Embracer Group (EMBRAC) Q1 24/25 earnings summary

Executive summary

• Q1 net sales reached SEK 7,933 million, down 24% year-over-year, mainly due to fewer new releases and tough comparisons in PC/Console and Entertainment & Services segments.

• Adjusted EBIT was SEK 828 million, a 51% decrease year-over-year, with a margin of 10% versus 16% last year.

• Free cash flow improved to SEK 47 million from negative SEK 599 million, supported by lower capex, divestments, and improved segment profitability.

• Profitability increased in Mobile and Tabletop segments, while PC/Console transformation continues.

• Spin-off plans for Asmodee, Coffee Stain & Friends, and Middle-earth & Friends are progressing, with Asmodee's Capital Markets Day scheduled for Q3 and listing planned for FY 2024/25.

Financial highlights

• Net sales for Q1 were SEK 7,933 million, down 24% year-over-year, and adjusted EBIT was SEK 828 million, down 51% year-over-year.

• Free cash flow improved to SEK 47 million from SEK -599 million last year.

• Net debt reduced to SEK 14,275 million as of June 30, 2024, from SEK 16,752 million a year earlier; pro forma net debt below SEK 3 billion excluding Asmodee ring-fenced debt.

• Adjusted EBITDA for Q1 was SEK 1,869 million, down from SEK 2,697 million year-over-year.

• EBIT was SEK -1,440 million, down from SEK 421 million, with an EBIT margin of -18%.

Outlook and guidance

• Management expects solid Adjusted EBIT growth in Tabletop Games and stable development in Mobile Games for Q2.

• PC/Console and Entertainment & Services segments are expected to see limited but improved EBIT contributions in Q2.

• Value of completed game development for the year expected at SEK 3.9 billion.

• No formal guidance provided, but management expects similar adjusted EBIT for the year as previously communicated.

• Kingdom Come: Deliverance II is confirmed for global release on February 11, 2025.