Square Enix Reports CY Q2 2023 Earnings - MMO Revenue Drops 22% While Profit Tanks 65%
Square Enix reported their calender year Q2 2023 (April-June) earnings report today and in it there were some disappointing figures. While total revenue increase 14.4% year over year (thanks to 8 days of Final Fantasy XVI revenue contribution), profits collapsed 65%. The company attributed the weak profits partially to increased amoritzation of FF16 development costs. The MMO and mobile game divisions also disappointed with 22% and 18% drops in revenue year over year. New mobile titles could not offset weak numbers from existing games. MMO revenues declined and will likely remain muted until Final Fantasy XIV: Dawntrail launches next year (Summer 2024).
The dollar value of MMO revenue was ~$77.6m USD for the quarter (~$25.87m USD per month), the lowest it's been in 2 years. MMO revenue is highly valued by investors as it tends to be recurring in nature and also much higher margin. This sales figure is actually much worse than face value as the Japanese Yen depreciated significantly in the last year, which benefited Square Enix's USD and EUR sales.
These weak numbers will likely pressure shares on Japanese trading when the market opens monday morning. On a more positive note though, Square Enix did not adjust their full year forecasts despite a weak first fiscal Q1, which means the company is optimistic they can still hit their full year profit and revenue targets (It's the second quarter on a calendar basis, but 1st quarter by Square Enix's accounting Fiscal Year).
