Embracer Group announced its financial results for the second quarter of the fiscal year, 2024/25, related to the period between July and September.
According to the press release, net sales were SEK 8,552 million, down 21% year-on-year. EBIT (basically profit) wasd down sharply from SEK 468 million, up from a loss o SEK 836 million, but adjusted EBIT (which removes one-time, irregular, and non-recurring items) was actually down 33% year-on-year.
Sales for PC and Console Games dropped 46% year-on-year. Sales for Mobile Games decreased 8% year-on-year. Tabletop Games decreased 6% year-on-year. Entertainment & Services dropped 10% year-on-year.
We also hear that Embracer has sold its Easybrain mobile studio to Miniclip for $1.2 billion cash.
The transaction for the sale of the puzzle game-focused studio is expected to close in the first months of 2025 pending regulatory approval and all that jazz.
Due to the transaction, Embracer will go from a net debt position of 13.2 billion SEK to approximately 0.5 billion SEK.
We also hear from CEO Lars Wingefors, who commented on the results and divestment.
In Q2, net sales amounted to SEK 8.6 billion, with Adjusted EBIT of SEK 1.2 billion. Asmodee delivered solid earnings growth YoY, in line with expectations. We confirm that the process to spin-off Asmodee is on track for this financial year. The quarter was softer for our other segments and within PC/Console we now expect lower earnings this year due to the delay of a number of notable H2 releases while we continue our ongoing work to improve efficiency and increase ROI.
The divestment of Easybrain, announced today, has a strong strategic and financial rationale, transforming our balance sheet and putting us in a stronger position to create value.
While Kingdom Come: Deliverance remains set for a February 11, 2025 release, a number of notable releases expected for the second half of the fiscal year for PC and console have been delayed or are likely to be delayed.
Disney Epic Mickey: Rebrushed was “well received by players” but initial digital sales were still slower than Embracer expected. That being said, we also hear that the company expects the game to perform solidly in the Holiday season.
On the other hand, the full release of Satisfactory on PC exceedede expectations, with a solid influx of new players. It managed to driving over 200,000 peak concurrent players in September. A console release is expected “in the near term.”
Monster Jam Showdown underperformed compared to management expectations.
Wingefors also acknowledges that PC and console games are underperforming due to delays and low return of investment on small and mid-sized releases, pledging to “firmly” address the issue.
“However, we acknowledge that parts of our PC/Console and Entertainment & Services segments are still underperforming due to delays and low ROI for primarily small and mid-sized releases. Combined with fixed operating costs this creates unacceptable margins which we are firmly addressing ahead of the spin-off.”
If you’d like to compare, you can check out the financial results for the previous quarter, published in August.
Other gaming companies have also already announced their latest financial results, including Koei Tecmo, Capcom, Electronic Arts, Ubisoft, Microsoft, Konami, Marvelous, Nintendo, Bandai Namco, Take-Two, Krafton, Warner Bros. Discovery, Sega, Sony, Square Enix, and Shift Up.
