Embracer Group Interim Report Q3 FY 22/23

Key insights

6 takeaways

01
Net sales grew 128% year-over-year to SEK 11,622 million, driven primarily by the acquisitions of Middle-Earth Enterprises, Crystal Dynamics, and Eidos.See it on page 5
02
The company reported a 3% decline in organic growth, citing a limited release schedule for PC and console titles and a softening global consumer market.See it on page 5
03
Net profit reached SEK 1,493 million, representing a recovery from losses recorded in the same period of the previous fiscal year.See it on page 19
04
As of December 2022, the group held a net debt of SEK 14.3 billion against SEK 7.2 billion in available funds, with future earnout obligations totaling SEK 11.2 billion.See it on page 20
05
Management maintains Adjusted EBIT forecasts of SEK 8.0–10.0 billion for the current fiscal year and SEK 10.3–13.6 billion for the following year.See it on page 7
06
The organization now manages a portfolio of over 850 franchises across 134 internal studios, with a development pipeline currently consisting of 224 projects.See it on page 59

Summary

Embracer Group’s third quarter of fiscal year 2022/23 reflects a period of aggressive structural expansion and significant revenue growth, primarily fueled by a series of high-profile acquisitions. Net sales surged 128% to SEK 11,622 million compared to the previous year, driven by the integration of entities such as Middle-Earth Enterprises, Crystal Dynamics, and Eidos. While inorganic growth remains the primary catalyst for this scale, the company experienced a 3% decline in organic growth, attributed to a limited release schedule in the PC and console segments and a broader softening of the global consumer market. Despite these headwinds, the group achieved a net profit of SEK 1,493 million, marking a recovery from losses in the prior year.

The company maintains a robust operational footprint, now encompassing 134 internal studios, over 16,200 employees, and a portfolio exceeding 850 franchises. Financial stability is supported by strong cash flow from the tabletop and mobile segments, alongside disciplined working capital management. As of December 2022, the group reported net debt of SEK 14.3 billion against available funds of SEK 7.2 billion, maintaining sufficient headroom to meet financial covenants. Management remains committed to a leverage target of 1.0x net debt to Adjusted EBIT, while navigating future earnout obligations totaling SEK 11.2 billion and significant share-based considerations.

Looking forward, the company has reiterated its Adjusted EBIT forecasts of SEK 8.0–10.0 billion for the current fiscal year and SEK 10.3–13.6 billion for the following year, contingent upon stable market conditions and the execution of planned partnership deals. With a development pipeline of 224 projects, the organization is prioritizing long-term value creation through intellectual property expansion and enhanced corporate governance. By refining its reporting frameworks and Alternative Performance Measures, the group aims to provide transparency into its underlying operational performance amidst the complexities of its rapid, acquisition-led growth strategy.