SM Hits a Record Q4 2025: Concerts & Merch Power a $600M+ Year

• SM's Q4 2025 revenue reached ₩319 billion (~$217.88 million) and operating profit increased by 62.2% year on year, marking its best quarter ever.
• Concerts and merchandise fueled growth, increasing by more than 50%, while record and digital sales decreased.
• SM's 3.0 strategy supports a back-to-back 2026 release and touring schedule, after annual income exceeded ₩1 trillion (~$696.7M) in 2025.

SM Entertainment, the South Korean entertainment conglomerate, reported its best fourth quarter in company history, ending on Dec 31, 2025. The K-pop powerhouse reported a solid revenue of ₩319 billion (~$217.88 million USD), depicting an increase of 16.6% over the previous year. This growth was further supercharged by a 62.2% rise in operating profit, amounting to ₩54.6B (~ $37.29M), which effectively pushed the company’s operating margin to 17.1%. The results exceeded market forecasts and displayed an upsurge from a prior-year quarterly net loss to a net profit of ₩27.4B (~$18.71M).

SM's profitability was mostly driven by heightened global concert activity and merchandise/licensing revenue, which increased nearly by 53.6% and 50.6% YoY, respectively. However, album and digital music revenue decreased by around 22.8% due to lower sales volumes. Subsidiary performance improvements at SM C&C and SM Japan, along with the consolidation of the fan platform DearU, further supported the company’s earnings.

Strategic Pivot: SM NEXT 3.0

These successes are anchored in SM's "SM 3.0" strategy, a shift toward a “Multi-Creative” structure aimed at scaling K-pop globally while strengthening operational discipline. Co-CEOs Daniel Jang and Dmitry Tak believe that regional IP and strategic relationships will help the agency become a more efficient, global organization.

SM’s strategy mirrors an industry-wide shift toward live and ancillary revenue, with global touring and merchandising assuming priority over traditional album sales. For instance, its rival company, HYBE's 2025 revenue amounted to ₩2.65 trillion (~$1.81B), which was reportedly mostly driven by a 69% increase in concert earnings from 279 global events, thereby making it a standard case study to study such effects.

Outlook & Market Position of SM Entertainment

SM anticipates a steady rise in recorded music, digital distribution, and live performance revenue in H1 2026, aided by a busy release calendar and touring schedule. In Q1 2026, SM’s Irene will release a new full-length album, along with brand new projects from Hearts2Hearts, NCT JNJM, and HYO. In the coming days, particularly in Q2 2026, additional releases and Japan-focused singles are also planned involving acts like RIIZE, TVXQ!, MINHO, and NCT WISH.

Building on this momentum, live shows are expected to sustain the company’s economic tempo. Some of these events from SM’s roster include SMTOWN Live (2025-26), which has Japan and Thailand as stops, along with EXO’s world tour, and shows from artists like NCT DREAM, aespa, RIIZE, NCT WISH, Taeyong, and Super Junior.

SM Entertainment, in 2025, broke records by attaining ₩1 trillion (~$696.7M) in annual revenue, which was backed by an operating profit that was more than double. This increase in capital provides a critical buffer, enabling the agency to rapidly expand its operations in the face of mounting global competition.