Embracer Reports Disappointing Q2 Results, CEO Vows to Address Underperformance
Stockholm, Sweden - Embracer Group, a leading global gaming and entertainment company, has reported disappointing financial results for the second quarter of 2024. The company's net sales dropped by 21% to SEK 8.6 billion ($782 million), with net sales in its entertainment and services division falling by 10%.
Adjusted operating profit also declined by 33% to $109 million between July and September 2024, missing projected forecasts.
The PC/Console games division was the hardest hit, with a significant drop in net sales of 46%, followed by an 8% decline in mobile games sales and a 6% decrease in tabletop games sales. CEO Lars Wingefors attributed these declines to release delays, increased production costs, and the "tough comparison from last year's releases" of 'Remnant II' and 'Payday 3'.
However, some bright spots emerged in Q2. The PC/Console game "The Lord of the Rings: Return to Moria" performed slightly above management expectations, while mobile game "LEGO Monkey Palace" and tabletop game "The Lord of the Rings: Duel for Middle-earth" are showing strong traction.
Embracer's CEO, Lars Wingefors, emphasized that the company is focusing on addressing its underperforming segments and creating an attractive future structure. The company plans to split into three publicly traded companies by 2025, with one tabletop games division, Coffee Stain & Friends, already set to be spun off within this financial year.
Additionally, Embracer announced the sale of subsidiary puzzle game mobile developer Easybrain to digital games company Miniclop for $1.2 billion and pinned its hopes on upcoming anime "The Lord of the Rings: The War of the Rohirrim," which is expected to generate notable earnings growth in the near future.
"We have created a stronger foundation for long-term value creation, lowering our net debt and our capex," Wingefors concluded. "We acknowledge that 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."
The company's upcoming financial future will depend on its ability to address these challenges and capitalize on emerging opportunities, including the release of new titles and franchises such as "Star Wars: Unlimited" and the continued success of its Middle-earth Enterprises & Friends division.