Square Enix

Purpose C O N T E N T S Creating New Worlds With Boundless Imagination 03 Financial Highlights Creating New Worlds With Boundless Imagination 03 Financial Highlights 04 A Message to Our Stakeholders to Enhance People’s Lives.

Square Enix has formalized a comprehensive sustainability and governance framework aimed at aligning long-term corporate value with environmental responsibility and human capital development. Central to this strategy is a commitment to achieve net-zero CO2 emissions at Japanese offices and data centers by 2030. This transition is already evidenced by a significant reduction in electricity-related emissions, which fell from 34,320 tCO2 in 2017 to 20,635 tCO2 by 2025. By shifting toward digital sales and renewable energy, the Group seeks to mitigate climate-related risks while modernizing its operational footprint.

The organizational focus on human capital emphasizes creativity and employee well-being through specialized training in emerging technologies like AI and blockchain, alongside "Game Dev Boot Camps." Support systems have been expanded to include flexible work-from-home options, daycare concierge services, and gamified wellness initiatives designed to incentivize healthy lifestyles. These efforts are intended to foster a high-performance culture capable of navigating the evolving digital entertainment landscape.

Governance is characterized by a clear separation between management oversight and operational execution. The Board of Directors is predominantly composed of independent outside directors who maintained near-perfect attendance throughout the fiscal year ending March 31, 2025. Executive remuneration is strictly tied to performance metrics, including consolidated net sales and operating income, with a significant portion of compensation delivered via restricted stock to align leadership interests with those of shareholders. Furthermore, strategic shareholdings in partners like gumi Inc. underscore a commitment to expanding influence within blockchain, cloud gaming, and the metaverse.

The leadership structure of Square Enix Holdings as of July 31, 2025, reflects a strategic emphasis on balancing creative expertise with global corporate governance. Under the leadership of President and Representative Director Takashi Kiryu, the board comprises twelve directors, a significant majority of whom are classified as outside directors under Japan’s Companies Act. This composition indicates a commitment to independent oversight, particularly within the Audit and Supervisory Committee. Share ownership among the executive team varies significantly, with President Kiryu holding the largest stake at 50,071 shares, followed by Yoshinori Kitase with 19,485 shares, while outside directors maintain comparatively nominal holdings.

The organizational framework is further defined by a comprehensive skills matrix designed to ensure diverse institutional knowledge across six core competencies: corporate and global management, media entertainment, IT and technology, legal and risk management, finance and accounting, and organizational development. While internal directors like Kiryu, Kitase, and Yu Miyake provide the foundational expertise in media entertainment and technology, the outside directors bolster the board’s capabilities in specialized areas such as legal compliance and financial auditing. Notably, Abdullah Aldawood and Tracy Fullerton bring multi-disciplinary strengths in global management and technology, aligning with the company's international growth objectives.

This governance model serves to integrate creative production experience with rigorous fiscal and legal standards. By maintaining a high ratio of outside directors and documenting specific skill sets, the leadership structure aims to mitigate risk while fostering innovation within the global entertainment market. The inclusion of an Honorary Chairman, Yasuhiro Fukushima, further suggests a continuity of institutional values alongside the modernized oversight provided by the Audit and Supervisory Committee members. This strategic alignment of personnel is positioned to support the company’s operational stability and long-term strategic planning through the 2025 fiscal period.

The Square Enix Group’s operational review for the fiscal year ended March 31, 2025, reveals a period of strategic transition characterized by improved profitability despite a decline in overall revenue. Net sales fell 8.9% year-on-year to ¥324,506 million, yet operating income rose significantly by 24.6% to ¥40,580 million. This divergence was driven largely by cost-optimization efforts and the performance of key intellectual properties across the Digital Entertainment, Amusement, Publication, and Merchandising segments.

The Digital Entertainment segment, which accounts for 63.6% of net sales, saw revenue drop 16.8% due to a lighter release schedule compared to the previous year’s major launches. However, the segment’s operating income grew by 33.0%. This profitability was bolstered by the success of the Dragon Quest III HD-2D Remake and the Final Fantasy XIV: Dawntrail expansion, alongside reduced development cost amortization and lower advertising expenses. Conversely, the smart device sub-segment faced challenges as existing titles weakened and royalty revenues normalized.

