Square Enix Reports Weak Q1 Earnings, Sales Down 10.7% Year over Year

Square Enix reported their Q1 earnings today with sales down 10.7% year over year. Sales came in at ¥59.2 billion ($400 million) vs ¥69.9 billion last year. Weak topline revenue was attributed to lower sales in HD Games (packaged games), MMOs, and mobile games.

MMO net sales for the quarter were ¥9.6 billion vs ¥12.5 billion in the same quarter last year. Operating profit in the MMO division was ¥3.6 billion, down from ¥6.6 billion last year. Despite MMO profits coming down significantly, MMOs (namely Final Fantasy XIV and Dragon Quest X) made up 40% of the company's operating profit for the year.

The only major bright spot in Square Enix's numbers were from the Amusement division which runs the Taito Game Station amusement facilities in Japan (Crane games, arcades, etc) where sales and profits both increased year over year. Merchandising and Manga sales and profits also slipped year over year.

Despite weak performance, Square Enix's stock price has soared 78% year to date thanks to investor optimism surrounding 3D Investment Partner's stake in the company. 3D Investment Partners owns 13.12% of the entire company, all acquired this year. Time will tell what 3D intends to do with their investment in Square Enix.

Further reading: Full Q1 Earnings Slide Deck