Embracer's sales for PC and console games experienced a significant decline in the second quarter

Embracer Group has unveiled its financial results for the second quarter, showing a decline in various areas, most notably in its segment for console and PC games.

The numbers

- Results for the three months concluding on September 30, 2024:

Net sales: SEK 8.55 billion ($774 million), a fall of 21% compared to the previous year, including:

• PC/console games: SEK 2.12 billion ($192 million), a decrease of 46% year-on-year
• Mobile games: SEK 1.35 billion ($122 million), a decrease of 8% year-on-year

Net loss: SEK 390 million ($35 million), compared to a net loss of SEK 562 million ($51 million) during the same period last year.

- Results for the six months ending September 30, 2024:

Net sales: SEK 14.4 billion ($1.30 billion), a fall of 23% year-on-year, including:

• PC/console games: SEK 4.77 billion ($432 million), a drop of 40% year-on-year
• Mobile games: SEK 2.74 billion ($248 million), a decrease of 6% year-on-year

Net loss: SEK 2.58 billion ($233 million), compared to a net profit of SEK 1.69 billion ($153 million) during the same period last year.

The highlights

The reduction in Embracer's Q2 earnings was most significant for PC/console releases, with sales falling 46% year-on-year. The firm attributed this to the scarcity of new games and mixed reviews for those released, such as Disney Epic Mickey: Rebrushed. The previous year's quarter saw successful releases like Remnant 2 and Payday 3, impacting this year's comparison.

Back catalog sales were also down, influenced by the sale of Gearbox and parts of Saber Interactive, showing a 21% decline year-on-year.

Other sectors experienced milder declines. Embracer mentioned "solid earnings growth" at Asmodee, which is still expected to spin off this financial year, despite a 6% decrease in tabletop games sales to SEK 3.82 billion ($345 million).

The workforce of game developers at Embracer Group plummeted from 10,654 to 6,250 compared to last year. Overall staff numbers declined 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

There are currently 128 game development projects underway, down from 201 in the prior year's second quarter.

For the full financial year, Embracer anticipates "lower earnings year-on-year," attributed to delays in launching notable games in the second half. The major release highlighted for the year is Kingdom Come: Deliverance 2, set for release on February 11, 2025, by Warhorse Studios.

Additionally, Embracer announced the divestment of Easybrain to Miniclip in a $1.2 billion agreement.

CEO Lars Wingefors stated, "Over the past 15 months, we have laid a stronger foundation for long-term value generation, minimizing our net debt and capital expenditures. We boast many efficient and high-performing companies, some with industry-leading margins. Nevertheless, we recognize underperformance in our PC/Console and Entertainment & Services segments, predominantly due to delays and low ROI on smaller and mid-sized projects. This, alongside fixed costs, results in unacceptable margins that we are resolutely tackling ahead of the spin-offs."

Embracer's comprehensive restructuring from June 2023 to April 2024 led to over 1,400 job cuts and several studio closures.

Further staff reductions have occurred, such as at Lost Boys Interactive, a Wisconsin-based studio, in September.

Earlier this year, Embracer confirmed retaining Metro developer 4A Games and Pinball FX creator Zen Studios as part of the Saber Interactive sale.