Tomb Raider Chronicles - EMBRACER GROUP PUBLISHES 2022 Q3 INTERIM REPORT

Embracer Group has published the interim report for Q3, the period October-December 2022. Embracer Group own 132 internal game development studios including Gearbox Software, Crystal Dynamics and Eidos-Montreal. The Group has an extensive catalog of over 850 owned or controlled franchises including Borderlands and Tomb Raider.

Embracer Group announced net sales increased by 128 % to SEK 11,622 million of which PC/Console Games increased by 64 % to SEK 3,575 million. Mobile Games increased by 2 % to SEK 1,573 million and Tabletop Games amounted to SEK 4,146 million. Entertainment and Services saw the largest segment increase by 71 % to SEK 2,328 million.

On a stable quarter with improved cash flow, Embracer Group CEO Lars Wingefors said: "We are pleased to announce another stable quarter for Embracer Group delivering largely in line with management expectations. Our diversified business mix across segments drove solid Net sales of SEK 11.6 billion, Adjusted EBIT of SEK 2.0 billion and SEK 1.7 billion of free cash flow in Q3 of FY 2022/23 despite a limited number of new game releases in our PC/Console segment."

On diversification, Lars Wingefors states: "Our business has grown increasingly diversified in recent years, adding stability to our results and cash flows. In the PC/Console Games segment, Coffee Stain successfully released Goat Simulator 3 to strong acclaim from fans providing a platform to further grow the player base over time. Together with our Danish colleagues at Ghost Ship Games, who continue their impressive work with Deep Rock Galactic, there is a lot to look forward to from Coffee Stain going forward."

"Several other upcoming large-budget games have also recently been announced for FY 23/24, including Warhammer 40,000: Space Marine 2, Remnant 2, and Payday 3. In total, we have 94 projects scheduled to be released FY 23/24 of which 58 are yet to be announced. We have invested significantly in one of the most diversified pipelines in the industry, empowered by the combined force of more than 11,000 game developers across the globe. In total, we have SEK 8.2 billion invested in ongoing game development projects as of December 31, 2022. For context, we have 31 AAA games slated to be released by FY 2027/2028 including 19 games that will ship by FY 2025/2026."

"In the current financial environment, we have built our resilience and agility by maintaining a solid balance sheet. We expect to reach our financial leverage target by the end of this financial year with no material loans to expire prior to June 2024. Going forward, we will focus on further deleveraging our balance sheet while allowing for selective continued growth investments."

On targeting a better balance between growth, profits and free cash flow, Lars Wingefors states: "Our investments have put Embracer in a strong position for organic growth in both earnings and free cash flow per share. It has also strengthened our position vis-à-vis platform owners and other industry partners, looking to increase their exposure to future releases of high-quality games."

On building a solid foundation, Lars Wingefors states: "A key part of our ongoing development and progress is an increased focus on sustainability, a priority area for me, the management, our businesses, and our people. It is encouraging to see that those efforts, and the strengthening of our corporate capabilities at the parent company, are paying off through improved ESG ratings. In the past few months, MSCI upgraded our ESG rating from BBB to A, and we are now also part of Sustainalytics' 2023 Top-Rated ESG Companies list."