KOSDAQMedia & Entertainment376300

Dear U

₩18,770▼ 0.58%2026-10-02 close

Market Cap

₩445.1B

Turnover

₩1.7B

Volume

90,000 shares

Shares out.

23.7M

PER

11.8×

PBR

2.0×

EPS

₩1,529

Dividend Yield

1.75%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩316 per share · Prices as of the 2026-10-02 close

Report overview

Overseas Expansion Amid Earnings Volatility

DearU is simultaneously expanding into China, Japan, and the United States, while quarterly earnings continue to show notable volatility.

1
2025 operating profit reached a record 31.39 billion won (+23.5% YoY), but a one-off impairment in Q2 caused net profit attributable to owners to fall 23.6%.
2
In Q1 2026 revenue, operating profit, and net profit all grew at double- to triple-digit rates, but Q2 net profit slowed sharply from the prior quarter.
3
Overseas operations including China's QQ Music bubble, the Japan joint venture, and the U.S. 'the bubble' are expanding simultaneously, with a new offline-store-based U.S. business planned within the year.
4
SM Entertainment is the controlling shareholder with a 50.03% stake, creating both stability and concentration-related risk through its group affiliation.
5
Reduced payment fees from expanding PG (payment gateway) conversion are a key margin driver, though the pace of conversion has been slower than the market expected.

Business structure

DearU is a fan communication platform company whose core business is 'bubble,' a subscription service that lets fans exchange private one-on-one messages with artists.

Following the October 2025 merger of SM Studios into SM Entertainment, the controlling shareholder's name changed to SM Entertainment while the stake was maintained at 50.03%. Several major agencies, including JYP Entertainment, also maintain equity or service participation relationships with the company.

Most revenue comes from bubble subscription fees, with over 93% of total 2025 revenue attributed to bubble. As of the end of June 2025, overseas usage accounted for roughly 73% of the total, an overwhelming majority.

The company launched 'bubble for Japan' in the first half of 2024 and 'the bubble' for North America in the second half, beginning to bring in overseas IP and global subscribers, before launching the China-focused 'QQ Music bubble' in June 2025 in partnership with Tencent Music Entertainment (TME).

Under the China arrangement, TME recognizes roughly 8-10% of total sales proceeds as royalty revenue, which the industry views as a structure that could deliver outsized profit contribution relative to revenue size.

In the United States, 'the bubble' officially launched in September 2024 featuring popular Latin artists J Balvin and Peso Pluma, and the company is now preparing a new offline-store-based business.

Competitively, DearU coexists with agency-operated platforms such as HYBE's Weverse, but is distinguished by a service structure that spans multiple agencies and IPs.

Earnings trend

Quarterly revenue · Operating profit

₩20.2B₩7.4B25Q2₩22.3B₩8.7B25Q3₩23.8B₩9.8B25Q4₩23.4B₩9.7B26Q1₩23.4B₩9.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩49.2B₩16.3B2022₩75.7B₩28.6B2023₩74.9B₩25.4B2024₩83.8B₩31.4B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩20.2B	₩7.4B	36.9%
2025Q3	₩22.3B	₩8.7B	39.1%
2025Q4	₩23.8B	₩9.8B	41.0%
2026Q1	₩23.4B	₩9.7B	41.4%
2026Q2	₩23.4B	₩9.4B	40.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩49.2B	₩16.3B	₩16.4B	33.1%	11.6%	8.0%
2023	₩75.7B	₩28.6B	₩26.2B	37.8%	15.4%	12.4%
2024	₩74.9B	₩25.4B	₩24.4B	33.9%	12.4%	12.4%
2025	₩83.8B	₩31.4B	₩18.6B	37.4%	8.9%	15.8%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23

Earnings analysis

Full-year 2025 revenue reached 83.83 billion won, up 12.0% from 74.86 billion won in 2024, while operating profit rose 23.5% to 31.39 billion won, lifting the operating margin to 37.4%.

In contrast, net profit attributable to owners fell 23.6% to 18.63 billion won from 24.39 billion won, diverging from the operating profit trend due to a one-off item in the second quarter of 2025.

Despite recording operating profit of 7.44 billion won in Q2 2025, net profit attributable to owners was negative at -6.60 billion won.

This reflected a large non-operating impairment of artist minimum-guarantee prepayments under conservative asset valuation standards, amounting to about 7.1 billion won at the U.S. subsidiary and 4.8 billion won at headquarters.

Net profit normalized afterward, with Q3 (operating profit 8.71 billion won, net profit 9.72 billion won) and Q4 (operating profit 9.75 billion won, net profit 10.30 billion won) both setting quarterly records.

