Square Enix : Consolidated Financial Results for the Three-Month Period Ended June 30, 2023

Consolidated Financial Results

for the Three-Month Period Ended June 30, 2023 (Japan GAAP)

August 4, 2023

Company name:	SQUARE ENIX HOLDINGS CO., LTD.
Shares traded:	Tokyo Stock Exchange, Prime Market
Company code:	9684
Company URL:	https://www.hd.square-enix.com/eng
Representative:	Takashi Kiryu, President and Representative Director
Contact:	Atsushi Matsuda, Chief Accounting Officer
Tel:	[phone]

Financial report submission:	August 9, 2023 (planned)
Cash dividend payment commencement:	－
Supplementary quarterly materials prepared: Yes
Quarterly results presentation held:	Yes (for institutional investors and analysts)

(Amounts under one million yen are rounded down)

1. Consolidated Financial Results (April 1, 2023 through June 30, 2023)

(1) Consolidated Financial Results									(Millions of yen and year-on-year changes in percents)
		Net sales			Operating income	Ordinary income	Profit attributable to
				owners of parent
Three months ended				％					％			％		％
June 30, 2023		85,669	14.4			3,097	(78.5)	9,178	(65.0)	6,300	(65.7)
June 30, 2022		74,876	(15.5)			14,430	(16.7)	26,255	48.7	18,355	45.0
Note: Three months ended June 30, 2023 Comprehensive income: 6,121 million yen [(63.6％)]
Three months ended June 30, 2022 Comprehensive income: 16,833 million yen [31.4％]
		Earnings per		Earnings per
		share, basic		share, diluted
Three months ended		yen					yen
June 30, 2023		52.61					52.52
June 30, 2022		153.45			153.19
(2) Consolidated Financial Position									(Millions of yen, ratios in percents and per share data)
		Total assets				Net assets			Equity ratio
As of															％
June 30, 2023			392,444					310,108				78.9
March 31, 2023			399,634					317,266				79.1
Note: Total equity	As of June 30, 2023:	309,539 million yen
	As of March 31, 2023:	316,290 million yen

2. Dividends

			Dividends per share
	1Q	2Q		3Q		4Q	Total
	yen	yen		yen		yen	yen
Fiscal year ended	－	10.00		－		114.00	124.00
March 31, 2023
Fiscal year ending	－
March 31, 2024
Fiscal year ending
March 31, 2024		10.00		－		87.00	97.00
(projection)

Note: No change in Dividend projection from previous announcement.

3. Consolidated Forecasts (April 1, 2023 to March 31, 2024)

(Millions of yen, year-on-year changes in percents and per share data)

	Net sales		Operating income	Ordinary income	Profit attributable to	Earnings per
		owners of parent	share, basic
Fiscal year ending		％		％		％		％	yen
360,000	4.9	55,000	24.1	55,000	0.5	38,500	(21.9)	321.68
March 31, 2024

Note: No change in Consolidated forecasts from previous announcement.

The Company refrains at this time from disclosing consolidated financial forecasts for the Six-month period ending September 30, 2023. For details, please refer to page 4 "1. Consolidated Results for the Three-Month Period Ended June 30, 2023 (3) Qualitative information on consolidated business forecasts."

Notes

1. Significant changes among major subsidiaries during the period: No
2. Adoption of special accounting treatment for quarterly consolidated financial statements: No
3. Changes in accounting policies, procedures, and methods of presentation for consolidated financial statements
4. 1. Changes in accounting policies due to revisions to accounting standards: No
   2. Changes other than 1. : No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
5. Outstanding shares (common stock)
6. 1. Number of shares issued and outstanding (including treasury stock):

	As of June 30, 2023	122,531,596
	As of March 31, 2023	122,531,596
2.	Number of treasury stock:
	As of June 30, 2023	2,600,280
	As of March 31, 2023	2,803,193
3.	Average number of shares during the period (cumulative):
	Three-month period ended June 30, 2023	119,753,839
	Three-month period ended June 30, 2022	119,616,868

Disclaimer: (1) This document is a translation of the Japanese language "Kessan Tanshin" prepared in accordance with the guidelines of the Tokyo Stock Exchange. The Japanese language document shall prevail in the event any differences or discrepancies exist between this English translation and the original. (2) At the time of disclosure of this report, review procedures for quarterly financial statements pursuant to the Financial Instruments and Exchange Law had not been completed. (3) The forward-looking statements in this document are based upon the information currently available and necessarily include elements that are not entirely predictable. The achievement is not promised. Actual results may differ from the forward-looking statements in this document. (4) For additional information about forecasts, please refer to "1. Consolidated Results for the Three-Month Period Ended June 30,

2023 (3) Qualitative information on consolidated business forecasts" section on page 4 of Supplemental Information

Supplemental Information － Index

		Page
1. Consolidated Results for the Three-Month Period Ended June 30, 2023	2
(1)	Analysis of consolidated business results	2
(2)	Analysis of consolidated financial position	3
(3)	Qualitative information on consolidated business forecasts	4
2. Consolidated Financial Statements for the Three-Month Period Ended June 30, 2023	5
(1)	Consolidated Balance Sheets	5
(2)	Consolidated Income Statement and Consolidated Statement of Comprehensive Income	7
	Consolidated Income Statement	7
	Consolidated Statement of Comprehensive Income	8
(3)	Notes to Consolidated Financial Statements	9
	(Note regarding going concern assumptions)	9
	(Material changes in shareholders' equity)	9
	(Segment information)	9

