Tomb Raider Chronicles - EMBRACER GROUP PUBLISHES Q2 24/25 INTERIM REPORT

Embracer Group has published the interim report for Q2 2024/25, the period July-September 2024. Embracer Group has an extensive catalogue of over 900 owned or controlled franchises including Tomb Raider and 103 internal game development studios including Crystal Dynamics and Eidos.

"In Q2, net sales amounted to SEK 8.6 billion, with Adjusted EBIT of SEK 1.2 billion. Asmodee delivered solid earnings growth YoY, in line with expectations. We confirm that the process to spin-off Asmodee is on track for this financial year. The quarter was softer for our other segments and within PC/Console we now expect lower earnings this year due to the delay of a number of notable H2 releases while we continue our ongoing work to improve efficiency and increase ROI. The divestment of Easybrain, announced today, has a strong strategic and financial rationale, transforming our balance sheet and putting us in a stronger position to create value." says Lars Wingefors, CEO and co-founder of Embracer Group.

"In the quarter, Embracer's net sales decreased by -21% YoY to SEK 8.6 billion. Organic growth amounted to -14%, primarily due to few new releases and a mixed reception for releases within PC/Console Games. Adjusted EBIT amounted to SEK 1.2 billion, and free cash flow was negative at SEK -0.5 billion, due to the expected seasonal increase in working capital for our physical businesses, including both Tabletop Games (Asmodee) and Entertainment and Services."

In the PC and Console Games segment, Embracer Group said "organic growth amounted to -33%, as expected, due to few new releases and a tough comparison from the releases of Remnant II and Payday 3 last year. The 8% Adjusted EBIT margin was largely in line with expectations but remained impacted by a low ROI for primarily small-and- mid-sized releases in the past two years."

In the Tabletop Games segment, Embracer Group said "Adjusted EBIT grew by 5% YoY to around SEK 700 million, with an improved margin supported by a favorable product mix. The organic growth amounted to -4%, in line with management expectations. Growth in games published by Asmodee was offset by a decrease in games published by partners, which performed well in Q2 last year."

The Mobile Games segment saw "organic growth improved sequentially to -7% YoY, despite relatively low user acquisition spending in previous quarters. Growth is also impacted by CrazyLabs' previous transition to a product strategy with lower sales but higher margins. Adjusted EBIT was stable YoY but lower than in recent quarters, with a 28% Adjusted EBIT margin."

The Entertainment and Services segment "had another slow quarter, largely as expected, with few new releases. Organic growth amounted to around -9% YoY with 2% Adjusted EBIT margin, with a product mix more geared to our physical businesses within PLAION."

Looking ahead to the spin-off of Asmodee, Embracer Group noted 19th of November, 2024, as "an important milestone in the spin-off process, offering an opportunity to meet both the management team and the board of Asmodee, and gain deeper insights into the company and its market."

In closing, Lars Wingefors said Embracer Group has "created a stronger foundation for long-term value creation, lowering our net debt and our capex. We have many high-performing and efficient companies, several with industry leading margins."