Embracer Group announced its financial results for the third quarter of the fiscal year, 2024/25, related to the period between October and December, alongside details on the performance of Kingdom Come: Deliverance 2.
According to the press release, net sales were SEK 7,364 million, down 3% year-on-year.
Sales for PC/console games were SEK 2,603 million, down 23% year-on-year.
Sales for mobile games were SEK 1,669 million, up 2% year-on-year.
Sales for Entertainment & Services were SEK 3,093 million, up 19% year-on-year.
EBIT (basically operating profit) was SEK 638 million, compared to a loss of 305 million in the previous year.
The number of developers dropped again to 5,757 from 6,250 in the previous quarter, and from 9,896 in the previous year. The same goes for the total headcount which is now 7,873 compared to 10,450 three months before and 15,701 in the previous year.
We get a comment from CEO Lars Wingefors, who appears to want to spin-off more companies making them publicly traded following tabletop developer Asmodee (“Coffee Stain & Friends” will be separated from “Middle-earth & Friends” during the calendar year 2025). He also mentions that Kingdom Come: Deliverance 2 “Significantly outperformed” the company’s expectations.
“In Q3, net sales amounted to SEK 7.4 billion, with Adjusted EBIT of SEK 1.2 billion and a free cash flow of SEK 0.9 billion. The spin-off of Asmodee has been successfully completed and the separately listed company is now trading on Nasdaq Stockholm. With a pro forma net cash position of around SEK 5 billion as of Q3, we will accelerate our efforts to find the best allocation of companies and assets as part of our next spin-off. This process aims to maximize operational efficiency and unlock value. We are immensely proud of the teams involved in the successful release of Kingdom Come: Deliverance II, which has significantly outperformed our expectations so far.
In the quarter, Embracer’s organic growth for continued operations (i.e., excluding Asmodee) amounted to 7%, with net sales of SEK 7.4 billion. Adjusted EBIT was relatively stable YoY at SEK 1.2 billion with a notably improved free cash flow of SEK 0.9 billion from continued operations. The profitability was supported by a resilient performance in PC/Console Games despite limited new releases in the quarter, while the organic growth was driven by Entertainment & Services and an improved organic growth trend for Mobile.”
While Kingdom Come: Deliverance 2 has sold over 1 million copies in the first 24 hours, we learn that it’s now “fast approaching 2 million.” Embracer believes that it’ll “continue to generate substantial revenues over the coming years.”
The game is expected to drive higher Adjusted EBIT year-on-year for the PC/Console business in Q4 (between January and March 2025) alongside Killing Floor 3 which will be released late in the quarter. Hyper Light Breaker, which was released in early access on PC in early Q4, is expected to slightly negatively impact the quarter’s performance.
For the upcoming three fiscal years, FY 2025/26, FY 2026/27, and FY 2027/28, the company has 10 AAA games in development (of 118 total in the pipeline) of which 8 are from internal studios and 2 from external studios. The number does not include the releases in the current quarter or any projects financed by third parties.
That being said, Wingefors mentions that there is room for delays if deemed necessary.
Two of the AAA games mentioned above will be released in FY 2025/26, which means by March 2026. Mid-size releases in the same period include Gothic 1 Remake, Reanimal, Fellowship, Deep Rock Galactic: Rogue Core, Titan Quest II, Screamer, Echoes of the End (working title), Tides of Tomorrow, Satisfactory for consoles, and the full release of Wreckfest 2. On top of that, there is a similar number of mid-sized games coming that are still unannounced.
Profits for PC/console games (Adjusted EBIT) increased by 17% year-on-year in the latest quarter. This was mostly due to profitable external development projects, a few subscription deals, primarily related to the Goat Simulator franchise and Dead Island 2, and a strong holiday catalog performance for many games.
Profits for mobile games dropped 24% year-on-year, but Embracer expects growth in the next fiscal year.
Wingefors concludes the report by mentioning Kingdom Come: Deliverance again and the lesson learned from its success.
“The success of Kingdom Come: Deliverance II is a reminder of our core – to bring great products to the market. High-quality teams need to have the resources and the time to execute their visions. When you have right teams, this trust benefits everyone, including gamers, employees and shareholders. I am convinced that we will remain among the industry leaders in our core business verticals in the future.”
If you’d like to compare with historical data, you can check out Embracer’s financial results from the previous quarter, announced in November.
Other gaming companies have also already announced their financial results this quarter, including Sony, Square Enix, Take-Two, Sega, Bandai Namco, Electronic Arts, Nintendo, Marvelous Entertainment, Koei Tecmo, Capcom, Microsoft, and Konami.