－ 1 －

1. Consolidated Results for the Three-Month Period Ended June 30, 2023

(1) Analysis of consolidated business results

The Square Enix group (the "Group") is continuing determined efforts to strengthen the competitiveness and profitability of its Digital Entertainment, Amusement, Publication and Merchandising business segments. Net sales for the three-month period ended June 30, 2023 totaled ¥85,669 million (an increase of 14.4％ from the same period of the prior fiscal year), operating income amounted to ¥3,097 million (a decrease of 78.5％ from the same period of the prior fiscal year). In foreign exchange rates, the weakness of Japanese yen compared to the rate as of the end of last fiscal year has resulted in the booking of a foreign exchange gain amounting to ¥5,835 million. As a result, ordinary income amounted to ¥9,178 million (a decrease of 65.0％ from the same period of the prior fiscal year), and profit attributable to owners of parent amounted to ¥6,300 million (a decrease of 65.7％ from the same period of the prior fiscal year).

A discussion of results by segment for the three-month period ended June 30, 2023 follows.

• Digital Entertainment

The Digital Entertainment segment consists of planning, development, distribution, and operation of digital entertainment content primarily in the form of games. Digital entertainment content is offered to meet customer lifestyles across a variety of usage environments such as consumer game consoles (including handheld game machines), personal computers, and smart devices.

The HD (High-Definition) Game sub-segment's net sales for the three-month period ended June 30, 2023 rose compared to the same period of the previous fiscal year due to the release of titles including "FINAL FANTASY XVI" and "FINAL FANTASY PIXEL REMASTER."

In the MMO (Massively Multiplayer Online) Games sub-segment, net sales fell versus the same period of the previous fiscal year.

In the Games for Smart Devices/PC Browser sub-segment, "DRAGON QUEST CHAMPIONS" was launched in June, but the sub-segment's net sales declined compared to the same period of the previous fiscal year because of weak performances from existing titles.

Net sales and operating income in the Digital Entertainment segment totaled ¥62,375 million (an increase of 16.4％ from the same period of the prior fiscal year), and ¥2,745 million (a decrease of 80.6％ from the same period of the prior fiscal year), respectively.

• Amusement

The Amusement segment consists of the operation of amusement facilities, as well as of the planning, development, and distribution of arcade game machines and related products for amusement facilities.

Net sales and operating income for the three-month period ended June 30, 2023 rose compared to the same period of the previous fiscal year due to a year-on-year increase in same-store sales.

Net sales and operating income in the Amusement segment totaled ¥13,330 million (an increase of 11.3％ from the same period of the prior fiscal year), and ¥1,481 million (an increase of 29.7％ from the same period of the prior fiscal year), respectively.

－ 2 －

• Publication

The Publication segment consists of publication and licensing of comic magazines, comic books, and game- related books.

Net sales and operating income for the three-month period ended June 30, 2023 declined compared to the same period of the previous fiscal year due to year-on-year declines in both digital and print sales.

Net sales and operating income in the Publication segment totaled ¥5,969 million (a decrease of 4.7％ from the same period of the prior fiscal year) and ¥2,129 million (a decrease of 14.8％ from the same period of the prior fiscal year), respectively.

• Merchandising

The Merchandising segment consists of planning, production, distribution, and licensing of derivative products of IPs owned by the Group.

Net sales and operating income for the three-month period ended June 30, 2023 rose compared to the same period of the previous fiscal year due in part to brisk sales of new merchandise featuring key characters from the Group's IP portfolio.

Net sales and operating income in the Merchandising segment totaled ¥4,747 million (an increase of 28.7％ from the same period of the prior fiscal year), and ¥1,290 million (an increase of 51.9％ from the same period of the prior fiscal year), respectively.

1. Analysis of consolidated financial position
   ● Assets
   As of June 30, 2023, total current assets were ¥333,635 million, a decrease of ¥8,623 million compared to March 31, 2023. This was mainly due to decreases in cash and deposits of ¥13,579 million and content production account of ¥8,180 million, while notes and accounts receivable-trade and the other on current assets increased by ¥8,055 million and ¥5,068 million respectively. As of June 30, 2023, total non-current assets were ¥58,808 million, an increase of ¥1,432 million compared to March 31, 2023.
   As a result, total assets were ¥392,444 million, a decrease of ¥7,190 million compared to March 31, 2023.

• Liabilities

As of June 30, 2023, total current liabilities were ¥71,635 million, a decrease of ¥69 million compared to March 31, 2023. This was mainly due to decreases in provision for bonuses of ¥2,247 million and notes and accounts payable-trade of ¥1,052 million, while the other on current liabilities and refund liabilities increased by ¥1,539 million and ¥1,306 million, respectively. As of June 30, 2023, total non-current liabilities were ¥10,699 million, an increase of ¥36 million compared to March 31, 2023.

As a result, total liabilities were ¥82,335 million, a decrease of ¥32 million compared to March 31, 2023.

• Net assets

As of June 30, 2023, net assets were ¥310,108 million, a decrease of ¥7,157 million compared to March 31, 2023. This was mainly owing to profit attributable to owners of parent of ¥6,300 million and dividend payments of ¥13,649 million.

As a result, the consolidated equity ratio stood at 78.9％ (79.1％ as of March 31, 2023).

－ 3 －