Square Enix : Outline of Results Briefing held on November 5, 2021

2Q FY2022/3 Financial Results Briefing by SQUARE ENIX HOLDINGS held on Nov. 5, 2021

We would now like to begin the Financial Results Briefing session of SQUARE ENIX HOLDINGS (the "Company") for the first half of the fiscal year ending March 31, 2022 ("1H FY2022/3").

Today's presenters are:

Yosuke Matsuda, President and Representative Director, and Atsushi Matsuda, Chief Accounting Officer.

First, Mr. Matsuda, Chief Accounting Officer, will give an overview of the Company's financial results for 1H FY2022/3, and then our president Mr. Matsuda will discuss the progress made by each of the Company's business segments.

I am Atsushi Matsuda, the Chief Accounting Officer.

In 1H FY2022/3, the Company booked net sales of ¥168.9 billion (down ¥3.8 billion YoY), operating income of ¥29.1 billion (down ¥2.5 billion), ordinary income of ¥31.4 billion (up ¥900 million), and net income attributable to parent company shareholders of ¥22.9 billion (up ¥6.9 billion).

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The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company's management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts.

The information on the future forecasts described in this material is current as of November 5, 2021. The company is not obliged to update or correct forecasts concerning the Company's future results, including forecasts or outlook, if new information becomes available and/or events occur after November 5 2021.

2Q FY2022/3 Financial Results Briefing by SQUARE ENIX HOLDINGS held on Nov. 5, 2021

I will next break down our results by segment.

The Digital Entertainment segment posted net sales of ¥129.4 billion (down ¥13 billion YoY) and operating income of ¥29.4 billion (down ¥4.4 billion).

While the HD Games sub-segment released such home console titles as "OUTRIDERS," "NieR Replicant ver.1.22474487139…", "NEO: The World Ends with You," and "Life is Strange: True Colors," its net sales were lower than in the same period of the previous fiscal year, which had seen the release of "FINAL FANTASY VII REMAKE" and "Marvel's Avengers."

Net sales rose YoY in the MMO sub-segment thanks to sharp growth in paying subscriber numbers for "FINAL FANTASY XIV."

The Games for Smart Devices/PC Browser sub-segment saw net sales decline YoY, in part because of lackluster performance in existing titles.

The Amusement segment booked net sales of ¥21 billion (up ¥7.1 billion) and operating income of ¥600 million (versus an operating loss of ¥1.6 billion a year earlier). The segment had been heavily impacted in the previous year by the temporary closure of our amusement facilities in Japan, a move taken to help prevent the spread of COVID-19 in keeping with the Japanese government's state of emergency declaration. As such, net sales rose substantially YoY, and the segment moved into the black at the operating line.

The Publication segment booked net sales of ¥14.1 billion (up ¥1.8 billion YoY) and operating income of ¥5.9 billion (up ¥600 million). Both sales and profits rose YoY thanks to growth in sales of e-books and other digital media, as well as brisk sales of print media.

The Merchandising segment posted net sales of ¥5.8 billion (up

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The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company's management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts.

The information on the future forecasts described in this material is current as of November 5, 2021. The company is not obliged to update or correct forecasts concerning the Company's future results, including forecasts or outlook, if new information becomes available and/or events occur after November 5 2021.

2Q FY2022/3 Financial Results Briefing by SQUARE ENIX HOLDINGS held on Nov. 5, 2021

¥1 billion YoY) and operating income of ¥1.7 billion (up ¥200 million). Both sales and profits rose YoY, in part because of brisk sales of new character goods based on the Company's IP.

This concludes my overview of our 1H FY2022/3 financial results.

I am Yosuke Matsuda. I will be discussing the progress made by each of our business segments, as well as the progress that we have made with our medium-term business strategy.

In 1H, net sales and operating income fell YoY.

This is a breakdown for the Digital Entertainment segment. The HD Game sub-segment released "Life is Strange: True Colors" and "NEO: The World Ends with You" in 2Q. We have plans to release "Life is Strange: True Colors" for Nintendo Switch, as well as "Life is Strange Remastered Collection" in the near future. . We are hoping for both titles to continue to sell well over the long term. While "NEO: The World Ends with You" was well received by users, it has underperformed our initial expectations.

As in 1Q, the MMO sub-segment benefitted from brisk recurring revenue from "FINAL FANTASY XIV." We expect the

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The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company's management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts.

The information on the future forecasts described in this material is current as of November 5, 2021. The company is not obliged to update or correct forecasts concerning the Company's future results, including forecasts or outlook, if new information becomes available and/or events occur after November 5 2021.

2Q FY2022/3 Financial Results Briefing by SQUARE ENIX HOLDINGS held on Nov. 5, 2021

release of an expansion pack in 3Q to generate additional excitement.

Net sales at the Games for Smart Devices/PC Browser subsegment declined due to lackluster performances from existing titles and to the release of few new titles. However, we have prepared a variety of initiatives to turn sales upward in 2H.

This slide shows our HD game pipeline.

In the MMO sub-segment, we have 3Q expansion pack releases planned for "FINAL FANTASY XIV" and "DRAGON QUEST X ONLINE."

The Games for Smart Devices/PC Browser sub-segment launched "DRAGON QUEST The Adventure of Dai: A Hero's Bonds" on September 28.

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The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company's management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts.

The information on the future forecasts described in this material is current as of November 5, 2021. The company is not obliged to update or correct forecasts concerning the Company's future results, including forecasts or outlook, if new information becomes available and/or events occur after November 5 2021.

2Q FY2022/3 Financial Results Briefing by SQUARE ENIX HOLDINGS held on Nov. 5, 2021

This slide shows the breakdown of digital and physical sales at the Digital Entertainment segment.

This slide shows units sold by region in 1H. The sharp YoY decline owes in part to the high hurdle set the previous year by the release of major titles.

Our content production account stood at ¥89.7 billion as of the end of 2Q. We have multiple major titles slated for launch, and we will ensure that each release meets certain standards of quality.

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The plans, forecasts, strategies and ideas described in this material are descriptions of forecasts of future results. These descriptions rely on information available as of the date of production of this material and are based on assumptions and judgment made by the Company's management. Readers are advised not to rely solely on these forecasts. Readers should also not assume that these forecasts are accurate or valid information, even after the date of public release. There are many factors that may cause actual results to vary considerably from the forecasts, and in some cases actual results may be inferior to forecasts.

The information on the future forecasts described in this material is current as of November 5, 2021. The company is not obliged to update or correct forecasts concerning the Company's future results, including forecasts or outlook, if new information becomes available and/or events occur after November 5 2021.