Square Enix Consolidated Financial Results: Six Months Ended September 30, 2004

Square Enix demonstrated robust financial growth during the six-month period ending September 30, 2004, following the strategic merger between Enix Corp. and Square Co., Ltd. The company reported net sales of ¥24,395 million and a substantial 162.8% increase in net income to ¥3,133 million. This performance was primarily fueled by the Online Games segment, which saw a 101% revenue surge driven by the expansion of Final Fantasy XI, alongside strong contributions from mobile content and publication divisions. Overseas markets, particularly North America, played a critical role in this expansion, accounting for 30.7% of total consolidated sales.

The company maintained a stable financial foundation, ending the period with ¥59,624 million in cash and cash equivalents and a strong equity ratio of 91.7%. While operating cash flow experienced a temporary decline compared to the prior year, the firm bolstered its position through the sale of investment securities and prudent management of financial risks, including the implementation of currency exchange reservations. Management expressed confidence in the fiscal outlook, projecting full-year net sales of ¥73,000 million and net income of ¥13,500 million.

Accounting practices underwent significant refinement during this period to reflect the post-merger corporate structure. The company adopted the pooling-of-interests method for the merger and introduced new policies, such as capitalizing game development costs into a content production account and adjusting retirement benefit reserves. These accounting shifts, while impacting recurring profit figures, were designed to provide a more accurate representation of the consolidated entity’s long-term assets and liabilities. By focusing on network-related operations and global market penetration, the company successfully leveraged its integrated resources to achieve significant year-over-year gains.