Overview

Video game publisher and developer Square Enix has reported a 43% increase in net sales and operating income for the fiscal year ended March 31, 2020 (FY2020). The company has attributed this growth to the successful launch of several new games, as well as continued strong performance from its existing franchises.

Financial highlights

• Net sales increased by 43% to ¥303.6 billion ($2.7 billion)
• Operating income increased by 43% to ¥40.9 billion ($363 million)
• Net income increased by 46% to ¥20.2 billion ($179 million)
• Operating margin increased from 10.5% to 13.5%

Factors contributing to growth

Square Enix has cited a number of factors that contributed to its strong financial performance in FY2020. These include:

• The successful launch of several new games, including “Final Fantasy VII Remake,” “Marvel’s Avengers,” and “Dragon Quest XI S: Echoes of an Elusive Age – Definitive Edition.”
• Continued strong performance from existing franchises, such as “Final Fantasy XIV,” “Dragon Quest X,” and “Kingdom Hearts III.”
• An increase in digital sales, which grew by 48% year-on-year and accounted for 87% of total sales.
• The favorable impact of foreign currency exchange rates, which boosted net sales by ¥26.7 billion ($236 million).

Challenges and future outlook

Square Enix has acknowledged that the COVID-19 pandemic could have a negative impact on its business, particularly in the short term. The company has stated that it is taking measures to mitigate the effects of the pandemic, including implementing remote work arrangements and adjusting development schedules.

Looking ahead, Square Enix has identified several growth opportunities, including:

• The continued expansion of its online games business, particularly in overseas markets.
• The release of new content and updates for existing games.
• The launch of new titles, including “Outriders” and “Balan Wonderworld,” in FY2021 and beyond.
• The pursuit of M&A opportunities that align with the company’s strategic priorities.