Embracer Group has published the interim report for Q3 2023/24, the period October-December 2023. Embracer Group owns 132 internal game development studios including Gearbox Software and Crystal Dynamics plus an extensive catalogue of over 900 owned or controlled franchises including Borderlands and Tomb Raider.

"Embracer's Net sales in Q3 grew by 4 % to all-time high SEK 12.1 billion. Organic growth amounted to -4 %, a result of positive organic growth within Tabletop, offset by a light release schedule within PC and Console and an increased focus on profitability within Mobile. Adjusted EBIT came in at all-time high SEK 2.2 billion, 7 % growth YoY. Free cash flow reached SEK 1.2 billion.

"In the last financial year, free cash flow generation was tilted towards Q3, driven by the contribution from a publishing deal for Tomb Raider, while for this year we see a more even distribution in H2, supported by our restructuring program." says Lars Wingefors, CEO and co-founder of Embracer.

"As part of the restructuring program, Embracer still has a few larger structured divestment processes ongoing that could strengthen our balance sheet and further reduce capex. Processes are in mature stages. Certain companies might initiate restructuring before any divestment is announced."

In the PC and Console Games segment, "sales declined by 9 % organically. In a quarter with fewer notable new releases, sales were largely driven by back catalogue revenue. The quarter included the successful release of new content for several games, including the DLCs The Awakened King for Remnant II and Haus for Dead Island 2, but was impacted by soft performance for our few new releases during the quarter."

"The performance of our strongest franchises in PC and Console is stable. In general we see a more selective consumer and reduced levels of platform content investment. Looking ahead, Q4 will be a quarter with higher activity, with a range of new games including Alone in the Dark, Outcast - A New Beginning, SOUTH PARK: SNOW DAY!, Expeditions: A Mudrunner game, Tomb Raider I-III Remastered, as well as Deep Rock Galactic: Survivor and Lightyear Frontier."

The Tabletop Games segment achieved "1 % organic growth, with Net sales of SEK 4.4 billion in Q3. Year-todate, the organic growth amounts to 9 %, a testament to Asmodee's diversified revenue base, solid underlying market and consistent execution. For the calendar year, the tabletop mass market saw a slight growth, confirming the industry's resilience, with Asmodee's strong position key to its robust growth."

In the Mobile Games segment "saw a record strong Adjusted EBIT, growing by 32 % YoY to SEK 611 million (37 % margin), driven by an improved product mix and optimized user acquisition investment. The organic growth was -10 % due to the shift in business model within DECA."

The Entertainment and Services segment "saw organic growth of -2 %, but again delivered a strong profitability, with Adjusted EBIT growing by 63 % YoY to SEK 305 million, with a margin of 12 %. The strong earnings growth was driven by stronger-than-expected licensing revenue from The Lord of the Rings IP."

The restructuring plans announced in June 2023 are designed to "improve efficiency and cash generation, transforming Embracer into a leaner, stronger, more focused and cash self-sufficient company. In a group-wide effort, our companies and studios have had to make difficult decisions, particularly on having to part ways with team members. In total, we have reduced our global headcount by 8 % of the workforce since the start of the program."

Looking ahead, Embracer Group "are excited about the future and have a notable pipeline of sizable new games in the coming two years" and are "creating a strong foundation for the future, with an improved financial profile, and a more streamlined structure, while leveraging the potential of our diversified portfolio."

Lara Croft and the Tomb Raider logo