Financials for the second quarter of Embracer's 2024-2025 fiscal year went out, and the Swedish company saw several dips across its games and entertainment businesses.
As of September 30, 2024, net sales decreased to 8.6 billion SEK (or $783.7 million), down 21 percent from 2023-2024's second quarter. Its interim report shows the Entertainment/Services and Games divisions—and the latter's individual PC/Console, tabletop, and mobile sub-segments—had downturns across the board.
PC/Console games had the biggest decline: net sales fell to 2.12 billion SEK ($193.2 million), down 46 percent year-over-year. CEO Lars Wingefors contributed that decline to the lack of new releases: whereas 2023-2024's second quarter had Payday 3 and Remnant II, the 2024-2025 quarter mainly saw a re-release of the original Epic Mickey and the 1.0 launch of Satisfactory.
According to Wingefors, Epic Mickey: Rebrushed had "slower than expected" digital sales, despite its positive reception, while Satisfactory reportedly performed above expectations and saw a "solid inflow" of new players. The Entertainment/Services division also had a sizable tumble of 35 percent, which was attributed to "few new releases."
Embracer cited 'few new releases' as reason for declines in its PC/Console game sub-segment.
Mobile games had less of a fall at 1.36 billion SEK ($123.9 million) in net sales, which translates to a roughly 8 percent decline compared to 2023-2024's Q2. Wingefors believes the improved market conditions that drove player activity and improved revenue growth for this quarter will continue through the fiscal year's second half.
In the interim report, Wingefors also commented on Embracer's recent $1.2 billion sale of mobile developer Easybrain, which he hopes will "put us in a much stronger position to drive value, both in the short- and long-term."
Despite a 5 percent dip in net sales, Asmodee (or the tabletop sub-segment) was commended for having a "strong execution" between July and September. Asmodee's decrease in publishing partners was said to be balanced out by a growth in the games published during the quarter.
Looking ahead, Embracer expects growth in earnings for Entertainment/Services during the third quarter, along with lower earnings for the larger 2024-2025 fiscal year. Growth in the Entertainment division is expected to come from the Lord of the Rings: War of the Rohirrim anime film, which arrives on December 13.
As for the losses, that can be owed to adjusted expectations for the first half of the fiscal year, and several PC/Console games that have already been (or are expected to be) delayed, such as Kingdom Come: Deliverance II, Deep Rock Galactic: Rogue Core, and Hyper Light Breaker. Some of these titles will come out during the second half of the fiscal year, while others are expected for the 2025-2026 period.
Speaking of losses, Embracer's report also shows it now has 128 game projects in development (-36.3 percent year-over-year), and employs 6,250 game developers (-41.3 percent year-over-year). This past May, the company revealed it had eliminated over 4,500 employees and cancelled 80 projects during its year-long restructuring process, which involved laying off staff and closing (or selling off) studios it'd previously purchased.
As of this past April, the company is being split into three standalone companies. In the report, Wingefors confirmed it's on track to spin off Asmodee by the end of the fiscal year.
Embracer's full financials for 2024-2025's second quarter, and the first half of 2024-2025 overall, can be read here.
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