Embracer boss says 'volatile' PC and console business is the 'bad guy'

Embracer CEO Lars Wingefors has told investors the PC / Console segment is the 'bad guy' within the company.

Outlining why Embracer has stopped providing hard guidance each quarter, Wingefors said there's some "lumpiness" within Embracer's PC / Console business that prevents it from looking too far into the future. Case in point: Kingdom Come: Deliverance II, which is being published by Embracer subsidiary Deep Silver, was just delayed until February 2025 (thanks Eurogamer). It was initially slated to launch this year.

Wingefors reiterated the overall business is performing in line with expectations, but suggested the PC / Console segment remains a "volatile" proposition–especially when compared to other businesses such as board game maker Asmodee.

"Asmodee is a fantastic business to own from the perspective of you're always very stable in the deliverance of your numbers," said Wingefors during an investor Q&A.

"The mobile business is the same. The PC / Console guy is the 'bad guy' because it's a bit volatile. But I'm very confident and excited about the future outlook of that business as well–especially now post-restructuring."

That restructuring program saw Embracer divest major assets like Gearbox Entertainment and Saber Interactive. It also resulted in mass layoffs, project cancellations, and studio closures.

As noted in its fiscal report for the quarter ended June 30, 2024, Embracer saw net sales within its PC / Console business fall by 34 percent year-on-year to SEK 2.65 billion ($253.2 million).

The Swedish company attributed that downturn to "lower release activity" and a "tough comparison" year-on-year due to the release of Dead Island 2 in corresponding quarter.

"Excluding the release of Dead Island 2 in the comparison quarter, the organic growth was 15 percent in Q1," added Wingefors. "The 5 percent adjusted EBIT margin is impacted by amortization of releases with low ROI from the past 24 months. The new content that came out for Deep Rock Galactic, Remnant II and Dead Island 2 performed well in line with management expectations."

Providing a bit more colour, Wingefors said Embracer's broader PC / Console pipeline "looks solid" and noted the company still expects to "release completed games with a value of SEK 3.9 billion for the financial year."