Q1 2026 Embracer Group AB Earnings Call Transcript
Key Points
- Embracer Group AB (THQQF) reported a significant improvement in free cash flow generation over the trailing 12 months, reaching SEK1.2 billion.
- The company is on track for the separate listing of Coffee Stain later in 2025, which is expected to enhance its value as a standalone entity.
- Embracer Group AB (THQQF) holds a strong IP portfolio with globally recognized franchises, including Lord of the Rings and Tomb Raider, which positions it well in the gaming industry.
- The Entertainment & Services segment showed strong organic growth of 52%, driven by a new distribution deal with Sony.
- The company is focusing on core IP projects, with investment allocation expected to reach 40% this year, up from 20% last year, indicating a strategic shift towards high-return projects.
- Net sales for the quarter were SEK3.4 billion, representing a 31% year-over-year decline, with a 2% organic decline when excluding divestments.
- Adjusted EBIT fell significantly to SEK75 million from SEK579 million in the previous year, indicating a decline in profitability.
- The PC/Console segment experienced a 22% year-on-year pro forma decline due to lower catalog revenue and no major releases.
- Mobile segment net sales dropped by 5% on a pro forma basis, impacted by increased competition and user acquisition cost headwinds.
- The company has revised its financial outlook, expecting at least SEK1 billion in adjusted EBIT for the current financial year, reflecting a more conservative view due to release shifts and slower growth in mobile.
Welcome to Embracer Group Q1 interim report 2025-'26. (Operator Instructions)
Now I'll hand the conference over to CEO, Phil Rogers; and CFO, Muege Bouillon. Please go ahead.
Thank you, and good morning, everyone and thank you for joining our webcast today on our Q1 results. Today marks a change from our most recent quarterly updates in that we're talking to you from our Stockholm office. We have a short presentation to cover the main beats for our operating performance and then closing on how we're seeing the outlook in the times ahead before turning over to Q&A. August, just a couple of weeks ago, Board and to Lars in particular, for the trust placed in me. And with that, I'll jump straight in.
Overall, our group Q1 results for PC console releases. Net sales were SEK3.4 billion which represents a 31% year over year decline but a much tighter 2% organic decline when we consider the impact of divestments last year. On adjusted EBIT, well, that came in at SEK75 million. This
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