Square Enix Sales Down, But Profits Up

Square Enix has shared its latest financial news. The company's sales are lower than before, but its profits have gone up. This is because older games are selling well and the company is managing its costs better. They are also selling more merchandise.
By Newsroom | Gaming, Business |

Square Enix, a prominent name in the video game industry, has reported a decline in net sales for the nine months ending December 31, 2025. This downturn in overall revenue is contrasted by an increase in operating income, driven by factors such as strong catalog game sales and improved monetization strategies. The company has also revised its financial forecasts, indicating an adjustment to expectations for the fiscal year ending March 31, 2026.

Financial Snapshot: Nine Months Ending December 31, 2025

Square Enix's latest financial disclosures reveal a complex picture:

Square Enix revenues continue to decline over past nine months to $1.3bn - 1

  • Net Sales: ¥215.4 billion ($1.3 billion), representing a 13.3% decrease compared to the same period in the previous fiscal year.

  • Profit: ¥25.6 billion ($163.4 million), showing a 3.6% increase.

  • Digital Entertainment Net Sales: ¥112.3 billion ($717 million), down 23.7%.

  • Digital Entertainment Operating Income: ¥35.5 billion ($226.6 million), up 28.3%.

Other reports indicate slightly different overall figures for net sales, citing ¥248.5 billion ($1.6 billion) as of December 31, 2024, a 3.5% decrease year-over-year. The discrepancies may stem from different reporting periods or specific segment inclusions.

Revenue Decline Attributed to New Title Shortfall

The primary driver for the overall decline in net sales appears to be the lack of revenue from new, high-profile game releases during the reporting period. This contrasts with the previous fiscal year, which benefited from significant launches and expansions.

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Square Enix revenues continue to decline over past nine months to $1.3bn - 2

  • MMO Sub-segment: Net sales and operating income both saw a decrease compared to the prior year. This period did not have the impact of major expansions like Final Fantasy 14: Dawntrail, which was a highlight in the preceding fiscal year.

  • Smart Devices and PC Browser Games: This segment also experienced a decrease in net sales, attributed to the underperformance of existing titles.

  • HD Games (Console): While some reports indicate this sub-segment saw lower net sales compared to the prior year, others mention improved operating income due to steady sales of newly launched titles and stronger performance from the back catalog.

Operating Income Growth Drivers

Despite falling net sales, Square Enix has managed to increase its operating income. This suggests a strategic focus on profitability and efficient cost management.

  • Catalog Game Sales: A significant contributor to the rise in operating income is the stronger performance of catalog titles. This indicates an effective monetization of older games and their back catalog.

  • Diversification of Payment Methods: In the smart devices and PC browser segment, operating income rose due to diversification of payment methods, suggesting successful implementation of new revenue streams.

  • Reduced Costs: In the HD games sub-segment, improvements in operating profit have been credited to reduced development cost amortization and lower advertising expenses.

Mixed Performance Across Segments

The company's financial results present a varied picture across its different business areas:

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Square Enix revenues continue to decline over past nine months to $1.3bn - 3

Digital Entertainment Performance

The Digital Entertainment segment, which encompasses a broad range of games, saw a significant drop in net sales but a notable increase in operating income.

  • Net Sales Decline: The 23.7% year-over-year decrease in net sales for this segment underscores the impact of fewer major new releases.

  • Operating Income Growth: The 28.3% rise in operating income within this segment indicates that the games released, and particularly older titles, were more profitable on a per-unit basis or generated higher margins.

Merchandise Sales Strength

While not directly related to game sales, Square Enix's merchandise segment has shown positive performance.

Square Enix revenues continue to decline over past nine months to $1.3bn - 4

  • Brisk Sales: Sales and operating profit in merchandise have risen, supported by strong sales of new products from popular franchises like Final Fantasy and Dragon Quest.

Mobile Segment Struggles

The mobile and browser-based game sector continues to be a challenge for Square Enix.

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  • Revenue Drop: Reports indicate a substantial drop in mobile game revenue, with one source stating it was down over 32%. This weakness is a significant factor in the overall decline.

  • Service Endings: The discontinuation of services for titles like Final Fantasy: Brave Exvius also contributes to the reduced performance in this segment.

Strategic Adjustments and Outlook

Square Enix is navigating these financial results by revising its consolidated financial forecast for the fiscal year ending March 31, 2026. The company is also focusing on a multi-platform strategy, especially as its exclusivity deal with PlayStation is expected to conclude following the release of the final part of the Final Fantasy 7 remake trilogy.

  • Prioritizing Profitability: The overall financial performance suggests a company prioritizing profitability over sheer sales volume, relying more on higher-margin titles and the long-term appeal of its game catalog.

  • Future Mobile Adaptation: A mobile adaptation of Final Fantasy XIV is reportedly in development, aiming to capitalize on the success of the MMO.

Key Data Points and Observations

SegmentNet Sales (9 Months Ended Dec 31, 2025)Change (YoY)Operating Income (9 Months Ended Dec 31, 2025)Change (YoY)Notes
Overall Net Sales¥215.4 billion ($1.3 billion)-13.3%N/AN/ALack of new title revenue.
Overall Net Sales (Alt.)¥248.5 billion ($1.6 billion)-3.5%N/AN/ADecline linked to underperformance of existing mobile/PC titles.
Digital Entertainment¥112.3 billion ($717 million)-23.7%¥35.5 billion ($226.6 million)+28.3%Decline in net sales due to fewer new titles; income rise from catalog and payment method diversification.
MMO Sub-segmentDeclinedDeclinedLacked major expansions like FFXIV: Dawntrail from prior year.
Smart Devices/PC BrowserDecreasedIncreasedDecline in sales due to weak existing titles; income rise from payment diversification.
HD Games (Console)Lower net salesIncreased operating incomeDriven by steady new releases and stronger back catalog sales, improved monetization.
MerchandiseNot SpecifiedRoseStrong sales of new products from popular series.
Mobile Game RevenueDown over 32%N/ASignificant contributor to overall revenue decline.

Conclusion

Square Enix is currently experiencing a period of declining net sales, primarily due to a comparatively light release schedule for major new titles in the nine months ending December 31, 2025. This decline is exacerbated by the weak performance of its mobile and PC browser games. However, the company is demonstrating resilience through significant growth in operating income, largely driven by the successful sales of its established game catalog, improved monetization strategies in mobile and PC segments, and strong performance in merchandise sales. The company's strategy appears to be shifting towards optimizing profitability and leveraging its existing intellectual property while preparing for future multi-platform releases.

Sources

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Frequently Asked Questions

Q: Are Square Enix's sales lower now?
Yes, the company reported lower sales for the nine months ending in December 2025.
Q: Did Square Enix make more money?
Yes, the company's profits went up even though sales were lower.
Q: Why did sales go down?
Sales dropped because there were fewer big new games released compared to last year.
Q: What helped profits increase?
Profits grew because older games sold well, and the company managed its costs better. Merchandise sales also did well.