Embracer Group announced its financial results for the first quarter of the fiscal year, related to the period between April and June 2024.
According to the press release, net sales for the quarter were SEK 7,933 million, a 24% drop year-on-year.
PC and console games generated SEK 2,656 million in net sales, dropping by 34% year-on-year.
Mobile games made SEK 1,389 million in net sales (-3% year-on-year).
Tabletop games generated SEK 3,039 million in net sales (-5% year-on-year).
Entertainment and services made SEK 848 million, dropping by 54% year-on-year.
EBIT (earnings before interests and taxes, which measures profitability) was a loss of SEK 1,440 million, a 18% drop year-on-year.
Adjusted EBIT (which is EBIT with any interest expense, rent expense, income tax expense, and so forth, added back in) was SEK 828 million, dropping 51% year-on-year.
We also learn that during the same period last year, the company had 215 games in development. Now it has 127. This is also a drop from the previous quarter (January-March 2024) when the company had 141 games in development.
The total number of game developers is 6,659, down from 7,699 by March 2024, and nearly halved (from 11,356) year-on-year.
The number of total employees is 10,844, dropping from 12,069 by March 2024, and 16,605 in the same quarter of the previous year.
That being said, CEO Lars Wingefors boasts that cash flow has “significantly improved” and net debt has been lowered. He also mentioned the announcement of the release date of Kingdom Come: Deliverance 2 (now set for February 11, 2025) and the upcoming spinoff of Asmodee.
We started FY 2024/25 in line with management expectations, growing profitability YoY in both the Mobile and Tabletop segments. As expected, the performance in PC/Console and Entertainment & Services was softer YoY due to a lower release activity.
Q1 total net sales were SEK 7.9 billion, with Adjusted EBIT of SEK 0.8 billion and a SEK 0.7 billion free cash flow improvement YoY. For the first time ever, on a trailing 12-month basis, free cash flow exceeded SEK 2 billion. Excluding the divested assets from Saber Interactive and Gearbox Entertainment, the pro forma EBITDAC was above SEK 5.9 billion.
The transformation of our PC/Console business continues, and the pipeline of games looks solid. We still expect to release completed games with a value of SEK 3.9 billion for the financial year. Our highly anticipated game Kingdom Come: Deliverance II, is now confirmed for global release on February 11, 2025.
The process to separate into three standalone publicly listed entities is progressing according to plan. Asmodee will host a capital markets day during the third quarter of the current financial year ahead of its spin-off.
Interestingly, besids in addition to the major partnership with Amazon Games to create an MMO, the company is “actively testing and prototyping multiple new game concepts” which promise “a wide range of immersive and authentic gameplay within the Middle-earth world.”
We also hear that Embracer has officially exited all of itws operations in Russia. The only remaining entities in the country are dormant legal structures with no employees, operations, or assets.
If you’d like to read more about gaming industry financial results, several have already been announced and we have dedicated reports, including Capcom, Koei Tecmo, Microsoft, Electronic Arts, Konami, Nintendo, Square Enix, Sega, Sony, Warner Bros. Discovery, Take-Two Interactive Software, and Nihon Falcom.
