Square Enix has reported a 68% increase in Q1 profits, reaching $72 million, even though there has been a drop in sales

Square Enix has disclosed its financial performance for the quarter concluding on June 30, 2024, revealing a notable reduction in net sales relative to the previous fiscal quarter.

The decline in Digital Entertainment revenue, which includes video game sales, was largely due to lower sales of new releases in Q1 2025. Titles such as SaGa: Emerald Beyond and the Steam version of the Kingdom Hearts HD remastered collection saw diminished sales.

The numbers

• Net sales: ¥69.9 billion ($477 million), a decrease of 18.4% year-over-year
• Profit: ¥10.6 billion ($72.3 million), an increase of 68.6% year-over-year
• Digital Entertainment net sales: ¥43.9 billion ($299 million), a decline of 29.6% year-over-year

Key Insights

The HD games segment brought in ¥12.3 billion ($83.8 million) in net sales, down from ¥29 billion ($197 million) in the same period the previous year. Releases such as Final Fantasy 16 and Final Fantasy Pixel Remaster had previously driven a significant revenue boost.

Notably, the HD games sub-segment became profitable this quarter due to reduced development cost amortization and lower advertising expenses compared to the previous year.

Meanwhile, net sales from the mobile and PC browser segment fell, chiefly because of weaker sales of existing titles. However, profitability improved because of streamlined operational costs.

In the MMO sub-segment, both net sales and profits rose when compared to the same quarter in the prior fiscal year.

On another front, the company's amusement division saw net sales grow by 13.9% to $103 million, driven by increased same-store sales year-over-year.

Looking forward, the firm maintained its full-year forecast, which had been previously outlined in its May 13 financial report.

Square Enix also announced layoffs in its American and European divisions, which affected departments like publishing, IT, and indie games, as part of a restructuring effort in May. This decision came after a financially challenging year where many titles did not meet profit forecasts, particularly those developed externally and several AAA games.