating profit, with the OP margin of 1.9%. This decline in OP margin is mainly due to preemptive investments for mid to long-term growth and costs incurred in the process of improving the profit structure. The first factor that affected our bottom line was preemptive expansion of our global artist IP portfolio. In 2025, HYBE has clearly proven that its production systems do work in basically all parts of the world with successful debut of CORTIS in Korea, Aoen in Japan and new artists in the Latin market. As costs tend to be recognized mainly in the beginning of debut, they put pressure on the operating margin in the short-term. However, just as you can see in the cases of KATSEYE and &TEAM, these new artists will become a valuable key asset that will further enhance HYBE's profit structure. The second factor is the process of improving operational efficiency of our U.S. business. We have been transitioning from the management centered business structure to a label-based integrated IP business model to reduce volatility in business performance and generate more stable profit. One-off costs incurred during this process were recognized in the second half of 2025. However, these were necessary measures aimed at improving mid to long-term profitability of the North American business through business restructuring, which in turn, will start to produce visible financial impact in 2026. In short, HYBE focused on realigning the business structure and improving business fundamentals in 2025 to achieve medium to long-term growth, and we will do our utmost to ensure that these efforts will be aligned with the resumption of BTS activities and growth of other major artist IPs to deliver more solid and stable financial performance in 2026. Let me now give you more details on the Q4 results. The consolidated revenue remained at a solid level, similar on a year-over-year basis with KRW 716.4 billion. Revenue with direct artist involvement, including recorded music, concerts and appearances was KRW 436.3 billion, accounting for 61% of the total revenue, while revenue with indirect artist involvement, including merch, licensing and content recorded KRW 280.1 billion, taking up the remaining 39%. In Q4, we posted KRW 4.6 billion in operating profit, which was affected by the initial marketing and operational costs for Architect: Land of Exiles, a game which was released in October last year, costs for debut of Santos Bravos, our new artist IP in Latin America, and costs incurred during our North American business restructuring that began in Q3. Next, allow me to provide more details on the impairment losses recognized as nonoperating losses to help our shareholders better understand the situation. As was explained through the third quarter earnings call and the letter to shareholders, HYBE has been restructuring its U.S. business model from a management centered structure to a label-centered model. In this process, approximately KRW 200 billion of impairment losses were recognized in the fourth quarter, which has resulted from a more conservative and strict revaluation of HYBE America currently in the middle of business restructuring. Please note that, these are accounting losses with no actual cash outflow. The new business structure is expected to deliver greater financial rewards compared to the previous artist management centered business. The value change that HYBE has established in the U.S. including talent development, production and marketing is proven to be competitive as demonstrated by the global success of KATSEYE. Based on the proven success formula, HYBE will pursue a full-fledged expansion of local artist IP lineups in the U.S. Preparations are underway for the next global girl group based on the production system of KATSEYE and a boy group project in collaboration with legendary producer, Ryan Tedder and a project with Alan's Universe, capitalizing on its 100 million subscriber base. When these global IPs become fully operational, HYBE America will emerge as a key growth driver of HYBE. We will do our utmost to return the trust of our shareholders and investors, not through vague expectations, but through solid performance and tangible results that will be proven over time. Let me now give you more details by revenue category. In the fourth quarter, recorded music sales and concert sales were slightly down year-over-year to KRW 218 billion and KRW 175.1 billion, respectively, because we had fewer artist comebacks and tours in the quarter. Recorded music sales were driven by &TEAM whose Korean debut album became a million seller as well as BOYNEXTDOOR, KATSEYE, and CORTIS and Lin Yanjun, while concert sales were mainly led by SEVENTEEN, who successfully concluded their tour in the U.S. and Japan as well as TXT, LE SSERAFIM and KATSEYE. Within the category of revenue with indirect artist involvement, merch and licensing revenue recorded KRW 142.9 billion, down 6% year-over-year, while content sales were KRW 100.6 billion, up 61% year-over-year. In the fourth quarter, merch sales were driven by increased tour activities and content sales were contributed by Season 2 of Are You Sure?!, starring Jimin and Jung Kook, as well as year-end season greetings by diverse artists. Moving on to KPIs of Weverse, our global superfan platform. Average MAU fell slightly Q-o-Q to approximately 11.2 million in the fourth quarter, while total transaction volume and monthly average revenue per paying user saw a Q-o-Q growth. In closing, let me