Embracer Group has published its financial results for Q2, reporting declines across the board, particularly in its console and PC games segment.
The numbers
– For the three months ended September 30, 2024:
Net sales: SEK 8.55 billion ($774 million), down 21% year-on-year, including:
- PC/console games: SEK 2.12 billion ($192 million), down 46% year-on-year
- Mobile games: SEK 1.35 billion ($122 million), down 8% year-on-year
Net loss: SEK 390 million ($35 million, compared to net loss of SEK 562 million / $51 million during the same period last year)
– For the six months ended September 30, 2024:
Net sales: SEK 14.4 billion ($1.30 billion), down 23% year-on-year, including:
- PC/console games: SEK 4.77 billion ($432 million), down 40% year-on-year
- Mobile games: SEK 2.74 billion ($248 million), down 6% year-on-year
Net loss: SEK 2.58 billion ($233 million, compared to net profit of SEK 1.69 billion / $153 million during the same period last year)
The highlights
Looking at the sales split for Embracer’s Q2, the decrease was particularly sharp for PC/console games, with net sales down 46% year-on-year. This was, among others, due to few new releases, and mixed reception of the titles that did release (for instance Disney Epic Mickey: Rebrushed), the company said.
Q2 FY25 also suffered the comparison with the same quarter last year due to the successful launches of Remnant 2 and Payday 3 in 2023.
Sales of Embracer’s back catalogue struggled as well, which the firm said was impacted by the divestment of Gearbox and parts of Saber Interactive – sales were down 21% year-on-year.
The decline was softer elsewhere, with Embracer noting “solid earnings growth” at Asmodee, which is still on track to spin off this financial year. Embracer’s tabletop games sales were still down 6% year-on-year to SEK 3.82 billion ($345 million).
Compared to the same quarter last year, the number of game developers working at the Embracer Group has plummeted, from 10,654 to 6,250. The total headcount similarly went from 15,701 to 10,450.
“Combined with fixed operating costs this creates unacceptable margins which we are firmly addressing ahead of the spin-offs”Lars Wingefors
Looking at its game development projects currently in the works, it went from 201 in Q2 FY24 to 128 during Q2 FY25.
For the full financial year, Embracer expects “lower earnings year-on-year” due to the delay of “notable” H2 games. The firm highlighted Kingdom Come: Deliverance 2 as its key release for this financial year. Warhorse Studios’ sequel is due to launch on February 11, 2025.
As part of its financials, Embracer also announced the divestment of Easybrain to Miniclip in a $1.2 billion deal.
“Over the past 15 months, we have created a stronger foundation for long-term value creation, lowering our net debt and our capex,” commented CEO Lars Wingefors. “We have many high-performing and efficient companies, several with industry leading margins. 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-offs.”
Embracer went through a long restructuring program from June 2023 to April 2024, which resulted in the loss of over 1,400 jobs and the closure of several studios.
More layoffs have occured since, for instance at Wisconsin-based studio Lost Boys Interactive in September.
Embracer confirmed earlier this year that, as part of the Saber Interactive sale, it was actually keeping Metro developer 4A Games and Pinball FX creator Zen Studios.
