Enix

Management Board Report on Activities of the PCF Group S.A. 2021

PCF Group S.A. (People Can Fly) experienced a transformative 2021 fiscal year, marked by its transition to a public issuer and a significant expansion of its global corporate structure.

• PCF Group achieved significant financial growth in 2021, with sales revenue rising 74% to 180.3 million PLN and net profit increasing 150% to 61.3 million PLN.
• The company’s revenue model is heavily concentrated, with 99% of income derived from work-for-hire AAA partnerships and over 80% of total revenue coming from only two major publishers, Square Enix and Take-Two Interactive.
• As of year-end 2021, the self-published title Outriders had not yet reached the profitability threshold required to trigger royalty payments to the Group.

Square Enix Holdings Q1-Q3 FY2022/3 Financial Results Briefing

Square Enix Holdings reported strong financial growth for the first nine months of the fiscal year ending March 31, 2022.

• Square Enix reported strong growth for the first nine months of FY2022/3, achieving ¥273.6 billion in net sales and ¥50.1 billion in operating income, representing year-over-year increases of ¥20 billion and ¥9.1 billion, respectively.
• The Digital Entertainment segment generated ¥211.6 billion in net sales, primarily driven by the strong performance of Final Fantasy XIV’s MMO subscriber growth and expansion packs.
• The HD games sub-segment experienced a year-over-year sales decline due to a lack of major title launches compared to the previous period, while several new smartphone titles underperformed expectations.

Financial Results Briefing Session: Nine-Month Period Ended December 31, 2021

The financial results for Square Enix Holdings for the nine-month period ending December 31, 2021, demonstrate a period of growth across all primary business segments.

• Square Enix reported strong growth for the nine-month period ending December 31, 2021, with net sales reaching 273.6 billion yen and operating income rising to 50.1 billion yen, up from 41.0 billion yen in the same period the previous year.
• Digital Entertainment remains the core revenue driver, with digital sales accounting for 191.4 billion yen of the segment's 211.6 billion yen total, significantly outpacing physical packaged sales.
• The Amusement segment successfully returned to profitability, generating 1.3 billion yen in operating income compared to a loss in the prior year, as arcade operations recovered from pandemic-related closures.

Nintendo Financial Results Explanatory Material: 3rd Quarter of Fiscal Year Ending March 2022

Nintendo experienced a period of transition during the first nine months of the fiscal year ending March 2022, characterized by a year-on-year decline in net sales and operating profit.

• The Nintendo Switch platform surpassed 100 million cumulative units sold during the first nine months of the fiscal year ending March 2022.
• Net sales and operating profit declined year-on-year due to the normalization of demand following the previous surge in Animal Crossing: New Horizons sales and ongoing semiconductor shortages.
• Digital revenue increased by 31.2% in the third quarter, driven by strong demand for downloadable content, add-on expansions, and the Nintendo Switch Online subscription service.

Directors' Report on the Operations of PCF Group S.A. and Its Group in 2020

The 2020 Directors' Report for PCF Group S.A. details a period of significant financial expansion and strategic organizational restructuring for the Poland-based video game developer.

PCF Group Full-Year Consolidated Financial Statements 2020

PCF Group demonstrated robust financial performance and operational expansion throughout the 2020 fiscal year, characterized by a significant increase in net profit to PLN 24.6 million from PLN 4.8 million in 2019.

• PCF Group achieved a significant net profit increase to PLN 24.6 million in 2020, up from PLN 4.8 million in 2019, on total revenue of PLN 103.8 million.
• The company successfully completed an initial public offering on the Warsaw Stock Exchange in 2020, raising over PLN 100 million in net proceeds to bolster its liquidity and financial independence.
• Strategic expansion included the establishment of People Can Fly Chicago, LLC and the acquisition of the Phosphor Games development team to support global operations across Poland, the UK, Canada, and the USA.

PCF Group Full-Year Financial Statements 2020

PCF Group demonstrated substantial financial growth during the 2020 fiscal year, characterized by a significant increase in revenue to PLN 83.5 million from PLN 47.5 million in 2019.

• PCF Group achieved significant financial growth in 2020, with revenue rising to PLN 83.5 million from PLN 47.5 million and net profit surging to PLN 29.1 million compared to PLN 2.4 million in 2019.
• The company faces high revenue concentration risk, as over 80% of its 2020 revenue was derived from a single trading partner, Square Enix.
• Following the 2020 fiscal year, the firm strengthened its capital base by raising over PLN 100 million through a share capital increase to support international expansion.

Letter to Shareholders 2021: PCF Group

The 2020 fiscal year marked a transformative period for PCF Group S.A., characterized by its transition from a private entity to a publicly traded company on the Warsaw Stock Exchange.

PCF Group Q1 2021 Financial Results Presentation

PCF Group’s financial results for the first quarter of 2021 demonstrate continued growth in revenue and operational scale, driven by ongoing development partnerships and strategic expansion.

• PCF Group reported Q1 2021 revenue of PLN 30.9 million, a 19.1% increase year-on-year driven by development partnerships with Square Enix and Take-Two Interactive.
• Net cash flow surged by 2,390% to PLN 106.1 million, despite a 10.0% decline in net profit to PLN 7.8 million.
• Adjusted EBITDA grew 6.6% year-on-year to reach PLN 10.4 million for the first quarter.

PCF Group Interim Consolidated Financial Statements: Q3 2021

PCF Group demonstrated robust financial growth during the first nine months of 2021, characterized by a significant increase in revenue to PLN 131.8 million and a net profit of PLN 46.4 million.

Mid-Year Consolidated Report for Period 3 and 9 Months Completed 30 September 2021

PCF Group demonstrated robust financial growth and strategic expansion during the first nine months of 2021, characterized by a significant increase in scale and a transition toward a more diversified business model.

• PCF Group reported a significant financial surge for the first nine months of 2021, with consolidated sales revenue reaching 131.8 million PLN and net profit more than doubling to 46.4 million PLN compared to the prior year.
• The company’s financial position is bolstered by 149.8 million PLN in cash, largely driven by 131.6 million PLN in net proceeds from Series B and D share issuances that increased total equity to 241.6 million PLN.
• Despite the April 2021 launch of Outriders, the Group recorded no royalty income through September 2021 as sales had not yet recouped the publisher's development and promotion costs.

Square Enix Holdings 2Q FY2022/3 Financial Results Briefing

Square Enix Holdings reported financial results for the first half of the fiscal year ending March 31, 2022, reflecting a period of mixed performance across its business segments.

• Square Enix reported net sales of ¥168.9 billion and operating income of ¥29.1 billion for the first half of FY2022/3, marking year-over-year declines of ¥3.8 billion and ¥2.5 billion, respectively.
• Net income attributable to parent company shareholders increased by ¥6.9 billion to reach ¥22.9 billion compared to the same period in the previous year.
• The Digital Entertainment segment saw a decline in performance as growth in the MMO sub-segment from Final Fantasy XIV subscriptions was offset by underperforming HD Games and a weak release schedule for smart device and browser titles.