Square Enix Consolidated Financial Results: Three Months Ended June 30, 2008

Key insights

6 takeaways

01
Square Enix reported a 9.3% year-over-year decline in net sales for the quarter ending June 30, 2008, falling to 29.77 billion yen from 33.75 billion yen.See it on page 1
02
Operating income dropped to 3.46 billion yen from 4.34 billion yen, though net income saw a slight increase to 2.88 billion yen compared to 2.74 billion yen in the prior year.See it on page 4
03
The company remains heavily reliant on the Japanese market, which generated 24.56 billion yen of the total 29.77 billion yen in sales, while overseas markets accounted for 18.6%.See it on page 6
04
The amusement segment, led by the Taito Group, remained a primary revenue driver despite overall performance being impacted by new accounting standards for inventory measurement.See it on page 6
05
The company maintains a stable financial position with total assets of 211.53 billion yen and an equity ratio of 70.1%.See it on page 3
06
Management reaffirmed its dividend projection of 30 yen per share for the fiscal year ending March 31, 2009.See it on page 1

Summary

Square Enix’s consolidated financial results for the three-month period ending June 30, 2008, reflect a period of contraction compared to the same quarter in the previous year. The company reported net sales of 29.77 billion yen, representing a 9.3% decrease from the 33.75 billion yen recorded in the first quarter of 2007. Operating income also declined to 3.46 billion yen, down from 4.34 billion yen in the prior year, while recurring income fell to 4.54 billion yen from 5.31 billion yen. Despite these declines in top-line and operating performance, net income saw a modest increase to 2.88 billion yen, compared to 2.74 billion yen in the same period of 2007.

The company’s business segments—comprising offline games, online games, mobile content, publications, and amusement—showed varied performance. The amusement segment, driven by the Taito Group, remained a significant contributor to revenue, though overall results were impacted by shifts in accounting standards, specifically the application of the Accounting Standard for Measurement for Inventories. Geographically, the vast majority of sales remained concentrated in Japan, which accounted for 24.56 billion yen of the total 29.77 billion yen in sales to outside customers. Overseas sales, primarily from North America and Europe, represented approximately 18.6% of total consolidated sales.

The financial position remains stable, with total assets of 211.53 billion yen and an equity ratio of 70.1%. The company maintained its dividend projections for the fiscal year ending March 31, 2009, anticipating an annual dividend of 30 yen per share. These results were prepared in accordance with the Accounting Standard for Quarterly Financial Reporting, marking a transition in reporting procedures for the 2008 fiscal year.