Other business units showed mixed but generally stable results. The Amusement segment experienced growth in both sales and profits, rising 15.7% and 3.7% respectively, fueled by strong same-store sales and arcade machine distribution. The Publication segment saw a slight decline in performance, attributed to a high baseline set by the previous year’s hit adaptation of The Apothecary Diaries. Finally, the Merchandising segment remained a steady contributor, with a 7.2% increase in operating income supported by new character-based products. Overall, the Group’s results reflect a focus on enhancing margins and leveraging core IP through diverse entertainment formats.

The fiscal year ending March 31, 2025, marked a strategic pivot toward profitability and structural reform, characterized by a recovery in earnings despite a contraction in top-line revenue. Net sales decreased 8.9% to ¥324.5 billion, yet operating income rose 24.6% to ¥40.6 billion. This improvement in margins was driven primarily by a significant reduction in extraordinary losses and content disposal costs compared to the previous year. Profit attributable to owners rose to ¥24.4 billion, resulting in a substantial increase in earnings per share to ¥203.38.

Central to this financial performance is a three-year "reboot" plan designed to optimize development footprints and diversify earnings across the Digital Entertainment, Amusement, Publication, and Merchandising segments. A rigorous strategic review led to the termination of several high-definition game projects deemed incompatible with a new focus on multiplatform development. While this resulted in specific losses on the disposal of content, it contributed to a leaner balance sheet, with the content production account decreasing to ¥46.9 billion and inventory valuation losses nearly halving to ¥7.5 billion.

The Group maintains a robust liquidity position with ¥243.6 billion in cash and equivalents, supported by conservative risk management and a reduction in interest-bearing liabilities to ¥1.5 billion. This financial stability has enabled increased shareholder returns, including a significant dividend hike and a three-for-one stock split scheduled for late 2025 to enhance market liquidity. Despite navigating foreign exchange volatility and rising statutory tax rates, the transition toward a multiplatform internal development model aims to stabilize long-term growth and mitigate the risks associated with high-budget software production.

The Dragon Quest franchise continues to expand its global footprint, reaching over 95 million units in total shipments and digital sales as of June 2025. A central focus of the current release strategy is the reimagining of the foundational Erdrick Trilogy through HD-2D remakes. Dragon Quest I & II HD-2D Remake is scheduled for a February 5, 2026, launch on a wide array of platforms, including the Nintendo Switch 2, PlayStation 5, Xbox Series X|S, and PC via Steam and the Microsoft Store. This multi-platform approach reflects a broader commitment to utilizing contemporary technology to modernize classic role-playing experiences for a global audience.

Beyond the core Dragon Quest series, the broader portfolio demonstrates significant market penetration across several flagship intellectual properties. The Final Fantasy franchise has surpassed 204 million units globally as of mid-2025, supported by the ongoing expansion of Final Fantasy XIV: Dawntrail and the continued rollout of Final Fantasy VII Rebirth across various ecosystems. Additionally, the Kingdom Hearts series, a collaborative effort with Disney, has achieved over 38 million units in sales, with new entries currently in development for unspecified launch windows.

The strategic roadmap emphasizes cross-platform accessibility and the revitalization of legacy content. By targeting next-generation hardware like the Nintendo Switch 2 alongside established consoles and PC storefronts, there is a clear intent to maximize reach across diverse geographic markets. This strategy is complemented by a robust pipeline of mobile and niche titles, including Dragon Quest Tact and various entries in the Bravely Default and Octopath Traveler series, ensuring a steady cadence of content across the role-playing game segment through 2026.

The Square Enix Group operates under a central mission to leverage boundless imagination to create new content that resonates with global audiences and enriches daily lives. This strategic framework emphasizes the delivery of unforgettable experiences through a commitment to innovation, swift action, and collaborative evolution. By focusing on the transformation of creative energy into immersive worlds, the organization aims to maintain its position as a premier provider of entertainment while upholding core values of integrity and continuous improvement.

Operational reviews and financial highlights indicate a multifaceted approach to the entertainment industry, spanning digital entertainment, amusement, and publication segments. The organizational structure is designed to support long-term stakeholder value by integrating environmental, social, and governance (ESG) principles into the core business model. This commitment to sustainability and corporate responsibility is presented as a fundamental component of the group’s identity, ensuring that creative pursuits are balanced with ethical operations and transparent governance.

The scope of these activities is global, reflecting a history of expansion and a diverse portfolio of intellectual properties. Executive leadership focuses on navigating the evolving landscape of the gaming and media sectors by embracing challenges and fostering a culture of excellence. Through a combination of historical expertise and a forward-looking strategy, the group seeks to sustain its competitive edge and drive growth across all primary business units, ensuring that its creative output remains a significant force in the international market.

