Square Enix Holdings Financial Results Briefing: FY2022/3

Square Enix Holdings reported strong financial performance for the fiscal year ended March 31, 2022, achieving record-high net sales and operating income. The company recorded net sales of ¥365.2 billion, an increase of ¥32.7 billion year-over-year, and operating income of ¥59.2 billion, up by ¥12 billion. This growth was driven by robust performance in the Digital Entertainment segment, particularly within the Massively Multiplayer Online (MMO) sub-segment, which benefited from strong subscriber growth and expansion content for Final Fantasy XIV. Additionally, the Amusement, Publication, and Merchandising segments all posted year-over-year growth, with the Amusement segment successfully returning to profitability following pandemic-related closures.

The company’s strategic focus is shifting toward reorienting its portfolio and strengthening its core intellectual property. A significant development in this strategy is the divestiture of select overseas studios and franchises, including Tomb Raider and Deus Ex, to the Embracer Group for $300 million. Proceeds from this transaction are earmarked for reinvestment into core development capabilities and the cultivation of new intellectual property rather than new domains. Despite these divestitures, the company remains committed to exploring emerging technologies, specifically blockchain entertainment, cloud gaming, and artificial intelligence, as part of its medium-term business strategy.

Management acknowledged that several high-definition game titles released over the past two years underperformed relative to expectations. Consequently, the company is refining its publishing functions and governance structures to improve title quality and alignment with customer needs. Due to the ongoing assessment of the impact of the recent studio divestiture, the company refrained from providing specific financial forecasts for the fiscal year ending March 31, 2023, opting to prioritize long-term stability and the achievement of medium-term earnings targets.