Embracer Reports 24% Decline in Sales to $754 Million Due to Challenging Comparisons

Embracer Group has announced its financial results for the first quarter of its fiscal year, revealing a 24% year-over-year decline in net sales to SEK 7.9 billion ($754 million). The company experienced sales decreases across its mobile, tabletop, and entertainment divisions, which were anticipated due to a less robust release schedule compared to the same quarter last year. Notably, PC and console games saw a 34% decline, primarily attributed to the comparison with the second quarter of 2023, when Plaion released the highly successful Dead Island 2. For the three months ending June 30, 2024, key financial metrics include: Net Sales: SEK 7.9 billion ($754 million), down 24% year-over-year; Net Loss: SEK 2.2 billion ($210 million), compared to a loss of SEK 2.3 billion ($219.4 million) for the same period last year; and Net Debt: SEK 14.3 billion ($1.37 billion), down from SEK 16.8 billion ($1.6 billion) as of June 30, 2023. Breaking down net sales by segment, Embracer's tabletop games generated the most revenue at SEK 3.04 billion ($290 million), a 5% year-over-year decrease. The PC/console segment was the second-largest, with SEK 2.7 billion ($253.5 million) in revenue, including SEK 146 million ($14 million) from new releases – a 91% year-over-year decline. This decline was largely due to the lack of a major release comparable to Dead Island 2, which sold one million copies in its first three days after launching in April 2023. In contrast, the biggest new releases for Q2 2024 were Homeworld 3, MotoGP 24, Gigantic: Rampage Edition, and Oddsparks: An Automation Adventure, for which Embracer did not disclose sales figures. Looking ahead, Embracer Group announced that Kingdom Come Deliverance 2 will launch on February 11, 2025, which is expected to be the company's largest release of the financial year, albeit delayed from its initial 2024 launch target. Mobile games contributed SEK 1,389 million ($132.6 million) in revenue, a 3% year-over-year decrease. However, Embracer noted that profitability for both mobile and tabletop games has improved year-over-year. The entertainment and services division suffered the largest decline, down 54% to SEK 848 million ($80.9 million), primarily due to fewer new releases. According to CEO Lars Wingefors, the company's plan to split into three publicly listed entities is 'progressing according to plan.' Tabletop publisher Asmodee is slated to be the first to break away, with plans to list on Nasdaq Stockholm before the end of the year and more information to be disclosed during a capital markets day in the third quarter (October to December 2024). The listing and distribution for the entity tentatively titled 'Coffee Stain & Friends' is planned for calendar year 2025, which will leave the remaining Embracer operations under the tentative name of 'Middle-earth Enterprises & Friends.'