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Investor Relations

Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 13, 2019

Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 13, 2019

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I am Yosuke Matsuda. I will be discussing the progress we made in each of our business segments and our outlook for the next fiscal year and beyond.

We saw a strong performance in 4Q thanks to the launch of major new titles, but this was not enough to compensate for the shortfalls of 1Q-3Q, and our full-year operating income undershot our initial plan.

In addition, we booked an extraordinary loss of ¥680 million in 4Q due to valuation losses on stock in an affiliate company. This owed to the suspension of development projects at our wholly owned subsidiary STUDIO ISTOLIA CO., LTD. and to the discontinuation of that firm’s operations.

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In the HD Game sub-segment, the 4Q release “KINGDOM HEARTS III” performed well. “NieR: Automata” sales also remained brisk and sold more than 1 million additional units in FY2019/3. Its cumulative units sold surpassed 4 million as of May 13, 2019.

We have reviewed our FY2020/3 assumptions for additional sales of existing games conservatively given the FY2019/3 performances of titles such as “JUST CAUSE 4” and “SHADOW OF THE TOMB RAIDER.”

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The value of digital sales of HD games is growing year by year. The portion of sales generated from physical disks rises when we launch major new titles due to campaigns aimed at securing substantial initial sales, but digital downloads form the bulk of later sales. Maintaining digital sales of existing titles over the long term is key and should continue to have a significant impact on our earnings in FY2020/3 and beyond.

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The MMO sub-segment saw a YoY decline due to the high hurdle set by the release of expansion packs in the previous year, but paying subscriber numbers remained strong. In particular, we have seen marked growth in subscriber numbers since we announced our plan for a July 2 release of the “FINAL FANTASY XIV: SHADOWBRINGERS” expansion pack. We look for the expansion pack to bolster earnings.