Embracer Group (EMBRAC) Q1 26/27 earnings summary

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 group reiterates its full-year Cash EBIT guidance of at least SEK 1.0 billion, anchored by major upcoming releases such as Metro 2039 and Tomb Raider: Legacy of Atlantis.

• The business is now reported in two segments: Fellowship Entertainment and Embracer, with a sharpened focus on operating performance and capital discipline.

• The planned spin-off of Fellowship Entertainment is progressing, targeted for calendar year 2027.

Financial highlights

• Group gross margin for Q1 FY 2026/27 was 56%, down from 61% in Q1 FY 25/26, with Embracer segment at 49% and Fellowship at 85%.

• Operating expenses (excluding marketing) decreased to SEK 972 million, supported by targeted savings and divestments.

• CapEx for the quarter was SEK 677 million, down from SEK 736 million last year.

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

• Free cash flow after working capital was SEK 3 million, up from SEK -383 million.

Outlook and guidance

• Full-year Cash EBIT guidance of at least SEK 1.0 billion is reiterated with increased confidence, with Q2 expected to show similar year-on-year improvement.

• Free cash flow is expected to strengthen in line with Cash EBIT, with a second-half weighting due to seasonal working capital build-up.

• Major upcoming releases include Metro 2039 and Tomb Raider: Legacy of Atlantis in February 2027.