Square Enix boosts profit 34.9% as sales stay under pressure

Square Enix just posted the kind of results that tell you more about a company’s reset than its growth. Net sales fell 8.3% to ¥297.661 billion for the fiscal year ended March 31, 2026, but operating income rose 34.9% to ¥54.736 billion, pushing operating margin up to 18.4% from 12.5% a year earlier.

That split came from the parts of the business that still move the needle for players. HD Game sales rose on steady demand for new releases including FINAL FANTASY TACTICS - The Ivalice Chronicles, DRAGON QUEST I & II HD-2D Remake, and DRAGON QUEST VII Reimagined, while catalog sales also improved. At the same time, MMO revenue and operating income fell year over year because fiscal 2025 had included the launch of FINAL FANTASY XIV: Dawntrail, and Games for Smart Devices and PC Browser slipped on weakness in older titles.

The bigger story is that Square Enix is actively shrinking and reshaping the machine behind those releases. Under its Square Enix Reboots and Awakens plan, the company said it is optimizing its development footprint, promoting multi-platform distribution, accelerating cross-media use of its IP, and pushing structural reforms in overseas publishing. It expects those overseas publishing changes to cut more than ¥3 billion a year starting in fiscal 2027. In November 2025, Square Enix said it was consolidating the HD Games publishing organization from 11 divisions to four, and the company has also said it wants to automate 70% of QA and debugging tasks in game development by the end of 2027 using AI-enabled workflows.

Takashi Kiryu’s push for fewer, higher-quality releases is showing up in the numbers and in the org chart. Square Enix said it had 4,290 consolidated employees in its FY2026 materials, and its management-committee restructure took effect on April 1, 2025 to speed decision-making. The company also executed a three-for-one stock split effective October 1, 2025, while keeping its dividend forecast at ¥25 per share after the split.

The catch is that Square Enix is not forecasting a clean follow-through. For fiscal 2027, it expects net sales of ¥298.0 billion, essentially flat, but operating income of ¥49.0 billion, down 10.5% from FY2026. Ordinary income is forecast at ¥49.0 billion as well. So the lesson from this year is not that Square Enix suddenly found easy growth. It is that the publisher is getting better at turning a narrower slate of premium games into profit, even as the rest of the lineup keeps getting trimmed around it.