Results Briefing Session for the Fiscal Year Ended March 31, 2010
Results Briefing Session The Fiscal Year Ended March 31, 2010
May 18, 2010
1 SQUARE ENIX HOLDINGS CO., LTD. Statements made in this document with respect to SQUARE ENIX HOLDINGS CO., LTD. and its consolidated subsidiaries' (together, “SQUARE ENIX GROUP") plans, estimates, strategies and beliefs are forward-looking statements about the future performance of SQUARE ENIX GROUP. These statements are based on management's assumptions and beliefs in light of information available to it at the time these material were drafted and, therefore, the reader should not place undue reliance on them. Also, the reader should not assume that statements made in this document will remain accurate or operative at a later time. A number of factors could cause actual results to be materially different from and worse than those discussed in forward-looking statements. Such factors include, but not limited to: 1. changes in economic conditions affecting our operations; 2. fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar and the Euro; 3. SQUARE ENIX GROUP’s ability to continue to win acceptance of our products and services, which are offered in highly competitive markets characterized by the continuous introduction of new products and services, rapid developments in technology, and subjective and changing consumer preferences; 4. SQUARE ENIX GROUP’s ability to expand international success with a focus on our businesses; and 5. regulatory developments and changes and our ability to respond and adapt to those changes.
The forward-looking statements regarding earnings contained in these materials were valid at the time these materials were drafted. SQUARE ENIX GROUP assumes no obligation to update or revise any forward-looking statements, including forecasts or projections, whether as a result of new information, subsequent events or otherwise. The financial information presented in this document is prepared according to generally accepted accounting principles in Japan.
2 SQUARE ENIX HOLDINGS CO., LTD. I. Achievement of Record High Profit
Recurring income (Billions of yen) 30 27.8 25.9 26.2 25
20 18.2 18.9 15.5 15 11.3 10
5
0 04.3 05.3 06.3 07.3 08.3 09.3 10.3
3 SQUARE ENIX HOLDINGS CO., LTD. I. Results by Business Segment
Operating income FY Mar ’10 FY Mar ‘09 (Billions of yen) 23.8 FINAL FANTASY XIII, DRAGON QUEST IX and Games Batman: Arkham Asylum were among the big 6.7 +254.0 ％ titles contributing to large increases in profit
Amusement 2.9 In the continued difficult environment, managed to 3.3 -11.8％ earn profit on roughly the level of the prior year
Publication 4.1 Strong comics and strategy guide book based +16.4％ on hit game led to record profit 3.5
Mobile Phone Content 4.6 +8.1％ Further improved on high strong 4.2 profitability year-on-year
Merchandising 1.8 +124.2％ Achieved strong increases in profit supported by 0.8 contribution from a CG animated film release
-9.0 Eliminations -6.3 or Unallocated
-200 -100 0 100 200
4 SQUARE ENIX HOLDINGS CO., LTD. I. Games: Achievement of Record High Unit Sales in All Regions
(Million units, composition percentage in parentheses) 26.66 30 Other (1) 25 Europe 16.93 (27) 20 14.41 13.62 (0) North America 15 12.23 (21) (1) 11.61 (1) 11.05 (0) (21) (1) (28) (20) (1) (7) (8) (20) 10 (29) (36) (26) (34) (43) (34) Japan 5 (64) (43) (52) (44) (36) (57) (45) 0 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3
5 SQUARE ENIX HOLDINGS CO., LTD. II. Although Still in 2nd Growth Stage 40±10
