Square Enix Holdings Financial Results Briefing: Nine-Month Period Ended December 31, 2022

Square Enix Holdings reported a challenging nine-month period for the fiscal year ending March 31, 2023, characterized by year-over-year declines in net sales and operating income. For the period ending December 31, 2022, the company recorded net sales of ¥255.6 billion and operating income of ¥41.3 billion. While operating performance dipped, net income rose to ¥46.3 billion, bolstered by foreign exchange gains and the divestment of subsidiary and associate shares.

The Digital Entertainment segment, the company’s primary revenue driver, faced significant headwinds. The HD Games sub-segment underperformed due to lower-than-expected sales from new titles, while the MMO sub-segment saw a decline attributed to the absence of new expansion packs for major titles. Additionally, the Games for Smart Devices/PC Browser sub-segment struggled as new releases failed to offset the weak performance of existing titles. Conversely, the Amusement segment showed resilience, with net sales and operating income rising due to increased same-store sales and improved operational efficiency. The Publication segment maintained solid sales, though profitability was constrained by rising costs for printing paper and increased advertising expenditures.

Management acknowledged that the fiscal year has been difficult, specifically citing lackluster sales for the title Forspoken. Despite these setbacks, the company is focusing on restructuring its development and publishing pipelines to support future growth. Looking toward the final year of its current medium-term plan, the company intends to leverage a robust pipeline of upcoming titles and continue its multi-platform strategy. Leadership remains focused on stabilizing performance and ensuring a sustainable release schedule for the 2024 and 2025 fiscal years.