Q2 2025 Embracer Group AB Earnings Call Transcript
Key Points
- Embracer Group AB (THQQF) reported SEK8.5 billion in net sales for the quarter, with Asmodee showing solid earnings growth year-over-year.
- The divestment of Easybrain is expected to significantly strengthen Embracer's financial position, reducing net debt to a pro forma SEK500 million.
- The company has a robust pipeline with over 120 game projects, including notable upcoming releases like Kingdom Come: Deliverance II and Tomb Raider IV-VI Remastered.
- Mobile Games segment showed strong profitability with SEK1.3 billion in revenues and a 28% adjusted EBIT margin.
- The Easybrain divestment is expected to provide SEK12.7 billion in net proceeds, enhancing the company's ability to invest in future growth opportunities.
- Net sales declined year-over-year, primarily due to the absence of major releases like Remnant and Payday from the previous year.
- The PC/Console segment experienced a 33% decline in organic growth, impacted by delays and underperformance of several game releases.
- Free cash flow was negative at minus SEK500 million, attributed to increased working capital and inventory buildup.
- The Entertainment & Services segment saw a negative 9% organic growth year-over-year, with a low adjusted EBIT margin of 2%.
- The company faces challenges with game release delays, which are increasing development costs and impacting return on investment.
My name is Martin Arnell, and I'm an equity analyst with DNB Markets in Stockholm. I'm here to moderate the Q&A presentation and introduce management today. (Event Instructions)
And with that, I want to hand over to CEO and President, Lars Wingefors.
Thank you, Martin, and welcome, everyone, to this morning in Stockholm. I will take you through our performance in the second quarter, followed by deeper information about the Easybrain transaction announced this morning. So in the quarter, we achieved SEK8.5 billion of net sales, which is a decline year-over-year and an adjusted EBIT of SEK1.2 billion. The difference between this year and last year is all made up of the two significant releases of Remnant and Payday we had in the previous year. The free cash flow came in a bit negative at minus SEK500 million due to increased working capital because of inventory buildup.
On a trailing 12-month basis, our free cash flow
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