Recurring income (Billions of yen) Current 25 ±10 300 Recurring income (7yrs) Average 20.6
25025 Pre-merger 15 ±５ Recurring income (10yrs)
20020 Average 12.5
1505
10015
1050
0 Combined results of pre-merger companies Square Enix Group (post merger) 10 years 2003/4 7 years 2010/3 6 SQUARE ENIX HOLDINGS CO., LTD. II. Key Success Factors to Enter 3rd Growth Stage
1. Globalization
2. Becoming “Network Centric”
3. Strengthen Own-IPs
7 SQUARE ENIX HOLDINGS CO., LTD. II. 1-1. Globalization: With Eidos Acquisition, Gained NA and EU Dev. Studios and Strengthened Sales Structure
China / Korea
Europe
North Japan America (SQUARE ENIX) Others Japan (TAITO)
Employees: 3,338
Completed organizational integration Corporate事業所 Offices Launched project-by- Development開発拠点 Studios project collaborations
8 SQUARE ENIX HOLDINGS CO., LTD. グローバル II. 1-2. Globalization: Increased AAA Title Releases
JPN NA EU Asia, Other FINAL FANTASY XIII 1.85 1.79 1.77 0.14 5.55 DRAGON QUEST IX 4.26 4.26 BATMAN: AKHAM ASYLUM 0.03 1.82 1.39 3.24 KINGDOM HEARTS 358/2 Days 0.54 0.75 0.20 1.49 DRAGON QUEST VI 1.29 1.29 1.19 (as of April-end) Japan Just Cause 2 0.33 0.59 0.92 JPN: Released in Mar. 2009 North America Europe DISSIDIA FINAL FANTASY 0.99 0.44 0.38 0.82 Asia, Other (Including JPN Sales: 1.81 mn Units) KINGDOM HEARTS BBS 0.75 0.01 0.76
0 2 4 6 (Million units)
*Data As of Mar-End
9 SQUARE ENIX HOLDINGS CO., LTD. II. 2-1. Becoming “Network Centric” Business Framework Shift to Networks
Online Games MMO, SNS , etc. . . . Online Sales
Online Business Model
Net Community Management .
10 SQUARE ENIX HOLDINGS CO., LTD. II. 3. Strengthen Own-IPs
FINAL DRAGON KINGDOM TOMB HITMAN FANTASY QUEST HEARTS RAIDER
KANE JUST PARASITE FRONT & DEUS EX CAUSE EVE MISSION LYNCH
FULLMETAL SOUL STAR SUPREME Kuroshitsuji ALCHEMIST EATER OCEAN COMMANDER
SPACE PUZZLE ・ ・ ・ Arkanoid Densha de GO! INVADERS BOBBLE
11 SQUARE ENIX HOLDINGS CO., LTD. II. Framework for Change - 1 Thorough Asset Optimization and Risk Reduction Content Production Account Notes and Cash and Intangible Assets Accounts Receivable Deposits 03/2009 18.4 18.7 12.6 36.1 15.4 (Billion JPY) ¥213.2 bn 112.0 Increased Due to Acquisition of Eidos
06/2009 26.1 38.1 19.4 38.0 14.7 88.1
09/2009 25.9 35.5 17.3 37.0 29.3 97.9
12/2009 22.3 35.1 17.8 36.3 32.7 94.8
¥35.0 bn Finance
03/2010 16.0 21.6 20.4 35.6 30.7 111.2 ¥270.5 bn 35.0 Expecting Repayment of Current Assets Non-Current Assets Securities 0 20 40 60 80 100 120 140 ¥37.0160 bn in 11/2010 (Other) (Other) (Certificates of Deposit )
12 SQUARE ENIX HOLDINGS CO., LTD. II. Framework for Change - 2 Headcount Adjustment to Strengthen Fundamentals and Energize the Organization
Group headcount at the end of Group headcount at the end of March 2009 March 2010 (including pre-acquisition Eidos): 3,805 3,338
467 Net Decrease
13 SQUARE ENIX HOLDINGS CO., LTD. III. Key Topics for FY Ending Mar. 2011
Strengthen US / EU business framework 1. Globalization Build China / Emerging market businesses
2. Becoming Launch FFXIV New business creation and begin “Network Centric” to build business framework
3. Strengthen Pursue cross media businesses Own-IPs Create new AAA brands
14 SQUARE ENIX HOLDINGS CO., LTD. III. Fiscal Year Ending 3/11: Forecasts
Full-Year Millions of Yen Fiscal Year Fiscal Year Ended 3/10 % Ending 3/11 % Change Net Sales 192,257 100% 160,000 100% (32,257) Operating Income 28,235 15% 20,000 13% (8,235) Recurring Income 27,822 14% 20,000 13% (7,822) Net Income 9,509 5% 12,000 8% 2,491 Depreciation and Amortization 7,962 - 7,000 - (962) Capital Expenditure 6,916 - 8,000 - 1,084
