It’s been a tough year for Embracer, with disppointing financials, an unsuccessful deal and a drop from multiple S&P lists.
All of which have been a fall from grace after a vibrant 2022, and now Embracer’s latest financials give an updated picture of where things are today, revealing how the group has performed in its second quarter, July to September 2023.
Quarterly performance
Compared to Q2 2022, Embracer’s net sales have taken a positive turn in rising 13% to 10.83 billion kr ($1 billion) this quarter, up from 9.57 billion kr ($903 million) last year. Its Entertainment & Services category saw the biggest growth in sales with a huge 76% increase to 1.38 billion kr ($130 million).
Mobile games saw some positive movement too, up 2% compared to last year’s second quarter. Sales reached 1.47 billion kr ($138.6 million), proving to still be one of Embracer’s largest enterprises even if its momentum is waning.
It was tabletop games, however, that brought in the bulk of Embracer’s revenue, at 4.07 billion kr ($383.8 million) in the quarter.
And while mobile saw minor growth this quarter, overall performance in Embracer’s H1 2023 has fallen. Across the past six months, mobile sales decreased by 1% from 2022 to 2.9 billion kr ($273.5 million), dragged down by a weaker first quarter.
In Q2, PC and console game sales also fell by 5% and Embracer’s adjusted EBIT fell by 14%. Basic earnings per share were down from 2.21kr ($0.21) to –0.47 (–$0.04) kr, as were diluted earnings per share. Organic growth fell by 2% too.
Necessary changes
Clearly, Embracer’s tough 2023 continues, and as a result the group has had to undergo some restructuring. What hasn't been known is the extent of the company's job losses which the latest report now reveals. Embracer have laid off approximately 900 people - 5% of its workforce - being Embracer’s biggest headcount reduction in a single quarter.
Studios are being closed and projects shuttered too, with Embracer recalibrating to focus on improving its returns through PC and console specifically, not mobile. The divesting of assets has been accelerating and plans are underway to consolidate the business.
"It’s never easy to part ways with talented individuals. I would like to put on record a special thanks to the people who have left Embracer in the quarter. These are difficult decisions and we do not take them lightly. For me, personally, it is crucial that the program is carried out with compassion, respect, and integrity," said co-founder and CEO Lars Wingefors.
"We have a responsibility to use our size and talent in smart ways to develop and scale services and capabilities across Embracer to deliver always better experiences for players. I am confident that we will not only deliver on the targets we set out in June but also maintain our status as one of the global leaders within the gaming industry."
