Shares of Square Enix Holdings Co. experienced a significant decline of 16%, marking the steepest drop in 13 years. This downturn followed comments from the company’s president regarding disappointing sales figures for recent major releases and the anticipated long timeline for the impacts of a recent organizational restructuring.
Takashi Kiryu reported to analysts that the sales of key titles such as Final Fantasy VII Rebirth, Final Fantasy XVI, and Foamstars — all launched exclusively on Sony Group Corp.’s PlayStation during the last fiscal year — failed to meet the company’s revenue and profit forecasts. Consequently, Square Enix now projects an operating income of ¥40 billion for the current fiscal year, significantly below the average analyst estimate of ¥57 billion. The updated outlook also reflected lowered expectations for sales and dividends.
On Tuesday, shares of Square Enix plummeted to their daily limit, reaching an interday low not seen in four months.
At 48 years old, Kiryu has implemented a comprehensive overhaul of the company’s approach, concentrating on high-quality big-budget games while discontinuing numerous mobile and console projects in development. He indicated that the publisher is moving away from the tradition of launching premier titles exclusively on PlayStation to ensure broader accessibility across platforms, including Nintendo’s systems, Microsoft’s Xbox, and PC gaming environments.
However, Kiryu emphasized that it would take time for these strategic changes to materialize into increased sales.
“While the company’s revamped game development processes and overall reboot may hold promise, questions remain about what new offerings will be available in the near term,” stated Hideki Yasuda, an analyst at Toyo Securities. Similarly, Jefferies analyst Atul Goyal has downgraded his rating of the stock to underperform and reduced his target price to ¥4,600 per share.
Kiryu’s comments indicate that the momentum anticipated from Final Fantasy XVI has not materialized, despite investors expecting the title to enhance the company’s profitability following its release in June of last year. After the game’s lukewarm reception initially, Kiryu mentioned plans to maintain its sales trajectory over an extended period, but specifics on sales figures for Final Fantasy VII Rebirth and Foamstars have not been disclosed.
Additionally, Square Enix’s mobile gaming segment has faced challenges, with several titles being discontinued within a year due to inadequate sales performance. “Our previous winning formula is no longer yielding results,” Kiryu commented. “It has taken us considerable time to realign our strategy.”
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