Embracer Group has released its second quarter financial results, reporting declines across the board, particularly in its console and PC gaming segment.
the numbers
– For the three months ended September 30, 2024:
Net sales: SEK 8.55 billion ($774 million), a 21% year-on-year decrease, including:
- PC/console games: 2.12 billion Swedish crowns ($192 million), a year-on-year decrease of 46%.
- mobile games: SEK 1.35 billion ($122 million), down 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)
– For the semester ended September 30, 2024:
Net sales: SEK 14.4 billion ($1.3 billion), a 23% year-on-year decrease, including:
- PC/console games: SEK 4.77 billion ($432 million), a 40% year-on-year decrease.
- mobile games: SEK 2.74 billion ($248 million), down 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
Looking at Embracer’s second quarter sales split, the decline was particularly pronounced for PC/console games, with net sales falling 46% year over year. This was due, among other things, to the few new releases and the mixed reception of the titles that were released (for example, Disney Epic Mickey: Rebrushed), the company said.
The second quarter of FY25 also suffered compared to the same quarter last year due to the successful launches of Remnant 2 and Payday 3 in 2023.
Sales of Embracer’s back catalog also struggled, which the company said was affected by the divestment of Gearbox and parts of Saber Interactive: sales fell 21% year over year.
The decline was softer elsewhere, with Embracer noting “solid earnings growth” at Asmodee, which is still on track to be spun off this financial year. Embracer’s board game sales still fell 6% year-on-year to 3.82 billion Swedish crowns ($345 million).
Compared to the same quarter last year, the number of game developers working at Embracer Group has plummeted, from 10,654 to 6,250. The total workforce also went from 15,701 to 10,450.
“This, combined with fixed operating costs, creates unacceptable margins which we are firmly addressing ahead of spin-offs”Lars Wingefors
As for its game development projects currently in the pipeline, it went from 201 in Q2FY24 to 128 during Q2FY25.
For the full financial year, Embracer expects “lower year-over-year profits” due to the delay of “notable” second-half games. The firm highlighted Kingdom Come: Deliverance 2 as its key release for this financial year. The sequel from Warhorse Studios will be released on February 11, 2025.
As part of its financials, Embracer also announced the sale 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, reducing our net debt and capital spending,” said CEO Lars Wingefors. “We have many efficient, high-performing businesses, several with industry-leading margins. However, we recognize that parts of our PC/Console and Entertainment & Services segments are still underperforming due to delays and low return on investment for “mainly small and medium launches. This, combined with fixed operating costs, creates unacceptable margins which we are firmly addressing ahead of spin-offs.”
Embracer underwent a lengthy restructuring program from June 2023 to April 2024, which resulted in the loss of more than 1,400 jobs and the closure of several studios.
Since then there have been more layoffs, for example at Wisconsin-based studio Lost Boys Interactive in September.
Embracer confirmed earlier this year that, as part of the sale of Saber Interactive, it would actually be keeping Metro developer 4A Games and Pinball FX creator Zen Studios.
