Embracer's Earnings Struggle As Game Delays, Restructuring Weigh On Results

Swedish video game company Embracer Group AB's THQQF latest financial results show a steep drop in sales and increased net losses as the company deals with game delays, staff reductions, and restructuring.

Q2 Financial Summary: Declining Sales And Higher Losses

For the quarter ending Sept. 30, Embracer reported (via GamesIndustry.biz) net sales of 8.55 billion SEK (about $774 million), down 21% from the same period last year.

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Revenue from PC and console games took the largest hit, falling by 46% year-over-year to 2.12 billion SEK ($192 million), with only a few new releases and mixed reception of existing titles such as Disney Epic Mickey: Rebrushed.

Mobile games saw an 8% decline, with revenue down to 1.35 billion SEK. The company recorded a net loss of 390 million SEK, a slight improvement from a 562 million SEK loss in the same quarter last year.

Six-Month Results: Losses And Reduced Workforce

Embracer's numbers for the first half of fiscal year 2025 reveal a sharper year-over-year decline. Net sales dropped 23% to 14.4 billion SEK, and its net loss widened to 2.58 billion SEK compared to a 1.69 billion SEK profit last year.

Workforce reductions reflect the company's major restructuring efforts, with the number of game developers dropping from 10,654 to 6,250, and total headcount falling from 15,701 to 10,450.

Game Delays And Studio Divestments

A significant factor in Embracer's reduced revenues was a lack of major new releases and weaker-than-expected sales of its back catalog.

Embracer also divested Gearbox and parts of Saber Interactive, affecting its revenue from older titles. CEO Lars Wingefors said, "Parts of our PC/Console and Entertainment & Services segments are still underperforming due to delays and low ROI for primarily small and mid-sized releases." Embracer also recently sold Easybrain to Miniclip in a $1.2 billion deal as part of its efforts to reduce debt and streamline operations.

The company remains focused on core projects with a view toward longer-term growth, notably with the release of Kingdom Come: Deliverance 2, set to launch on Feb. 11, 2025, which Embracer expects will bring strong interest from the gaming community.

Outlook: Restructuring And Future Focus

Embracer anticipates continued lower earnings through the fiscal year, with Wingefors noting that the company has created "a stronger foundation for long-term value creation" by reducing debt and capital expenditures.

Embracer is also moving forward with plans to spin off Asmodee by the fiscal year-end, further refocusing its portfolio around core segments.

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