Square Enix’s Latest Financials: Sales Dip, But Profits Surge as the Publisher Leans on Its Back Catalog

Square Enix released its financial results for the nine-month period ending December 31, 2025, presenting a classic “good news, bad news” scenario for industry watchers. The headline? The publisher is making significantly more money while selling fewer games, a sign that their aggressive internal restructuring is starting to impact the bottom line. The company also raised their full year profit guidence significantly due to strong performance of the back catalog.

Net sales took a notable hit, dropping 13.3% year-over-year to ¥215.4 billion. However, operating income tells a very different story, skyrocketing 39.0% to ¥46.3 billion.

The primary culprit for the sales dip is simply a tough comparison against last year. Without any major heavy hitters launching in late 2025, the “HD Games” and “MMO” segments naturally saw revenue declines.

Despite the drop in new releases, the Digital Entertainment segment (the actual video games) saw its operating income jump 28.3%. Square Enix credits this to “steady sales of new titles” and, crucially, strong performance from their catalog. Essentially, older games are continuing to sell well with better margins. The company also benefited from a weaker Yen, booking a healthy ¥5.5 billion in foreign exchange gains.

It wasn’t all smooth sailing, however. The report notes a ¥11.9 billion hit listed explicitly as “Reorganization costs.” Square Enix has been open about overhauling its development pipeline to focus on quality over quantity, and it seems we are seeing the literal price tag of that pivot.

While the games division tightened its belt, the Merchandising segment went supernova. Sales were up 30%, but operating income nearly doubled (up 98.9%) thanks to high-margin royalty income from their key IPs. It seems that even when fans aren’t buying a new Final Fantasy, they are definitely buying the statues, plushies, and soundtracks.

Square Enix is in a transition period. The post-Dawntrail cooling period for Final Fantasy XIV was expected, and the mobile sector continues to struggle with “weakness in existing titles.” However, the company is emerging as a leaner, more profitable operation.

Sources: Investor Presentation