Square Enix's core video game business experienced a 1,900% uptick in profit during the second quarter of the calendar year 2025, ending the three-month period ¥1 billion in the black. However, the company's latest financials still show some signs of concern for Square Enix investors.
After peaking in 2022, Square Enix's operating profit has been on a decline for two full years before finally returning to growth in late 2024. However, its overall financials for the fiscal year 2025 that ended this March revealed a 20% operating income decline, from ¥40 billion to ¥32 billion, the equivalent of $216.5 million based on today's exchange rates.
Square Enix Reports Mixed Q2 2025 Results
On August 8, Square Enix published its consolidated financial results for the first quarter of its fiscal year 2026, covering the April–June 2025 period. The report was another mixed bag from the Japanese gaming giant, revealing a 15% decline in quarterly net sales, which amounted to ¥59.32 billion (~$401.3 million) during the observed period. Company-wide operating income was also down over 16 points, dropping from ¥10.8 billion to ¥9 billion (~$60.9 million) over the course of the previous quarter. The decline is largely attributed to the lack of high-profile Square Enix games during the reported period.
Square Enix's HD Game Business Sees Sharp Profit Growth
However, as noted by TheGamer, operating profit in the HD (console and PC) video game segment rose from ¥0.05 billion to ¥1 billion (~$6.76 million), a staggering 1,900% increase. The company leadership attributed the margin rebound to lower development cost amortization and reduced marketing spend compared to the second quarter of the calendar year 2024. In plain terms: Square Enix sold fewer big games, but it also ate fewer past-project costs and spent less on advertising, so its profits in the HD segment still rose substantially.
Square Enix's Digital Entertainment Business Has Declined
The broader Digital Entertainment segment—which includes everything from Square Enix mobile games and MMOs to amusement parks—posted net sales of ¥32.9 billion (~$222.58 million), down from ¥43.9 billion a year prior. Its operating income reached ¥8.1 billion (~$54.8 million), a 17% year-over-year decline. MMO net sales and operating income both declined compared to Q2 2024 (Q1 FY 2025), but mobile operating profit marginally increased from ¥3 billion to ¥3.3 billion (~$22.32 million). Unit volumes also slipped, with Square Enix selling 4.01 million physical (0.56 million) and digital games (3.45 million) during the quarter, down 8.65 points compared to the 4.39 million sales it reported for the same period 12 months ago.
As the earnings were released after Friday’s close on the Tokyo Stock Exchange, their impact on the company’s share price has yet to be seen. The group is presently trading at about $72.20 per share, up 78.74% since the start of the year. November 2025 will mark the halfway point of a 36-month restructuring plan that Square Enix announced last year. Titled "Square Enix Reboots and Awakens," the strategy aims to streamline development processes and revamp business targets with the goal of focusing on fewer higher-quality games. It also aims to strengthen Square Enix's multi-platform strategy after the company's exclusivity deal with PlayStation comes to an end, which is expected to happen following the release of the final entry in the Final Fantasy 7 remake trilogy, which is likely to be a timed PS5 exclusive.
- Date Founded
- April 1, 2003
- Headquarters
- Shinjuku City, Tokyo, Japan
- Parent Company
- Square Enix
- Subsidiaries
- Eidos Interactive, Crystal Dynamics, Luminous Productions
- Known For
- Final Fantasy, Dragon Quest, Kingdom Hearts, Tomb Raider