Square Enix's Q1 operating profit triples, but revenue slides on lack of new releases and weak back catalog sales
Square Enix has released its report for the first fiscal quarter ended June 30, 2024. The Japanese company posted a huge increase in operating profit despite weak sales.
Final Fantasy XIV: Dawntrail
- According to its new earnings release, Square Enix reached ¥69.9 billion ($482 million) in Q1 revenue, down 18.4% compared to the same period last year.
- Operating profit more than tripled year-over-year, up 260%, to ¥10.8 billion ($74.5 million).
Square Enix’s consolidated revenue and operating profit in Q1 2024
- Digital Entertainment, the company’s video game division, accounted for 63% of the total, or ¥43.9 billion ($302.8 million), down 29.5% year-over-year. Operating profit grew 259% to ¥9.7 billion ($) due to lower development cost amortization and ad expenses.
- In Q1, Square Enix sold 4.39 million copies of games, a significant decline from 7.54 million units in the same period last year. Digital sales accounted for 87% of the total.
- 67.5% of all game sales came from North America and Europe, while the share of domestic sales (Japan) was 19.3%.
Square Enix’s Digital Entertainment revenue and operating profit in Q1 2024
- Games for Smart Devices/PC Browser (mobile titles) was the number one sub-segment by net revenue, with ¥18.9 billion ($130 million). “Sales of existing titles remain weak, but operating income up on optimization of operational expenses,” Square Enix noted.
- Revenue from MMO games amounted to ¥12.5 billion ($86.2 million), up 13.6% year-over-year due to the successful launch of the Dawntrail expansion for Final Fantasy XIV.
- HD Games (PC and console titles) fell 57.4% to ¥12.3 billion ($84.8 million). Such a sharp decline is due to a lack of major releases (last year, Q1 was marked by launches of Final Fantasy XVI and FF Pixel Remaster).
- So while the lack of new games and weak sales of back catalog caused a decline in revenue, Square Enix’s gaming division remained profitable thanks to lower operating expenses.
