Like AR said,
KH3 was in the top 10 selling games of 2019. It sold over 5 million on two consoles very quickly and should have sold over 6 million, if not 7 by now what with all the sales and the PC port. Square Enix hasn't updated the fine print text in their press releases for a while but I can't see it selling under a million in the last three years. Also not sure where the 1 million number in your OP came from?
The game was also in the All-In-One physical bundle or whatever its call so I'm not sure if SE counted those numbers as official KH3 sales or not and that's why the 5 million hasn't been updated, maybe?
In fact, comparing the data between the two most recent KH3 press releases (March 2021 and October 2021), the series as a whole has sold an additional 2 million copies both physically and digitally (from 33 million to 35 million.)
On the note of press releases,
Square Enix even had one boasting the 5 million sales and it being the fastest selling Kingdom Hearts game and it launching to critical acclaim. You don't really do that unless you're happy with it. The press release went up on February 4th 2019, 10 days after release in Japan on January 25th and 6 days after release worldwide.
In fact, that press release about the 5 million sales say that the series as a whole had only sold 25 million copies worldwide. Between February 2019 and October 2021, the series sold 10 million copies. Whether that's individual new games such as KH3 and MoM, or older games such as the 1.5 + 2.5 and 2.8 collections and the All-in-One collection, I think the series is soaring at the moment.
I'm not Square Enix and don't have proper insight into anything, all of this is just based on the data I can find but based on that data I think they should be happy with it. Happy enough that they greenlit a minimum of two console games (MoM and whatever Osaka is working on next) and whatever that mysterious third team is working on.