Embracer Group tops $1 billion in revenue in Q2, while its restructuring program already resulted in 904 job cuts

Embracer Group has shared its financial results for the three-month period ended September 30. The Swedish holding company also provided new details about its gaming business and the ongoing restructuring program that has already resulted in hundreds of job cuts.

Embracer Group's Q2 FY23/24 report: revenue of over $1 billion, net loss of $53 million, and over 900 job cuts

Financial highlights

  • According to its latest interim report, Embracer Group’s net sales reached SEK 10.83 billion ($1.024 billion), up 13% year-over-year.
  • The company’s net loss was SEK 562 million ($53.18 million), compared to a net profit of SEK 2.38 billion ($225.3 million) in the same period last year.
  • The Tabletop Games segment performed the best, with its revenue increasing by 25% year-over-year to SEK 4.07 billion ($385 million).
  • It is followed by PC/Console ($369.7 million, down 5%) and Mobile Games ($139 million, up 2%), and Entertainment & Services ($130.6 million, up 76%). The latter is the operating segment that includes e-commerce, comics (Dark Horse), Middle-earth Enterprises, and other media products and services not directly related to games.

Games and pipeline

  • Revenue from new game releases for PC and consoles amounted to SEK 1.4 billion ($132.5 million), making it one of the strongest quarters in the history of Embracer by that metric.
  • Remnant II reached 2 million copies sold globally, generating over SEK 700 million ($66.2 million) in net sales in Q2.
  • Payday 3, developed externally by Starbreeze Studios, has already recouped its investment. Embracer Group expects the game to contribute positively to its financials, but below management expectations “due to a softer launch where an unforeseen error relating to external matchmaking software impacted the experience for gamers.”
  • Jagged Alliance 3 and RIDE 5 have performed “largely in line with management expectations,” while Trine 5: A Clockwork Conspiracy has underperformed.

Quarterly revenue of the PC/Console Games segment 

  • Revenue from back-catalog titles amounted to SEK 1.61 billion ($152.5 million), down 14% year-over-year.
  • The top 10 back-catalog games by revenue included Dead Island 2, Saints Row, Deep Rock Galactic, Star Trek Online, Insurgency: Sandstorm, Snowrunner, AEW: Fight Forever, Welcome to Bloxburg, Neverwinter Online, and Valheim.

  • Overall, Embracer invested SEK 1.69 billion ($160 million) in game development in Q2, and its investment in already released titles amounted to SEK 1.12 billion ($106 million).
  • As of September 30, the total number of game development projects was 201. This is down 15% from 237 titles in the same period last year, and the decline is a result of the ongoing restructuring program.

  • By the end of the current fiscal year ending March 31, 2024, Embracer expects to launch games like Homeworld 3, South Park: Snow Day!, Expeditions: A MudRunner Game, Alone in the Dark, Outcast — A New Beginning, and Deep Rock Galactic Survivors.
  • The release date for Saber’s Warhammer 40,000: Space Marine 2 will be decided and announced by Focus Entertainment.

Restructuring and layoffs

  • CEO Lars Wingefors noted that “our restructuring program is making good progress.” As of September 30, Embracer Group had laid off 904 employees, of which 511 people were developers (plus, 191 jobs were cut across external studios).
  • This represents 5% of the company’s total headcount. At the end of the second quarter, Embracer employed 15,701 people.

  • Since June 2023, job cuts have already been made at Gearbox Publishing, Crystal Dynamics, Rainbow Studios, Beamdog, Zen Studios, and Cryptic Studios. In addition, Embracer shut down Volition and Campfire Cabal.
  • 15 “mainly unannounced projects” were written down across Amplifier, Freemode, Gearbox, Plaion, Saber Interactive, and THQ Nordic.
  • “Post-30 September, on-going restructuring, closures or buy-outs are in process and will lead to further headcount reductions,” Embracer said in its presentation.
  • The restructuring program’s main goal is still to reduce the company’s net debt to at least SEK 8 billion ($757 million) by March 31, 2024. However, Wingefors also noted that Embracer is focused on “improving the projected return on investment within PC/Console.”
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