Financial Results Briefing Session: Six-Month Period Ended September 30, 2018

The financial results for the six-month period ending September 30, 2018, reflect a challenging fiscal environment for Square Enix Holdings Co., Ltd. compared to the same period in the previous year. Consolidated net sales for the first half of the fiscal year reached 112.2 billion yen, representing a decline of 19.8 billion yen year-over-year. Operating income saw a more significant contraction, falling to 10.0 billion yen from 25.8 billion yen in the prior year, resulting in an operating income margin of 9.0 percent.

The Digital Entertainment segment, the company’s primary revenue driver, experienced a downturn in both net sales and operating income. This was attributed to the high performance of titles released in the previous year and the underperformance of several smart device and PC browser games. While the HD games sub-segment launched notable titles such as Octopath Traveler and Shadow of the Tomb Raider, the overall segment struggled against the high comparative hurdle set by the previous year’s Final Fantasy XIV expansion. Additionally, the company recorded an extraordinary loss of 3.7 billion yen related to a strategic shift at its subsidiary, Luminous Productions, which is now focusing exclusively on large-scale, high-quality AAA titles.

In contrast, the Publication segment demonstrated resilience, achieving year-over-year growth in both net sales and operating income as robust digital format sales offset declines in print media. The Amusement and Merchandising segments both reported lower results compared to the prior year, the latter being impacted by the absence of major character-based merchandise releases. Despite these headwinds, the company maintains a focus on long-term growth through post-launch initiatives, subscription models, and a strategy of selection and concentration in its development pipeline. The company declared an interim dividend of 10 yen per share, maintaining a commitment to a 30 percent consolidated payout ratio.