Embracer Group Q3 Financial Report: 2022

Key insights

5 slides

Revenue growth

Embracer Group's net sales reached SEK 11.6 billion in Q3.

This represents a 128% year-over-year increase. However, organic growth for the period was negative at -3%.

Investment in development

Embracer Group invested SEK 1.6 billion into its internal development pipeline.

The company aims to mitigate challenges faced by segments like PC/Console.

Like planting seeds for future harvests, this investment is designed to yield long-term growth.

Strategic Focus. Embracer Group invested SEK 1.6 billion in its internal development pipeline to drive long-term organic growth.

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Summary

Embracer Group’s third-quarter financial report for the period ending December 31, 2022, highlights a period of significant expansion driven by acquisitions, alongside a strategic shift toward long-term organic growth through a robust development pipeline. The Swedish holding company reported net sales of SEK 11.6 billion ($1.12 billion), representing a 128% year-over-year increase. Despite this top-line growth, organic growth remained negative at -3%, underscoring the company’s continued reliance on inorganic expansion to scale its operations.

Segment performance was led by Tabletop Games, which generated $398 million, followed by PC/Console at $343 million, Entertainment & Services at $223.7 million, and Mobile at $151.2 million. While the company achieved an operating profit of SEK 226 million—a recovery from the previous year’s loss—the PC/Console segment faced a significant profit decline of 1,554% year-over-year. This downturn was attributed to a lack of major new releases and the amortization of development costs for underperforming titles, such as the Saints Row reboot.

To mitigate these challenges, Embracer is heavily investing in its internal production capabilities, with SEK 1.6 billion allocated to PC/Console development during the quarter. The company’s future strategy centers on a massive pipeline of 224 games, including 31 AAA titles scheduled for release by March 31, 2028. Key production efforts include 11 AAA projects at Saber Interactive and five major titles under development at Crystal Dynamics and Eidos Montreal. As of the end of the quarter, the group managed 134 internal studios with a total workforce of 16,243 employees, signaling a transition toward prioritizing in-house content creation to drive sustainable, long-term revenue.