Embracer Group (EMBRAC) Q2 24/25 earnings summary

Executive summary

• Net sales for Q2 FY 2024/25 were SEK 8,552 million, representing a 14% organic decline and a 21% year-over-year drop, mainly due to fewer major releases and divestments.

• Adjusted EBIT was SEK 1,207 million, down 21% year-over-year, with free cash flow negative at SEK -473 million, mainly from inventory buildup.

• The divestment of Easybrain for USD 1.2 billion (EUR 1.2 billion/SEK 12.9 billion) was announced, expected to close in early 2025, significantly improving the financial position and resetting net debt.

• Asmodee delivered solid earnings growth and is preparing for a public listing, with a Capital Markets Day scheduled for November 19.

• Ongoing efficiency improvements and ROI focus across segments.

Financial highlights

• Net sales: SEK 8,552 million in Q2 FY 2024/25, down from SEK 9,569 million year-over-year.

• Adjusted EBIT: SEK 1,207 million, margin 14%, down 21% year-over-year.

• Free cash flow after working capital: SEK -473 million, down from SEK 387 million last year.

• Net debt at SEK 13.2 billion as of September 30, 2024, with pro forma net debt expected to be near zero or SEK 0.5 billion post-Easybrain sale.

• Basic EPS was SEK -0.32, adjusted EPS SEK 0.18.

Outlook and guidance

• Lower earnings expected for PC/Console segment this year due to project delays and softer performance.

• Asmodee's peak sales and cash generation are expected in Q3 and Q4 due to seasonality.

• Asmodee spin-off on track for FY 2024/25 listing, with further details at the November 19 Capital Markets Day.

• No formal guidance provided, but conservative outlook for PC/Console EBIT in Q3.

• Key upcoming release: Kingdom Come: Deliverance II set for February 11, 2025.