Embracer Group Q2 FY20/21 Interim Report

Key insights

6 takeaways

01
Embracer Group achieved record financial performance in Q2 FY20/21 with net sales of SEK 2,383 million, an 89% year-over-year increase.See it on page 3
02
Operational EBIT grew by 171% to SEK 653 million, bolstered by a 61% organic growth rate and strong performance from back catalog titles.See it on page 5
03
The company’s development pipeline reached an all-time high of 135 projects, supported by a workforce of over 3,600 developers across 102 internal and external studios.See it on page 8
04
Embracer invested SEK 445 million in game development during the quarter and maintains SEK 4.7 billion in liquidity to fuel an aggressive M&A strategy.See it on page 3
05
The group expanded its portfolio by integrating Vertigo Games and DECA Games, following discussions with over 100 entrepreneurs regarding potential acquisitions.See it on page 17
06
Digital sales and remote operational efficiency successfully offset the negative impacts of the COVID-19 pandemic on physical retail channels.See it on page 12

Summary

Embracer Group’s second quarter fiscal year 2020/2021 report highlights a period of significant financial expansion and operational scaling. The company achieved record-breaking performance, with net sales reaching SEK 2,383 million, representing an 89% year-over-year increase. This growth was driven by strong organic performance across the group’s diverse portfolio, including a 61% organic growth rate and a 171% increase in operational EBIT to SEK 653 million. The company’s strategic focus on a quality-first approach and Games-as-a-Service (GaaS) models proved effective, with back catalog titles consistently exceeding management expectations.

The report details a robust development pipeline, which reached an all-time high of 135 projects as of September 30, 2020. Embracer Group expanded its operational capacity by managing 102 internal and external development studios, supported by a workforce of over 3,600 developers. Capital investment in game development remained high, with SEK 445 million invested during the quarter. The company maintains a strong liquidity position, reporting SEK 4.7 billion in cash and available credit, which supports an aggressive M&A strategy. During the quarter, the group engaged with over 100 entrepreneurs to explore potential acquisitions, successfully integrating new entities such as Vertigo Games and DECA Games to bolster its operative groups.

Geographically and operationally, the group operates through multiple segments, including THQ Nordic, Coffee Stain, Koch Media, and DECA Games, among others. While the COVID-19 pandemic presented challenges to physical retail, the company successfully offset these impacts through strong digital sales and remote operational efficiency. Looking forward, the group continues to prioritize inorganic growth through M&A and organic development, supported by a maturing pipeline of unannounced projects and a commitment to sustainability initiatives, such as the "Play Create Green" climate awareness program.