announce a new shareholder return policy for the next 3 years. HYBE considers enhancing shareholder value to be a core management goal and have decided to overhaul its existing dividend policy to achieve this goal in a more practical and transparent manner. The first shareholder return policy announced at the end of 2023 marked the beginning of our full-fledged shareholder return. In this process, we received valuable feedback from the market that demanded more predictability and transparency around our dividend policy. As a result, HYBE conducted in-depth review of voices of our shareholders and held internal discussions to establish a new 3-year shareholder return policy. The highlight of the new policy is a shift of the basis for dividend payout from the previous net profit to consolidated free cash flow, reflecting underlying cash generating capacity. From 2025 till 2027, HYBE will use up to 30% of its free cash flow as distributable income to minimize volatility from noncash profits and losses and establish a predictable policy that allows shareholders to easily estimate the size of dividend. In addition, we are introducing a minimum dividend system to guarantee a minimum DPS of KRW 500 regardless short-term changes in our earnings. This is to significantly strengthen downside stability and ensure that shareholders have clear visibility into dividends. HYBE is the first K-content company to introduce this advanced shareholder return model, which signifies the company's commitment to shareholder return amid uncertainties in the external environment. We will continue to listen to our shareholders and share fruits of growth with them in a transparent manner. We promise to continuously enhance shareholder value based on our solid core business performance and become a more trusted company. Thank you. artist IP lineups in the U.S. Preparations are underway for the next global girl group based on the production system of KATSEYE and a boy group project in collaboration with legendary producer, Ryan Tedder and a project with Alan's Universe, capitalizing on its 100 million subscriber base. When these global IPs become fully operational, HYBE America will emerge as a key growth driver of HYBE. We will do our utmost to return the trust of our shareholders and investors, not through vague expectations, but through solid performance and tangible results that will be proven over time. Let me now give you more details by revenue category. In the fourth quarter, recorded music sales and concert sales were slightly down year-over-year to KRW 218 billion and KRW 175.1 billion, respectively, because we had fewer artist comebacks and tours in the quarter. Recorded music sales were driven by &TEAM whose Korean debut album became a million seller as well as BOYNEXTDOOR, KATSEYE, and CORTIS and Lin Yanjun, while concert sales were mainly led by SEVENTEEN, who successfully concluded their tour in the U.S. and Japan as well as TXT, LE SSERAFIM and KATSEYE. Within the category of revenue with indirect artist involvement, merch and licensing revenue recorded KRW 142.9 billion, down 6% year-over-year, while content sales were KRW 100.6 billion, up 61% year-over-year. In the fourth quarter, merch sales were driven by increased tour activities and content sales were contributed by Season 2 of Are You Sure?!, starring Jimin and Jung Kook, as well as year-end season greetings by diverse artists. Moving on to KPIs of Weverse, our global superfan platform. Average MAU fell slightly Q-o-Q to approximately 11.2 million in the fourth quarter, while total transaction volume and monthly average revenue per paying user saw a Q-o-Q growth. In closing, let me announce a new shareholder return policy for the next 3 years. HYBE considers enhancing shareholder value to be a core management goal and have decided to overhaul its existing dividend policy to achieve this goal in a more practical and transparent manner. The first shareholder return policy announced at the end of 2023 marked the beginning of our full-fledged shareholder return. In this process, we received valuable feedback from the market that demanded more predictability and transparency around our dividend policy. As a result, HYBE conducted in-depth review of voices of our shareholders and held internal discussions to establish a new 3-year shareholder return policy. The highlight of the new policy is a shift of the basis for dividend payout from the previous net profit to consolidated free cash flow, reflecting underlying cash generating capacity. From 2025 till 2027, HYBE will use up to 30% of its free cash flow as distributable income to minimize volatility from noncash profits and losses and establish a predictable policy that allows shareholders to easily estimate the size of dividend. In addition, we are introducing a minimum dividend system to guarantee a minimum DPS of KRW 500 regardless short-term changes in our earnings. This is to significantly strengthen downside stability and ensure that shareholders have clear visibility into dividends. HYBE is the first K-content company to introduce this advanced shareholder return model, which signifies the company's commitment to shareholder return amid uncertainties in the external environment. We will continue to listen to our shareholders and share fruits of growth with them in a transparent manner. We promise to continuously enhance shareholder value based on our solid core business performance and become a more trusted company. Thank you.

