In an interview (through a translator) with The Mirror at D23, Kingdom Hearts III Director Tetsuya Nomura was asked if Sephiroth would return in the sequel, and if there might be more secret bosses.
“I can’t say for certain [if there will be more secret bosses]. I hope, hint hint hint. I can’t say for certain. In terms of Sephiroth, do you feel like you want to battle Sephiroth again?” he said with a laugh at the end. After going back and forth with The Mirror about Sephiroth’s difficulty, Nomura ultimately said that the team is worried bringing him back again might be redundant:
In terms of the secret boss, we can’t say anything at this time, but in terms of Sephiroth specifically, my development team are worried that we’ve had him come back so many times so they’re maybe worried it might be redundant at this point. We’re still deliberating on it.
Elsewhere in the interview, Nomura mentioned that he does have plans for what happens after the Xehanort Saga ends in Kingdom Hearts III, but nothing’s been finalized yet:
Of course there are different plans that are in my mind and things that I would like to work on or depict in terms of narrative, but it’s not like we have anything finalized with Disney as of yet, so I’m not able to introduce it or mention it at this time, but again, I do have different ideas in my head.
If Kingdom Hearts III makes its 2018 release window, it will be five years since it was first announced. Nomura acknowledges that the announcement timing was a bit too early, “but I do not like information going out in the form of a leak. Rather than having that leaked out unofficially, I’d rather make an official statement.”
Asked when Kingdom Hearts III might appear at another event, Nomura said, “Perhaps when we’re finally able to reveal the month and date of the release.”