Net sales and profits up at Square Enix despite HD game struggles

Consolidated net sales and profits are up at Square Enix, despite a drop off in HD game sales.

According to its financials for the six months ended September 30, 2019, consolidated net sales rose by 8.2 percent year-on-year to 120.76 billion yen ($1.1 billion), while profits increased by 32 percent to 10.96 billion yen ($100.2 billion) during the same period. 

Focusing specifically on the company's Digital Entertainment segment, which houses its video game operations, net sales actually increased by 4.2 percent to 85.4 billion yen ($781.1 million). Operating income also saw a 33 percent year-on-year upswing, rising to 16.68 billion yen ($152.6 million). 

Despite that overall upturn within the division, net sales in the HD Games sub-segment fell to 10.8 billion yen ($98.8 million) in Q2 2019 from 24 billion yen ($219.5 million) in Q2 2018. Square Enix attributed the decline to an absence of major launches and weak additional sales of recent catalog titles (as shown in the graph below). 

It's a situation that actually led to the sub-segment posting an operating loss, although Square had a better showing in the smart devices and PC browser area, with net sales and operating income within that sub-division both rising thanks to strong performances from games including Dragon Quest Walk and Romancing SaGa Re: Universe. 

The company's massively multiplayer online catalog was also handed a revenue boost thanks to positive sales of the latest expansion pack for Final Fantasy XIV and an increase in the number of paying subscribers. 

Taking all of that into account, Square is still forecasting net sales of 270 billion yen ($2.48 billion) and profits of 16.8 billion yen ($154 million) for the end of the fiscal year on March 31, 2020.