The Q4 improvement reflected the full-quarter effect of the 11-12% subscription price increase implemented in the second half of 2025, favorable currency effects from won weakness, and a drop in the payment-fee ratio to about 40% (down 8 percentage points year over year) driven by expanded PG payment conversion.

Growth continued in Q1 2026, with revenue of 23.41 billion won (+33.4% YoY), operating profit of 9.70 billion won (+76.9% YoY), and net profit of 11.76 billion won (+125.6% YoY).

However, Q2 2026 revenue of 23.35 billion won and operating profit of 9.41 billion won held roughly steady versus the prior quarter, while net profit dropped sharply to 4.53 billion won, attributed to right-of-use asset amortization related to preparations for a new U.S. offline store and a decline in average subscribers to 1.97 million (down 40,000 quarter over quarter) amid artist departures tied to agency transfers.

Industry analysis

The K-pop fandom industry is highly sensitive to artist activity cycles such as comebacks, tours, and military enlistment; in Q4 2025, subscriber numbers fell 7% quarter over quarter due to key artists' enlistments, service discontinuations, and the migration of Chinese subscribers.

In the competitive landscape, agency-operated platforms such as HYBE's Weverse coexist with DearU, which maintains a structure spanning IP from multiple agencies including SM and JYP.

In China, the partnership with TME is the central pillar, with the QQ Music bubble structured to recognize about 8-10% of sales proceeds as royalty revenue, which the industry views as potentially delivering outsized profit contribution relative to revenue size.

As of July 2026, marking the one-year anniversary of the QQ Music bubble launch, the company reported roughly 490 artists on the platform spanning K-pop and C-pop, with about 360 K-pop artists and about 130 C-pop artists.

The Japan joint venture has reportedly reached stable operations, surpassing quarterly break-even since last year according to the company. The U.S. business remains at an early stage with a low contribution to results, though artist and subscriber counts are said to be gradually increasing.

PG payment conversion is tied to an industry-wide margin-improvement trend through lower payment fees, but the conversion rate stood at 16% as of Q1 2026, a slower pace than the market had expected.

Outlook

The company positions overseas operations in China, Japan, and the United States as the key axis of future growth, with domestic subscriber growth seen as limited while overseas business is expected to drive additional expansion.

Samsung Securities projected in an August 2026 report that the new U.S. business, based around offline stores, would launch within the year.

The QQ Music bubble continues to expand mainly through C-pop artist additions, but Chinese royalty revenue is recognized with a one-quarter lag, meaning this recognition delay could recur going forward.

The PG payment conversion rate stood at 16% as of Q1 2026, a slower pace than the market expected, leaving the timing of full-scale payment-fee savings as a point to watch.

The company passed a resolution to add new business purposes at its 2025 annual general shareholders' meeting (held March 24, 2026), which is interpreted as preparation for business diversification including the new U.S. venture.

Controlling shareholder SM Entertainment also continued group-level overseas restructuring, acquiring additional stakes in Everysing Japan and SMEJ Holdings in August 2026, raising questions about potential linkage with DearU's overseas expansion.

KB Securities noted in a May 2026 report that while the overseas segment's contribution to results remains low, artist and subscriber counts are gradually increasing.

Valuation

PER

11.8×

PBR

2.0×

ROE

17.7%

EPS

₩1,529

BPS

₩9,208

Dividend per share

₩316

DearU is classified as a media and entertainment platform company that has maintained profitability on KOSDAQ while growing both revenue and operating profit from 2022 through 2025.

Major brokerages have applied differing multiples in setting target prices: Samsung Securities, in an August 2026 report, applied a 20x price-to-earnings multiple based on global peer comparables to forward earnings, arriving at a target price of 30,000 won, while KB Securities, in a May 2026 report, applied a 25x multiple citing growth superior to the entertainment industry, arriving at a target price of 46,000 won.

The debt ratio rose somewhat from 8.0% in 2022 to 15.8% in 2025 but remains at a low level, and equity expanded from 141.2 billion won to 209.9 billion won over the same period, reflecting solid financial stability.

Earnings recovered after the one-off impairment in Q2 2025, but net profit slowed again in Q2 2026, and this quarter-to-quarter volatility means the relationship between market-applied valuation multiples and the multiple at which the stock actually trades can shift with each earnings release.

The company paid a cash dividend in its most recent fiscal year, though dividend-related metrics tend to sit at a lower level than high-dividend sectors given the company's growth-stock characteristics.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23

Bull factors

Diversified overseas growth drivers

A distinguishing feature is the simultaneous pursuit of growth drivers across three new markets: China (QQ Music bubble), Japan, and the United States.

