Highlights
- Square Enix’s net sales declined 13.3% YoY due to the underperformance of new titles.
- Operating income rose 39% YoY, driven by catalog titles and payment diversification.
- Digital Entertainment’s profitability lifts the full-year profit forecast to ¥55B (~$351M).
The Japanese publisher, Square Enix, reported a decline in net sales for the nine months ended Dec 31, 2025. The drop reflected lower contributions from new releases and continued softness in its existing portfolio. Net sales reached ¥215.4 billion (~$1.4 billion USD), down 13.3% year-over-year (YoY) from ¥248.5B (~$1.6B).
The publisher stated the drop followed a shortfall in earnings from new titles and extended a downward trend after last fiscal year’s five-year net sales low.
Profitability, however, strengthened. Operating income rose 39% YoY to ¥46.3B (~$295.7M), while ordinary income increased 41% to ¥53.1B (~$342.8M). Profit climbed nearly 4% to ¥25.6B (~$165M), already surpassing the prior full fiscal year with one quarter remaining.
Square Enix Earnings Show Profit Growth Despite Sales Decline
Digital Entertainment, the company’s core games division, generated 57% of total sales at ¥122.3B (~$787.7M). However, segment net sales fell 23.7% to ¥112.3B (~$717M). Square Enix cited “weakness in existing titles” for declining performance in games for smart devices and PC browsers, a segment that also fell in the previous fiscal year (FY).
Despite lower sales, Digital Entertainment’s operating income rose 28.3% YoY to ¥35.5B (~$231M). The increase was driven by “higher sales of catalog titles” and the “diversification of payment methods.”
Performance diverged by category. Massively multiplayer online game (MMO) net sales and operating income declined following last year’s uplift from Final Fantasy XIV: Dawntrail and its expansion content. HD games and mobile categories, however, supported profit growth.
The results come in the second year of Square Enix’s reboot strategy, a mid-term plan designed to establish long-term growth foundations by March 2027. As part of the restructuring, the company intends to close overseas studios and shift development resources to Japan. The region accounts for 52% of digital entertainment sales.
Against this backdrop, Square Enix revised its full-year financial outlook after the nine-month performance exceeded expectations. The net sales forecast remains unchanged at ¥280B (~$1.7B), but the company now projects a profit of ¥55B (~$351M), up from its earlier ¥41B (~$261.7M) estimate.
The upward revision reflects improved profitability in the Digital Entertainment segment and stronger-than-expected royalty income from the Rights and Properties business.
