Square Enix Holdings 2Q FY2022/3 Financial Results Briefing

Square Enix Holdings reported financial results for the first half of the fiscal year ending March 31, 2022, reflecting a period of mixed performance across its business segments. The company recorded net sales of ¥168.9 billion and operating income of ¥29.1 billion, representing year-over-year declines of ¥3.8 billion and ¥2.5 billion, respectively. Despite these decreases, net income attributable to parent company shareholders rose to ¥22.9 billion, an increase of ¥6.9 billion compared to the same period in the previous year.

The Digital Entertainment segment, the company’s primary revenue driver, experienced a decline in both sales and operating income. While the Massively Multiplayer Online (MMO) sub-segment saw growth due to strong subscription numbers for Final Fantasy XIV, the HD Games sub-segment underperformed relative to the prior year, which had benefited from major title releases. Additionally, the Games for Smart Devices/PC Browser sub-segment faced challenges due to the lackluster performance of existing titles and a limited release schedule. Conversely, the Amusement, Publication, and Merchandising segments all reported year-over-year growth in both sales and profits, with the Amusement segment successfully returning to profitability following the lifting of COVID-19-related facility closures.

Looking ahead, the company is prioritizing a medium-term strategy focused on strengthening its intellectual property ecosystem and expanding into new domains, specifically NFTs and blockchain gaming. Management identified the integration of token economies into game design as a key growth pillar, though they acknowledged current risks regarding a lack of internal expertise and an evolving legal landscape. To mitigate these challenges, the company plans to pursue aggressive hiring and strategic partnerships while continuing to optimize its business structure for the post-pandemic environment.