Square Enix is facing a tumultuous period after its share price dropped by almost 16% soon after the release of the company’s financial statements for FY2024 this week. Only last week, the share price for Square Enix was hovering around ¥6,268, but when the Tokyo Stock Exchange closed after the release of the company’s financial statements, the share price dropped to ¥5,268 and is stable there.
The steep curve of the market value is being attributed to shareholder concerns after the release of the financial results and what is in store for the near future. According to the president of Square Enix, Takashi Kiryu, the reason for this disappointing year in terms of revenue was because of the underwhelming sales of Final Fantasy 7 Rebirth, Final Fantasy 16, and Foamstars. All these titles came out in FY2023, and all of them fell well short of expectations.
Square Enix Share Price Drops After Publishing FY2024 Statements
The budgeted operating profits for FY2024 were ¥57 billion ($364 million) but the actual results were around ¥40 billion ($255 million) which is an actual variance of ¥17 billion ($108 million). As for profits compared to last year, there was a drop of almost 70%, which is because of the abnormal loss of ¥22,087 million ($141 million) which was recognized this year.
To make matters worse, Square Enix had to cancel a few unannounced projects because they fell short of the company’s future strategy. Namely, they did not match up with the new methods and workflows introduced for HD games.
Square Enix has a plan, however, to mend some of the damage done, and improve its overall strategy for the future. Not only will the publisher now focus more on an aggressive multiplatform strategy which will allow all its major titles to be on all platforms, but also to bring and retain skills in-hours instead of outsourcing.
But this will take time to implement, and until then, to recoup costs, the Japanese video game developer will have to undergo layoffs to prepare for the upcoming changes. No other Japanese developer has undergone any cutbacks so far, and Square Enix technically won’t be the first. This is because, according to Kiryu, these layoffs will mainly focus on the company’s American and European teams.