[Interpreted] [Operator Instructions] The first question will be provided by Jung Lee from NH Investment & Securities.

[Interpreted] I'm Lee Hwa-Jung from NH Investment & Securities. I'd like to ask one question. You reported that Weverse has turned profit this year in 2025 on an annual basis. So I'd like to understand which revenue categories contributed to improved profitability of Weverse? And if you expect greater earnings going forward for 2026, what kind of outlook do you have for Weverse?

[Interpreted] I am CEO. Let me address your question. As you may remember from our previous earnings call, since I took office as CEO of HYBE, we've been working with Weverse management and CFO as well for about a year to improve the fundamental business capabilities of Weverse. And as was communicated earlier, as of the third quarter, on a cumulative basis, Weverse already turned to profit. And this is mainly thanks to the growth of the digital business, including digital membership and Weverse DM, as well as other of these independent profit models that continue to generate profit regardless of artist activities. So the digital business has contributed -- has been growing at an annual rate of 30%, and is accounting for more than 10% of the total revenue of Weverse, thus providing more stability in the profit structure. Furthermore, we have been increasing efficiency in the commerce operation for several months and this has led to a better profit structure for commerce activities as well. And we were able to continue to recruit artists in Japan, because we already have so many Korean artists on Weverse. So Japan was our next target market where Yoasobi, Mrs. Green Apple and Katori Shingo and other influential Japanese artists have joined the platform. As you know, Weverse is a global platform, and it is an innovative model, but we do have limited resources. So we were not able to work on all major markets such as Korea, Japan, Europe and North America. But rather, as we have already succeeded in Korea, we've decided to focus on the Japanese market. And as for the traffic, as of the fourth quarter, our MAU is 11.2 million. And in January, it has already increased by 15%. Moving forward for 2026, we expect a lot of impact -- a positive impact from BTS resumption of activities, which will lead to a dramatic increase in traffic and commerce for Weverse. And as I mentioned earlier, we will continue to increase our Japanese lineup for the platform. As we have already a pool of Japanese artists on Weverse, we will add more services and continue to drive commerce transactions as well. And for digital business, we will try to increase our profitability as well. And in doing so, we will focus on IPs that can contribute to better commerce and increase transactions. Now what is important for Weverse from the CEO's perspective is whether we will continue to maintain this profit trend or not. From the very beginning, Weverse was created as a global platform, and we already have a huge lineup of Korean artists. So we are generating profit in Korean market. But we believe that our presence has to expand further in the Japanese market, which means that we have to invest in marketing, and we have to invest in other promotional activities. So in short, we will continue to go through the cycle of having profit in the already established market, while making some losses in the new markets where we enter for our target markets. So we don't really want to continue to maintain this profit structure as is because we want to grow this platform to be a truly global platform. So in some of the established markets, we will continue to generate profits. But in the new markets where we enter, we have to make investments for future growth, which may lead to some decline in profits to a certain extent. But this is the cycle that we expect going forward, and this is the intention of the management. Thank you.

[Interpreted] The following question will be presented by Ki-hoon Lee from Hana Securities.

[Interpreted] I'm Lee Ki-hoon from Hana Securities. I'd like to ask one question, which is about CORTIS. I've been analyzing the K-Pop market for the past 10 years, and CORTIS seems to be rather an unprecedented case with huge outbound sales, not just for the first week, but also on an ongoing basis. And as of January, I understand that they have sold more than 1.7 million copies. So on an annual basis, this will be ranked about fifth or sixth place among the total K-Pop artists. So I wonder, whether the first week sales was lower for some reason or maybe there was some successful promotions in other markets later. And I know that BTS mentioned CORTIS a couple of times, so this may have had an impact. So I'd like to understand your analysis of the success behind CORTIS? And if there's any guidance or any color that you can provide to us regarding the future of CORTIS, we would appreciate it.

[Interpreted] I'm CFO. Let me address your question. First of all, as you mentioned, their album sales have continued even after the first week and which means that there has been an increased growth of the fandom for CORTIS on an ongoing basis. And there are 2 main reasons why. First of all, CORTIS is a very attractive and talented group of artists. And secondly, we have applied promotional strategies that are quite different from the existing K-Pop approaches. For instance, we produced music videos for all tracks on the album with the participation of the members and all music videos were released. And in addition, a variety of other promotional strategies were applied. So in short, there was a combination of the appeal and attractiveness of CORTIS members, and the new promotional strategies that HYBE has applied, and these were well received in the market. And that is why since debut, CORTIS has been gaining more and more people to their fandom, and this has been maintained ever since.

[Interpreted] I'm CEO. I'd like to add some comments. CORTIS debuted in September in 2025. And as I'm sure you've been following the K-content industry, this was indeed unprecedented. And when you listen to their music, they have their unique feel and originality. And also, we applied promotional strategies that were quite atypical. And many of our marketing and promotional activities were atypical and unusual, and these were all intentional and planned. In just 3 months, CORTIS sold more than 1.3 million physical copies, which is unprecedented. And it means that they are a huge debut of group. And indeed, their advertising prices are similar to those who have more than 3 or 4 years of experience. And when you look at the global -- Spotify Global Daily Streaming, you can confirm that CORTIS' popularity in the global market is indeed quite bigger than you would ever imagine. So there are growing popularity in the world as well. And that is why they were invited to an NBA-related show as well as got a partnership with an F&D brand, and they are receiving many calls from global brands as well. And CORTIS was able to sell more than 1.9 million copies, their first album in just 5 months. And in this process, a lot of works have been made by, for instance, VP Kim Soyoung of Big Hit Entertainment, BIGHIT MUSIC as well as the production team, the management team, and the protocol team and so many producers as well as the guidance and leadership of Mr. Bang himself. So a lot of resources have been invested, and we were able to employ differentiated and unprecedented marketing approaches. And so you can see that CORTIS was the result of concerted efforts at the company level. And this is also the result of what HYBE can do after accumulating 7 or 8 years of experience in the global market with its network and its know-how. And all of these capabilities has led to the success of KATSEYE in North America and the growth of Santos Bravos in the Latin genre. And so indeed, we believe that we have opened the K-Pop era 3.0.

Thank you. This is the end of the fourth quarter conference call for HYBE. Thank you for joining. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]