Embracer Group reports almost $1 billion in Q1 revenue, with sales of PC and console games up 74%

Embracer Group has announced its financial results for the first fiscal quarter ended June 30. The Swedish holding company saw growth in key business metrics, also saying that its restructuring is proceeding according to plan.

Financial highlights

• According to its latest report, Embracer Group’s net sales reached SEK 10.45 billion ($955.3 million), up 47% year-over-year.
• PC/Console was the top segment by revenue — $365.5 million, up 74% compared to the same period last year. It is followed by Tabeltop ($291.2 million, +20%) and Mobile ($131.5 million, -3%).
• The Entertainment & Services segment, which includes e-commerce, comics (Dark Horse), Middle-earth Enterprises, and other media products and services not directly related to games, posted the biggest growh — $167.5 million, +173% year-over-year.

Quarterly net sales by segments

• Embracer Group’s net profit was SEK 2.25 billion ($205.9 million), compared to a net loss of SEK 182 million ($16.6 million) in the same period last year.
• As of June 30, Embracer employed 16,605 people, of which over 11k were game developers.

Embracer’s restructuring program is on track

• According to Embracer Group CEO Lars Wingefors, the company is “making good progress on the restructuring program.”
• One of the goals is to halve its net debt of SEK 16.75 billion ($1.53 billion) to at least SEK 8 billion ($732 million) by March 31, 2024.
• Embracer has already taken initial actions on closure of certain projects and studios. Earlier this month, it shut down Campfire Cabal, a subsidiary of THQ Nordic that was established last year.
• “A painful consequence of the program is that a number of talented and passionate team members have left us, or will be leaving us before the end of the financial year,” Wingefors said, adding that the company “will try to provide opportunities for our colleagues to transition onto other projects.”

Objectives of Embracer’s restructuring program

Games and production pipeline

• In the PC/Console segment, back catalog sales accounted for nearly 40% of revenue. Top 10 back catalog titles include Deep Rock Galactic, Borderlands 3, Snowrunner, Valheim, Chivalry II, and Metro Exodus.
• The company cited Dead Island 2 (2 million units sold in its first month) and Remnant II (over 1 million copies sold in the first four days) as the main drivers of PC/Console segment’s growth in Q1.
• Performance of another new release, Jagged Alliance 3, was “in line with management expectations.”
• It is also betting big on the upcoming games (expected during the current fiscal year ending March 31, 2024), such as Warhammer 40,000: Space Marine 2, Homeworld 3, Payday 3, and Alone in the Dark.
• Embracer Group currently has 215 titles in development for PC and consoles, of which 153 are yet to be announced.

• In the first quarter, Embracer’s mobile titles had 312 million MAU and 33 million DAU, a slight decrease from the previous quarter.
• The holding company also spent SEK 641 million ($58.6 million) on user acquisition, or 45% of the mobile segment’s net sales.