Weak sales, mixed mobile performance see Square Enix post $26.2M Q1 loss

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By Kathleen De Vere Comments

Japanese developer and publisher Square Enix has posted a loss for Q1 2013.

Although sales were up by 1.6 percent year-over-year to 29.4 billion yen ($373.5 million), the company reported a net loss of 2.07 billion yen ($26.2 million). Square Enix’s profits are down year-over-year from Q1 2012‘s 690 million yen ($8.7 million) and quarter-over-quarter, from the 6.06 billion yen ($75.9 million) in net income it earned in Q4 2012.

The company’s digital entertainment division — which includes both console and mobile titles — saw sales decrease 3.9 percent year-over-year to 11.3 billion yen (143.5 million), leading to an operating loss of 111 million yen ($1.4 million).

Square Enix blamed the division’s poor performance on weak console game sales, but did point out that its Mobage social game Final Fantasy Brigade has continued to generate favorable earnings. The company did not highlight the performance of any of its other mobile titles.

Overall, it appears Square Enix is racking up a mixed track record on mobile. Although the company has moved fairly aggressively into the space and has seen success in Japan thanks to titles like Final Fantasy Brigade, the company hasn’t seen as much luck stateside.

While mobile ports of its classic back catalogue title have done fairly well — the recent Android re-release of Final Fantasy III reached as high No. 7 on the top grossing Android app chart — the company’s other games haven’t performed as strongly over the summer. The company’s highly anticipated iOS RPG Chaos Rings II peaked at No. 70 on the top grossing iPhone app chart. Meanwhile the May release of Freeze Tag’s hidden object game Victorian Mysteries: Woman in White (which Square Enix published) was weak — the game’s top chart position has so far been No. 97 on the educational apps chart according to AppAnnie.

In the press release accompanying its Q1 earnings, the company stated it is “making every effort to achieve a substantial earnings improvement in the fiscal year ending March 31, 2013 and beyond through a range of initiatives to respond to the changes in the business environment.” Overall Square Enix is forecasting net sales of 165 billion yen ($2.09 billion) for the fiscal year ending March 31, 2013, and a full-year operating income of 15 billion yen ($190.5 million).

The company’s stocks are currently trading at 1,203 yen ($15.28), giving the company a market capitalization of 138.8 billion yen ($1.76 billion).