Enix

Square Enix Holdings Financial Results: Fiscal Year Ended March 31, 2017

Square Enix Holdings reported strong financial growth for the fiscal year ended March 31, 2017, driven primarily by the successful launch of major blockbuster titles.

• Square Enix reported consolidated net sales of 256.8 billion yen and operating income of 31.2 billion yen for the fiscal year ended March 31, 2017, representing a year-over-year increase of 42.7 billion yen in sales and 5.2 billion yen in operating income.
• The Digital Entertainment segment remains the primary revenue driver, contributing 199.0 billion yen in net sales and 33.3 billion yen in operating income for FY2017/3.
• Revenue from games for smart devices and PC browsers saw significant growth, reaching 83.3 billion yen in FY2017/3 compared to 44.2 billion yen in FY2015/3.

FY2017 Third Quarter Financial Results

GREE’s financial results for the third quarter of fiscal year 2017 demonstrate a period of strategic transition and growth, characterized by a recovery in the domestic native game business and expansion into video-related media.

• GREE reported Q3 FY2017 net sales of ¥15.9 billion and operating income of ¥1.5 billion, marking quarter-on-quarter growth for both metrics.
• Domestic native game performance recovered, with coin consumption rising to 5.4 billion following a successful release blitz of new titles.
• The company released two new first-party IP titles, Rara-MAGI and A Farewell to Arms, and currently has ten titles in development, including the SINoALICE collaboration with Square Enix.

U.K. Road Show Material: February 2017

The February 2017 investor presentation outlines a mid-term growth strategy for Square Enix, centered on achieving six consecutive years of sales growth through the expansion of its Digital Entertainment segment.

• Square Enix aims to reach 400 billion JPY in sales by fiscal year 2019, targeting six consecutive years of growth in its Digital Entertainment segment.
• The company is prioritizing profitability in its high-definition (HD) gaming division while maintaining a stable revenue foundation through MMOs and smart device games.
• Strategy focuses on three pillars: enhancing digital sales via a new global website, maximizing multi-platform accessibility across consoles, PC, and mobile, and expanding IP into merchandising and publishing.

Square Enix Holdings 3Q FY2017/3 Financial Results Briefing

Square Enix Holdings reported financial results for the nine-month period ending December 31, 2016, reflecting a period of high-profile releases balanced by significant development cost amortization.

• Square Enix reported 1-3Q FY2017/3 net sales of ¥190.1 billion and operating income of ¥21.5 billion, with operating income declining year-over-year despite a sharp rise in Digital Entertainment sales.
• Final Fantasy XV reached 6 million units in shipments by early 4Q, with development costs fully amortized in 3Q, allowing future downloads and repeat sales to contribute directly to earnings.
• The Digital Entertainment segment experienced a ¥1.4 billion decline in operating income due to lower MMO expansion disk sales compared to the previous year and the heavy amortization of FFXV development costs.

Reference Materials: Nine-Month Period Ended December 31, 2016

This financial summary outlines the performance of Square Enix Holdings Co., Ltd. for the nine-month period ending December 31, 2016.

• Square Enix reported net sales of 190.1 billion yen for the nine-month period ended December 31, 2016, a significant increase from 152.8 billion yen in the same period of the previous year.
• Operating income for the nine-month period declined to 21.5 billion yen from 23.8 billion yen in the prior year, despite the substantial growth in net sales.
• The Digital Entertainment segment remains the primary revenue driver, contributing 146.2 billion yen in sales, though its operating margin compressed from 21.0% to 14.9% year-over-year.

Square Enix Holdings Financial Results Briefing: 1H FY2017/3

Square Enix Holdings reported financial results for the first half of fiscal year 2017, ending September 30, 2016. The company achieved net sales of ¥106.3 billion, representing a year-over-year increase of ¥20 billion.

• Square Enix reported 1H FY2017 net sales of ¥106.3 billion, a year-over-year increase of ¥20 billion, despite a decline in net income to ¥5.5 billion.
• Operating income fell by ¥1.5 billion to ¥11.1 billion, driven by high development cost amortization for major titles and underperforming smart device games.
• Digital Entertainment revenue growth was fueled by the overseas launches of Deus Ex: Mankind Divided, Hitman, and the PlayStation 4 version of Rise of the Tomb Raider.

