Square Enix’s core video game business delivered a huge profit increase in the second quarter of the 2025 calendar year, with its HD (console and PC) game segment posting a 1,900% year-over-year profit surge. Despite this, the company’s overall financial performance showed areas of concern for investors.
Mixed Q2 2025 Financial Performance
For the April–June 2025 period, Square Enix reported net sales of ¥59.32 billion ($401.3 million), a 15% decline compared to the same quarter last year. Company-wide operating income also fell over 16%, from ¥10.8 billion to ¥9 billion ($60.9 million). The drop is largely due to the absence of major new releases during the quarter, leaving the company without a high-profile title to boost sales.
This follows a longer-term trend where Square Enix’s operating profit peaked in 2022 before declining for two years straight. Although late 2024 brought a return to growth, the fiscal year 2025 ended in March still showed a 20% drop in operating income year-over-year, falling from ¥40 billion to ¥32 billion (~$216.5 million).
HD Game Business Rebounds Strongly
The standout performance came from Square Enix’s HD game segment, which saw profits jump from ¥0.05 billion to ¥1 billion (~$6.76 million). Leadership attributed this surge to lower development cost amortization and reduced marketing expenses, meaning that while fewer big games were sold, the company also avoided heavy past-project costs and advertising spend.
Decline in Digital Entertainment Segment
The wider Digital Entertainment division, which includes MMOs, mobile games, and amusement operations, saw a year-over-year decline. Net sales dropped from ¥43.9 billion to ¥32.9 billion ($222.58 million), with operating income down 17% to ¥8.1 billion ($54.8 million). MMO sales and profit both fell, though mobile profits saw a slight increase from ¥3 billion to ¥3.3 billion (~$22.32 million).
Unit sales also slipped, with 4.01 million total games sold (0.56 million physical, 3.45 million digital), an 8.65% decrease compared to last year’s 4.39 million.
Looking Ahead: Restructuring and Multi-Platform Focus
November 2025 will mark the halfway point of Square Enix’s three-year “Reboots and Awakens” restructuring plan. The strategy is designed to focus on fewer, higher-quality games, streamline development, and expand multi-platform releases. This comes as the company’s exclusivity deal with PlayStation nears its end, likely following the launch of the final entry in the Final Fantasy 7 remake trilogy, expected to be a timed PS5 exclusive.
Square Enix’s stock is currently trading at around $72.20 per share, up nearly 79% since the start of the year. The market’s reaction to these results remains to be seen as trading resumes next week.