(Ref.) First-Half Year ending September 30, 2011 Millions of Yen Fiscal Year Fiscal Year Ended 3/10 % Ending 3/11 % Change Net Sales 90,561 100% 76,000 100% (14,561) Operating Income 13,091 14% 4,000 5% (9,091) Recurring Income 12,181 13% 4,000 5% (8,181) Net Income 2,683 3% 2,400 3% (283)
15 SQUARE ENIX HOLDINGS CO., LTD. III. Fiscal Year Ending 3/11: By Business Segment
1. Projections for the Fiscal Year ending March 31, 2011 Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales 85,000 51,000 10,000 11,000 3,000 - 160,000 Operating Income 18,600 3,000 2,000 4,600 800 (9,000) 20,000 Operating Margin 21.9% 5.9% 20.0% 41.8% 26.7% - 12.5% Exchange rate: USD1=JPY95.00, EUR1=JPY125.00, CNY1=JPY14.00
2. Results for the Fiscal Year ended March 31, 2010 (unaudited proforma calculation) Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales 109,949 52,299 14,367 10,171 5,473 (3) 192,257 Operating Income 23,814 2,892 4,120 4,593 1,827 (9,012) 28,235 Operating Margin 21.7% 5.5% 28.7% 45.2% 33.4% - 14.7%
3. Change（1－2） Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales (24,949) (1,299) (4,367) 829 (2,473) 3 (32,257) Operating Income (5,214) 108 (2,120) 7 (1,027) 12 (8,235)
16 SQUARE ENIX HOLDINGS CO., LTD. III. Fiscal Year Ending 3/11: (For reference) Half-Year Forecast By Business Segment
1. Projections for the First-Half of the Fiscal Year ending March 31, 2011 Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales 38,600 25,000 6,000 5,000 1,400 - 76,000 Operating Income 4,000 1,400 1,200 2,200 200 (5,000) 4,000 Operating Margin 10.4% 5.6% 20.0% 44.0% 14.3% - 5.3% Exchange rate: USD1=JPY95.00, EUR1=JPY125.00, CNY1=JPY14.00
2. Results for the First-Half of the Fiscal Year ended March 31, 2010 (unaudited proforma calculation) Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales 48,444 25,853 7,875 5,179 3,210 (2) 90,560 Operating Income 10,365 1,106 2,335 2,169 1,387 (4,273) 13,090 Operating Margin 21.4% 4.3% 29.7% 41.9% 43.2% - 14.5%
3. Change（1－2） Millions of Yen Mobile Phone Eliminations Games Amusement Publication Merchandising Total Content or unallocated Net Sales (9,844) (853) (1,875) (179) (1,810) 2 (14,560) Operating Income (6,365) 294 (1,135) 31 (1,187) (727) (9,090)
17 SQUARE ENIX HOLDINGS CO., LTD. III. Fiscal Year Ending 3/11: Unit Sales Forecasts
(Million units, composition percentage in parentheses) 30 26.66
Other (1) 25 24.00 (27) EU 20 16.93 14.41 (37.5) (0) 15 12.23 (21) 11.61 11.05 (1) (28) (21) (0) (1) (1) (7) NA 10 (8) (20) (29) (36) (26) (34) (37.5) (34) (44) 5 (64) (43) (52) JPN (57) (45) (25.0) 0 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 Forecast
18 SQUARE ENIX HOLDINGS CO., LTD. III. Major Release Line-up (announced launches)
Release Date Title Region Platform (Scheduled)
JPN, NA, April 22 (JPN) NIER PS3/Xbox360 April 23 (EU) EU April 27 (NA)
DRAGON QUEST JPN DS April 28 MONSTERS: Joker 2
Dragon Quest: Monster JPN Wii July 15 Battle Road Victory
JPN, NA, August 24 (NA) Kane & Lynch 2: Dog Days PS3/Xbox360/PC EU August 26 (JPN) *For PC outside JPN August 27 (EU)
KINGDOM HEARTS Birth September 7 (NA) NA, EU PSP by Sleep September 10 (EU)
JPN, NA, FINAL FANTASY XIV PS3/PC 2010 EU
FRONT MISSION JPN, NA, PS3/Xbox360/PC 2010
EVOLVED EU .
19 SQUARE ENIX HOLDINGS CO., LTD. Results Briefing Session The Fiscal Year Ended March 31, 2010
May 18, 2010
20 SQUARE ENIX HOLDINGS CO., LTD.