Swedish gaming giant Embracer Group disclosed its financial performance for July-September 2023, exhibiting a 13 percent rise in overall sales to SEK 10,831 million, despite a 2 percent decrease in organic growth compared to the same period last year.
Sales Breakdown by Segments:
PC/Console Games: Experienced a decline of 5 percent to SEK 3,909 million, attributed to a 17 percent organic drop. Notwithstanding strong revenue from new releases — generating over SEK 1.4 billion —such as Remnant II, the segment faced a decrease due to significant contributions from previous quarters and platform deals.
Mobile Games: Witnessed a 2 percent uptick to SEK 1,471 million, showcasing an improvement from the previous quarter. This segment faced a 10 percent organic decrease, partially driven by strategic shifts in genre focus by Crazy Labs, emphasizing profitability and cash flows.
Tabletop Games: Achieved a remarkable surge of 25 percent to SEK 4,070 million, indicating a 15 percent organic growth. This segment delivered outstanding results, showcasing its potential within Embracer Group.
Entertainment & Services: Recorded an impressive 76 percent increase to SEK 1,381 million. This segment exceeded expectations, buoyed by licensing revenues from the successful Lord of the Rings: Tales of Middle-earth trading card game.
Operating Profits and Challenges:
Adjusted Operating Profit: Suffered a setback, plunging by 14 percent to 1.8 billion Swedish crowns ($170.2 million) compared to the same period last year. This decline was mainly attributed to reduced contributions from the PC and console games segment.
Challenges Faced: Embracer Group encountered development delays, lower demand, and mixed responses to its new titles, impacting its profit margins. In response, a major restructuring program was initiated in June, following the cancellation of a $2 billion partnership deal in May.
CEO Lars Wingefors in its earnings report has expressed confidence in the ongoing restructuring efforts, noting operational expense savings ahead of projections and anticipated capital expenditure savings in the latter half of the year.