Square Enix’s Latest Earnings Report: A Mixed Bag of Results

Square Enix recently released its financial earnings report for the nine months ending December 31, 2024. The report paints a mixed picture of the company’s performance, with some segments showing growth while others experienced declines.

Financial Overview

Square Enix reported a decrease in net sales, which fell to ¥248.5 billion from ¥257.6 billion the previous year. This decline was primarily attributed to weakness in existing titles within its mobile and PC browser sub-segment. Despite this, the company saw a 70.3% increase in operating profit for its HD games subsection, reaching ¥4.6 billion ($30.2 million). This growth was driven by lower development costs and advertising expenses, as well as stronger-than-expected sales of Dragon Quest 3 HD-2D.

Game Performance Highlights

1. Dragon Quest 3 HD-2D: This remake exceeded expectations, contributing significantly to the HD games sub-segment’s profitability. The game’s modernized graphics and nostalgic appeal resonated well with fans, leading to stronger sales than initially anticipated.
2. Final Fantasy 14: Dawntrail: Released in July 2024, this expansion for Final Fantasy 14 saw a 26.4% rise in net sales for the MMO sub-segment, reaching ¥44 billion ($288.6 million). The expansion’s success helped offset some of the declines in other areas1.
3. Mobile and PC Browser Games: This sub-segment faced significant challenges, with a 58.5% decline in operating profit to ¥5.6 billion ($36.7 million). Despite the launch of the puzzle RPG Emberstoria in November 2024, the segment struggled due to weakness in existing titles and a valuation write-down associated with content production.

Looking ahead, Square Enix remains optimistic about its future prospects, with no changes to its forecast for the fiscal year announced during its FY24 results last May. The company is banking on upcoming titles and continued growth in its successful segments to drive future performance.