Embracer Group (EMBRAC) Q4 25/26 earnings summary

Executive summary

• Full-year net sales were SEK 15,906 million, down 25% year-over-year, with adjusted EBIT of SEK 905 million, impacted by major non-cash impairments but exceeding management's revised expectations.

• Q4 net sales reached SEK 3,931 million, a 24% year-over-year decline (10% organic), with adjusted EBIT of SEK 360 million.

• Free cash flow for the year was SEK 50 million, with a strong Q4 free cash flow of SEK 883 million and a net cash position of SEK 3.8 billion at year-end.

• The group completed the spin-off of Coffee Stain Group in December 2025 and announced a planned separation into two listed companies: Fellowship Entertainment (IP-led development/licensing) and Embracer Group (cash-generative businesses), targeting 2027.

• Major non-cash impairments totaling SEK 7.2 billion, mainly related to goodwill and discontinued projects, drove negative reported EBIT.

Financial highlights

• Q4 adjusted EBIT margin was 9%, with full-year adjusted EBIT margin at 6%.

• Q4 gross profit margin was 61%, with full-year gross margin at 61%.

• Operating expenses (excluding marketing) were SEK 3,993 million for the year, 24% of sales.

• Net cash position at March 31, 2026 was SEK 3.8 billion, with available funds of SEK 6.8 billion.

• Share buybacks of SEK 500 million completed, with a new SEK 750 million buyback program announced for execution by end of FY 2026/2027.

Outlook and guidance

• Guidance shifts to Cash EBIT as the primary metric, targeting at least SEK 1 billion for FY 2026/2027.

• Q1 FY 2026/27 expected to have negative Cash EBIT, with improvement and positive free cash flow anticipated in the second half.

• Segment reporting will align to the new structure from Q1 FY 2026/27, providing early visibility ahead of the planned separation.

• Ambition for consistent year-over-year earnings growth and organic expansion for Fellowship Entertainment.