Embracer Group (EMBRAC) investor relations material

Executive summary

• Net sales reached SEK 3,943 million in Q1 FY 2026/27, up 24% year-over-year and 33% organically, driven by strong performance in the Embracer segment and a new reporting structure ahead of the planned Fellowship Entertainment spin-off in 2027.

• Cash EBIT improved to SEK 47 million from SEK -99 million, and free cash flow turned positive at SEK 3 million, reflecting improved profitability and lower capex.

• The company reiterates its full-year Cash EBIT forecast of at least SEK 1 billion, anchored by the upcoming release of Metro 2039 and a robust pipeline.

• Reporting structure changed to two segments: Fellowship Entertainment and Embracer, with Cash EBIT as the key earnings measure.

• The groundwork for future growth is complete, with a focus on IP-centric strategy and capital discipline ahead of the planned Fellowship Entertainment spin-off in 2027.

Financial highlights

• Net sales for Q1 were SEK 3,943 million, up 24% year-on-year; organic and pro forma growth was 33% after adjusting for divestments and FX.

• Group gross margin was 56%, down from 61% year-on-year, mainly due to revenue mix shifts.

• Cash EBIT for the quarter was SEK 47 million, up SEK 146 million year-on-year.

• Free cash flow turned positive at SEK 3 million, a significant improvement from -SEK 383 million in Q1 last year.

• Net cash position at quarter end was SEK 3.5 billion, with total available funds of SEK 6.4 billion.

Outlook and guidance

• Full-year Cash EBIT guidance of at least SEK 1 billion is reiterated with increased confidence, supported by major releases including Metro 2039 and Tomb Raider: Legacy of Atlantis in February 2027.

• Q2 Cash EBIT is expected to improve year-on-year, with earnings and free cash flow weighted toward H2 due to seasonal working capital build-up and key game releases.