The Square Enix Holdings Group maintains a robust global infrastructure centered on digital entertainment, amusement, publication, and merchandising. As of August 31, 2025, the organization operates with a consolidated workforce of 4,604 employees and a common stock valuation of 24,039 million yen. The corporate structure is defined by a series of wholly owned subsidiaries that manage regional operations across Japan, North America, Europe, and Asia, ensuring a localized approach to publishing and service management.

The Japanese core consists of Square Enix Co., Ltd. and Taito Corporation, which handle the primary development and amusement sectors, alongside specialized entities like Square Enix AI & Arts Alchemy. This latter subsidiary focuses on research and development at the intersection of artificial intelligence and computer graphics. International operations are segmented by geography, with Square Enix of America Holdings and Square Enix Ltd. overseeing the North American and European markets, respectively. These entities manage the distribution of digital content and physical merchandise while providing business management for their respective territories.

Expansion into Asian markets is facilitated through dedicated branches in China and India. Square Enix (China) Co., Ltd. and Huang Long Co., Ltd. manage digital entertainment and online game sales within the Chinese market, while Square Enix Pvt. Ltd. focuses on the promotion and publishing of entertainment services in India. This organizational framework demonstrates a strategic commitment to global diversification, utilizing a network of 100% voting right subsidiaries to maintain strict brand control while scaling operations across diverse regulatory and consumer landscapes.

Square Enix Holdings maintains a diverse global ownership structure as of the conclusion of the 2025 fiscal year. Foreign companies and individuals represent the largest shareholder segment, controlling 44.55% of the company’s equity. This is followed by individual investors and other minor holders at 26.25%, while financial institutions and instruments companies collectively account for approximately 23% of the shares. The remaining 5.91% is held by other domestic corporations. A significant corporate action occurred on October 1, 2025, when the company executed a three-for-one stock split, resulting in a total of 367,594,788 issued shares.

The distribution of principal shareholders reveals a mix of individual founders, trust banks, and international financial entities. Yasuhiro Fukushima remains the largest single shareholder with a 19.67% stake, followed by The Master Trust Bank of Japan at 11.25%. Other major positions are held by Fukushima Planning Co., Ltd. and various accounts managed by JP Morgan Chase Bank and the Custody Bank of Japan. These figures exclude treasury shares, which totaled approximately 2.43 million at the time of reporting.

Operational governance is centered on a fiscal year running from April to March, with the annual general meeting of shareholders held each June. Dividend record dates are established at the end of September and March to facilitate interim and year-end payouts. Listed on the Tokyo Stock Exchange under securities code 9684, the company utilizes Mitsubishi UFJ Trust and Banking Corporation as its shareholder register administrator. This data reflects the company's capitalization and governance framework within the Japanese gaming and entertainment industry for the 2025 reporting period.

Square Enix Holdings Co., Ltd. experienced a period of fluctuating financial performance between the fiscal years ending March 2021 and March 2024, with projections extending into 2025. While net sales reached a peak of ¥365,275 million in 2022, they remained relatively stable through 2024 at ¥356,344 million. However, profitability metrics showed a notable decline during the 2024 fiscal year. Operating income dropped to ¥32,558 million, down from a high of ¥59,261 million in 2022, resulting in an operating income margin of 9.1%, the lowest in the five-year period analyzed.

The most significant contraction occurred in profit attributable to owners of the parent, which fell sharply from ¥49,264 million in 2023 to ¥14,912 million in 2024. This decline is reflected in the earnings per share, which plummeted from ¥411.62 to ¥124.37 year-over-year. Consequently, the return on equity saw a substantial reduction, falling to 4.7% in 2024 after maintaining double-digit percentages in the preceding three years. Despite these pressures on earnings, the consolidated balance sheet remained robust, with total assets growing to ¥410,876 million and the equity ratio maintaining a strong position at 77.0%.

Looking forward to the 2025 fiscal year, projections suggest a strategic recovery in profitability despite an anticipated decrease in net sales to ¥324,506 million. Operating income is expected to rebound to ¥40,580 million, improving the operating margin to 12.5%. This forecast indicates a focus on operational efficiency and margin recovery. The data, presented in both Japanese yen and U.S. dollars, covers the global operations of the parent company and its consolidated subsidiaries, providing a comprehensive view of the firm’s financial health and its trajectory toward improved capital efficiency and shareholder returns.