Square Enix Holdings Financial Results Briefing: Nine-Month Period Ended December 31, 2023

Square Enix Holdings reported financial results for the nine-month period ending December 31, 2023, reflecting a period of mixed performance characterized by growth in net sales but declines in operating and net income. Consolidated net sales reached ¥257.6 billion, a slight year-over-year increase of ¥2.0 billion. However, operating income fell to ¥34.9 billion, and profit attributable to owners of the parent dropped to ¥26.7 billion. These bottom-line declines were primarily attributed to reduced foreign exchange gains and the absence of gains from the divestiture of overseas studios and intellectual property that occurred in the previous fiscal year.

The Digital Entertainment segment, the company’s primary business driver, experienced a year-over-year decline in both net sales and operating income. While the HD Games sub-segment saw growth from new releases such as Final Fantasy XVI and Dragon Quest Monsters: The Dark Prince, these gains were offset by increased development cost amortization and advertising expenses, alongside weaker performance in the MMO and smart device sectors. Conversely, the Amusement, Publication, and Merchandising segments all reported year-over-year growth in both sales and profit, with the Publication segment benefiting significantly from the popularity of The Apothecary Diaries anime series.

Management is currently focused on structural profitability improvements, particularly within the HD games division, through cost optimization and a strategic review of development and publishing footprints. Future initiatives include bringing more development capabilities in-house and refining the approach to multi-platform releases to expand the customer base. While the company maintains its initial earnings guidance for the full fiscal year, leadership acknowledged the potential for further write-downs following a rigorous review of the content production account, emphasizing that long-term structural changes will take time to materialize.