Tomb Raider Chronicles - EMBRACER GROUP PUBLISHES Q1 2025/26 INTERIM REPORT

Embracer Group has published its interim report for the first quarter of the 2025/26 financial year, covering the period from April to June 2025. The company operates as a global network of creative and entrepreneurial businesses within the PC, console, and mobile gaming sectors. Its portfolio comprises more than 450 owned or controlled franchises, including Tomb Raider, and 73 internal game development studios, such as Crystal Dynamics and Eidos-Montreal.

"Our overall group Q1 results reflect a quiet quarter for PC/Console releases. This year will be a transition year in terms of own major releases, and we will be highly focused on operational and strategic execution. Coinciding with the expected listing of Coffee Stain Group towards the end of 2025, Embracer will evolve into Fellowship Entertainment, an IP-first company powered by great creators and strong franchises in a structure enabling focus and operational discipline. Through initiatives to improve and simplify our business, combined with a stronger release slate, we have the foundation for great long-term value creation." says Phil Rogers, Group CEO of Embracer Group.

"In our first quarter, organic growth amounted to -2% with net sales of SEK 3.4 billion and an adjusted EBIT of SEK 75 million, down from SEK 579 million in Q1 last year, or around SEK 250 million excluding the divested assets Easybrain and Gearbox. At the same time, our capex is down to SEK 784 million in Q1 from SEK 967 million a year prior excluding divested assets. On a trailing 12-month basis, free cash flow improved to SEK 1.2 billion, compared to SEK -0.2 billion in the preceding period. These are important steps with regards to underlying cash flow generation."

In the PC and Console Games segment, Embracer Group said net sales in the quarter "amounted to SEK 1,641 million, a decrease of -38% compared to the same period last year, and -22% organically and pro forma. The negative organic growth was primarily impacted by lower back catalog revenue, including a lower contribution from recently released games and from platform deals than in the corresponding quarter last year. Net sales growth was also impacted by the divestment of Gearbox and Shiver last year"

Net sales in the quarter for Mobile Games "amounted to SEK 520 million, a decrease of -63% compared to the same period last year, primarily due to the divestment of Easybrain. The organic growth decreased by -5% and pro forma -5%. The organic growth decelerated in the quarter, driven by increased competition for CrazyLab's hybrid casual games and a slower back catalog performance, leading to decreased UAC. The decrease of total installs, DAU and MAU are mainly driven by the divestment of Easybrain."

Net sales in the The Entertainment and Services segment "amounted to SEK 1,193 million, an increase of 41% compared to the same period last year, or 52% organically and pro forma. The positive organic growth was driven by PLAION's partner and film business, due to successful new releases and strong back catalog sales. The performance was also positively impacted by the strengthening of PLAION's global partner business footprint, through several new agreements, announced earlier this year."

Concluding, Phil Rogers says: "As Embracer evolves from a collective to a cohesive business in Fellowship Entertainment it will hold one of the most exciting IP portfolios in the industry with globally recognized franchises including The Lord of the Rings, Tomb Raider, Kingdom Come Deliverance, Metro, Dead Island, Darksiders and Remnant. We are laying the groundwork for a more agile and more empowered organization centered around such IPs."