Square Enix Holdings has reported its financial results for the first quarter of fiscal year 2026, revealing a double-digit decline in revenue and a sharper drop in profit compared to the same period last year. The company shipped fewer game units overall, reflecting a lighter release schedule, but demonstrated improved cost efficiency in several segments.
For the quarter ended June 30, 2025, net sales reached ¥59.2 billion, down 15.2 percent year-on-year, while profit attributable to owners fell 54.8 percent to ¥4.8 billion. Operating income came in at ¥9.0 billion, representing a 16.8 percent decline. Despite the weaker top-line results, the operating margin remained relatively steady at 15.2 percent. The company ended the quarter with a strong financial position, holding ¥231.7 billion in cash and deposits.
The Digital Entertainment segment, Square Enix’s largest revenue source, posted net sales of ¥32.9 billion, a 25.1 percent decrease year-on-year. HD Games sales fell to ¥8.9 billion from ¥12.3 billion, largely due to a quieter release slate compared to last year’s notable launches, such as the Kingdom Hearts collection on Steam. However, the sub-segment’s operating profit surged to ¥1.0 billion, driven by lower development cost amortization and reduced marketing expenses.
MMO performance was weaker, with sales down 23.2 percent to ¥9.6 billion and operating income nearly halved to ¥3.6 billion. The Games for Smart Devices and PC Browser segment also saw sales decline to ¥14.3 billion, though operating profit improved 10 percent year-on-year to ¥3.3 billion, aided by diversified payment options and operational efficiencies.
In terms of unit sales, the company moved 4.01 million games globally in the quarter, down from 4.39 million last year. Japan accounted for 650,000 units, while North America and Europe combined delivered 2.88 million units. Asia and other regions sold 490,000 units. Digital distribution continued to dominate, making up roughly 86 percent of all units sold.
Looking ahead, Square Enix maintains its full-year forecast of ¥280 billion in net sales and ¥28.7 billion in net profit, expecting the release of major HD titles in the second half to bolster results. While the current figures highlight ongoing revenue pressures, the company’s consistent profitability and strong digital footprint position it to rebound in the coming quarters.