The Japan joint venture has reportedly already surpassed quarterly break-even, while China's service base has expanded to about 490 artists as of its one-year anniversary.

The U.S. business remains at an early stage but continues to strengthen its lineup around Latin artists, offering a way to diversify country- and artist-specific risk.

Structural room for margin improvement

A trend of declining payment-fee ratios has been confirmed as PG payment conversion expands, with the fee ratio falling to about 40% in Q4 2025, down 8 percentage points year over year. Given the subscription model's near-100% paid usage rate, revenue growth translates directly into profit through operating leverage.

Chinese royalty revenue is also seen by the industry as carrying outsized margin contribution relative to its revenue size, leaving room for further operating margin improvement if payment-structure gains continue.

Track record of record quarterly results

Operating profit set consecutive quarterly records for three straight quarters, from Q3 2025 through Q1 2026. This resulted from the combined effect of the full-quarter subscription price increase, favorable currency effects, and fee reductions, demonstrating earnings resilience once the one-off item faded.

Q1 2026 reaffirmed this recovery trend, with revenue, operating profit, and net profit all growing at double-digit rates or higher.

Bear factors

Subscriber count volatility

Subscriber counts have fluctuated quarter to quarter due to artist-related issues such as agency transfers, military enlistment, and service discontinuations. In Q2 2026, average subscribers fell to 1.97 million, down 40,000 from the prior quarter, due to artist departures tied to agency transfers.

Since the subscriber base underpins revenue, this volatility remains a source of uncertainty for future results.

Pace risk in the China business

There have been repeated observations that the pace of C-pop artist onboarding and recognition of Chinese royalty revenue has been slower than the market expected. Royalty revenue is recognized with a one-quarter lag, meaning the timing of its reflection in results could be delayed beyond expectations.

The PG payment conversion rate also stood at 16% in Q1 2026, below market expectations, leaving uncertainty around the pace of margin improvement.

Initial cost burden of the new U.S. business

Starting in Q2 2026, right-of-use asset amortization tied to U.S. offline store preparation has been reflected, expanding the consolidated subsidiary's operating loss. Until the new business generates meaningful revenue, these upfront investment costs could weigh on consolidated profitability in the near term.

Whether the offline-store-based business launches within the year and its initial performance remain unconfirmed variables.

Risk factors

Business concentration risk

More than 90% of revenue comes from the single bubble service, and core IP is concentrated among a small number of major agencies such as SM and JYP. Artist departures or changes in contract terms at a given agency could have an outsized impact on results.

Service diversification, such as IP and commerce linkage, is underway but still accounts for a limited share of revenue.

Geopolitical and policy risk

China business expansion could be affected by shifts in Sino-Korean cultural exchange policy and the status of restrictions on Korean content in China.

While the collaboration structure with TME itself remains in place, artist onboarding pace and royalty revenue scale could be influenced by changes in the policy environment.

Foreign exchange risk

With overseas usage at roughly 70% of the total, currency fluctuations have a significant impact on results. Won weakness contributed positively to the earnings improvement in the second half of 2025, but a reversal in currency direction could weigh on future results.

What to watch next

Mid-November 2026
Q3 2026 preliminary results are expected to be disclosed. This will be a point to check whether average subscriber counts recover and the scale of Chinese royalty revenue recognition.
During Q4 2026
The actual launch and initial reception of the new U.S. offline-store-based business should be checked; Samsung Securities projected a launch within the year.
Each quarterly disclosure
The trend in the PG payment conversion rate (16% in Q1 2026) and the change in payment fees as a share of revenue warrant ongoing monitoring.
Ongoing monitoring
The pace of additional C-pop artist onboarding on the QQ Music bubble and the quarterly scale of royalty revenue recognition should be tracked continuously.

Overall view

DearU is a profitable fan communication platform that grew both revenue and operating profit from 2022 through 2025, with operating profit reaching a record high in 2025.

However, recurring quarterly earnings volatility—including the one-off impairment in Q2 2025 and the net profit slowdown in Q2 2026—means operating performance and net profit trends need to be examined together.

Simultaneous expansion across three overseas markets—China, Japan, and the United States—carries growth potential alongside execution-pace uncertainty, with delayed Chinese royalty revenue recognition and initial U.S. business costs standing out as variables that could affect near-term results.

Fee savings from PG payment conversion remain a key margin driver, though the conversion pace has been slower than the market expected. On the financial structure side, stability appears solid, with a low debt ratio and steadily expanding equity.

The relationship with controlling shareholder SM Entertainment and the China collaboration structure with Tencent Music are viewed as factors supporting both business stability and growth potential.

Upcoming quarterly earnings releases and the progress of overseas operations are likely to be the key variables shaping the direction of future results.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.