Square Enix Holdings Financial Results: Six-Month Period Ended September 30, 2016

Square Enix Holdings reported financial results for the six-month period ending September 30, 2016, highlighting a period of significant top-line growth alongside a contraction in operating profitability.

• Square Enix reported net sales of 106.3 billion yen for the six-month period ended September 30, 2016, a significant increase from 86.4 billion yen in the same period of the previous year.
• Operating income for the first half of FY2017/3 was 11.1 billion yen, a decrease from 12.6 billion yen in the prior year, driven by higher amortization costs for new AAA titles and underperformance of new smart device and PC browser games.
• The Digital Entertainment segment remains the primary revenue driver, contributing 78.3 billion yen in net sales, though its operating margin compressed from 21.5% to 15.5% year-over-year.

FY2017 First Quarter Financial Results

GREE’s financial performance for the first quarter of fiscal year 2017 reflects a strategic pivot toward profitability growth and operational efficiency.

• GREE achieved an operating income of ¥2.5 billion in Q1 FY2017, driven by a ¥1.1 billion quarter-over-quarter reduction in expenditures despite a slight decline in net sales to ¥14.9 billion.
• The company projects a first-half fiscal performance of ¥30 billion in net sales and ¥4 billion in operating income, supported by six new domestic titles and the acquisition of the mobile game DragonSoul.
• Strategic focus has shifted toward native game development and global expansion to mitigate the decline of legacy web-based titles, evidenced by a 2.4-fold increase in coin consumption for DragonSoul.

How Square Enix managed the teams behind Hitman GO and Lara Croft GO

Managing small, high-performing development teams requires a structured approach to individual performance, centered on the intersection of talent, experience, and motivation.

• Square Enix Montreal optimizes small team performance by prioritizing candidates with demonstrated passion and rapid learning capabilities over traditional academic credentials.
• Management increases the 'truck factor' and reduces production bottlenecks by fostering cross-functional skill sets, allowing team members to contribute across diverse areas like animation and narrative design.
• To drive intrinsic motivation, managers delegate challenging responsibilities and grant developers full ownership of specific game features.

Square Enix Holdings: Reference Materials for the Three-Month Period Ended June 30, 2016

Square Enix Holdings reported its financial performance for the first quarter of the fiscal year ending March 31, 2017, covering the period from April 1, 2016, to June 30, 2016.

• Square Enix reported a strong start to the fiscal year ending March 2017, with net sales increasing by 8.9 billion yen (21%) to 51.2 billion yen for the three-month period ended June 30, 2016.
• Operating income grew to 8.9 billion yen, a 1.0 billion yen increase compared to the same period in 2015, driven primarily by the Digital Entertainment segment.
• The Digital Entertainment segment remains the primary revenue driver, contributing 37.5 billion yen in sales and 9.5 billion yen in operating income, reflecting a 7.2 billion yen increase in sales year-over-year.

Square Enix Holdings Consolidated Financial Results: Three-Month Period Ended June 30, 2016

Square Enix Holdings reported its consolidated financial results for the three-month period ending June 30, 2016, demonstrating strong top-line growth despite a decline in bottom-line profitability.

• Square Enix reported consolidated net sales of ¥51,193 million for the quarter ended June 30, 2016, a 21.1% increase year-on-year, while operating income rose 13.1% to ¥8,949 million.
• The Digital Entertainment segment, the company's primary revenue driver, saw net sales grow 23.9% to ¥37,541 million and operating income rise 15.6% to ¥9,472 million, fueled by strong performance in smart device, PC browser, and console titles.
• Ordinary income fell by 32.5% to ¥6,446 million, largely impacted by ¥2,520 million in foreign exchange losses compared to the prior year's gains.

Square Enix Holdings Financial Results Briefing: Fiscal Year Ended March 31, 2016

Square Enix achieved record-breaking financial performance for the fiscal year ending March 31, 2016, reporting net sales of ¥214.1 billion and a net income of ¥19.9 billion.