Embracer Group full-year sales rise to $3.9bn, but $1.5bn debt remains

Embracer has released its full-year financial results, showing a rise in overall sales despite a slow final quarter.

The company reported net sales of SEK 42.2 billion ($3.9 billion) for the full fiscal year, a rise of 12% year-on-year. Sales for the three months ended March 31, 2024 came in at SEK 8.9 billion ($830.9 million), down 5% compared to the same period last year.

The group's debt stands at SEK 16.4 billion ($1.53 billion), compared to SEK 15.6 billion ($1.46 billion) at this time in 2023. Speaking to GamesIndustry.biz last month, CEO Lars Wingefors explained that tabletop leader Asmodee is expected to clear most of this debt.

Embracer Group has been through a rough restructuring period that saw multiple studios closed or sold, plus more than 1,400 staff laid off.

Alongside its financial results this morning, Embracer announced that CFO and deputy CEO Johan Ekström is stepping down.

Here's what you need to know:

The numbers

Full year (twelve months ended March 31, 2024)

• Net sales: SEK 42.2 billion ($3.9 billion, up 12% year-on-year)
• PC/console games: SEK 14.4 billion ($1.3 billion, up 7%)
• Mobile games: SEK 5.9 billion ($550.9 million, up 2%)
• Tabletop games: SEK 14.8 billion ($1.4 million, up 13%)
• Entertainment & Services: SEK 7.1 billion ($662.9 million, up 34%)

• Net debt: SEK 16.4 billion ($1.53 billion, compared to SEK 15.6 billion / $1.46 billion at the end of the previous fiscal year)

Q4 (three months ended March 31, 2024)

• Net sales: SEK 8.9 billion ($830.9 million, down 5% year-on-year)
• PC/console games: SEK 3.1 billion ($289.4 million, down 10%)
• Mobile games: SEK1.4 billion ($130.7 million, up 4%)
• Tabletop games: SEK 3.1 billion ($289.4 million, up 1%)
• Entertainment and services: SEK 1.3 billion ($121.4 million, down 15%)

The highlights

For the final quarter of the year, the company cited Tomb Raider 1-3 Remastered and Deep Rock Galactic: Survivor as key releases that performed well. Looking at the year's biggest sellers, Dead Island 2 sold three million copies and reached seven million players, in part thanks to its inclusion in Xbox Game Pass during the final quarter.

Embracer also reported that some mid-sized titles from THQ Nordic saw "a more mixed performance". Alone in the Dark's sales "performed below management expectations", while South Park: Snow Daw "delivered within expectations."

Looking ahead, the group expects "similar performance" for the new fiscal year, ending March 2025, with the "potential for earnings growth" across PC/console, tabletop and mobile.

Kingdom Come: Deliverance 2 and Killing Floor 3 were highlighted as key releases, and are expected to perform "largely in line with" Dead Island 2 and Remnant 2, which launched in the previous fiscal year.

Overall, Embracer Group expects to release more than 70 'development projects' (including releases such as Dead Island 2's DLC) by March 31, 2025, of which at least are three unannounced titles. Looking further ahead, the company expects to release a higher number large-sized PC/console games, both from established and new IPs.

The company noted there was a SEK 20.4 billion ($1.9 billion) impact on its earnings before interest and tax. SEK 1 billion ($93.3 million) of this was attributed to the restructuring program, while SEK 11.4 billion ($1.1 million) was related to the sales of Saber Interactive and Gearbox Entertainment.

The group's financial reports also gave an clear indication of how Embracer's headcount has changed during the restructuring.

As of March 31, 2023, the group stood at 12,069 total employees, down from 16,601 at the end of the previous fiscal year. Of these, 7,699 are developers, down from 11,426.

There are 141 development projects in the works across all the company's businesses, down from 221.

In his comments, CEO Lars Wingefors said Embracer Group had shown strong improvement in both earnings and cash flows this year, and the strategy to split into three publicly-listed companies is "tracking according to plan."

"It has been a transformative year for Embracer," he wrote. "The restructuring program, that is now successfully finalised, has created a stronger foundation for improved profitability, cash flows and long-term value creation."

He added: "Throughout the past year, our companies and studios have had to part ways with team members. These were necessary but difficult decisions, and it has been important to carry out the changes with compassion, respect and integrity towards those affected. Post-restructuring, we will strive to make continuous improvements as part of our ordinary business, to further improve operational efficiency and capital allocation."

We spoke to Wingefors at length last month about the future of the company and the criticism it has received around its restructuring.