SQUARE ENIX HOLDINGS CO., LTD.
3Q FY2019/3 Financial Results Briefing Session (Teleconference) Q&A
Date/Time: February 5, 2019 (Tuesday); 6:00-7:30 pm (JST)
On behalf of the company: Yosuke Matsuda, President and Representative Director
Q: Do the sales thus far of “SHADOW OF THE TOMB RAIDER” and “JUST CAUSE 4” change your outlook for additional sales in FY2020/3? If so, does that impact your medium-term target for operating income of ¥40-50 billion in FY2020/3?
A: While “SHADOW OF THE TOMB RAIDER” got off to a weak start, we had shipped a total of 4.12 million units as of the end of 3Q, and we look for sales to grow further in FY2020/3. Initial sales of “JUST CAUSE 4” were below our expectations, but we intend to grow sales in FY2020/3 by offering updates and through other initiatives. As such, any adverse impact on the achievement of our medium-term target should be limited.
Q: Operating income at the Games for Smart Devices/PC Browsers sub-segment dropped off sharply versus 2Q. With sales down, could you not do something to control advertising spending and other costs?
A: TV commercials are especially expensive, but we do not advertise all of our titles. We are selective about which titles we advertise based on the return we can expect from our investment. In terms of the comparison versus 2Q, we ran advertising campaigns toward the year-end, but since December sales are not posted until 4Q, that prior spending hit the books first and depressed our profits.
Q: Do you believe you can achieve operating income of ¥30 billion in FY2019/3, or have you maintained full-year guidance because you believe you’re in the clear so long as you don’t undershoot guidance by more than 30% based on the Tokyo Stock Exchange’s disclosure rules [which say no guidance revision is required if a company expects a profit result that deviates no more than 30% from published guidance]?
A: We see some uncertainty in terms of the extent to which we will be able to make up for ground lost in 3Q and because we could incur valuation losses depending on the timing at which we release new major titles in FY2020/3 and beyond. That said, we also see some potential upside factors, so we intend to work hard to achieve our ¥30 billion target.