Key Takeaways
- Embracer Group shares surged as high as 19.5% following first-quarter revenue of SEK 3.94 billion, surpassing analyst estimates of SEK 3.61 billion
- The company’s Cash EBIT turned positive at SEK 47 million, a significant improvement from the SEK 99 million loss reported in the prior-year period
- The PC/Console division experienced 68% growth, propelled by Gothic 1 Remake’s impressive debut of 500,000 units sold within seven days
- Adjusted operating profit reached SEK 151 million, significantly exceeding the company-compiled consensus of SEK 69 million
- Management reaffirmed its fiscal 2026/27 Cash EBIT guidance of at least SEK 1 billion
Embracer Group delivered impressive first-quarter results on Thursday, with revenue reaching SEK 3.94 billion compared to analyst consensus estimates of SEK 3.61 billion. The gaming company’s shares spiked as much as 19.5% immediately following the announcement, before stabilizing at gains of 7-9% during mid-day trading.
Embracer Group AB (publ), THQQF
Revenue increased 24% compared to the same quarter last year, with organic growth registering at 33%. The core Embracer operating division delivered the strongest performance, particularly within the Entertainment & Services and PC/Console categories.
The Gothic 1 Remake emerged as the quarter’s star performer. The release moved 500,000 units during its opening week, driving PC/Console revenue to SEK 728 million compared to SEK 433 million in the year-ago period. Revenue from new releases in this division surged to SEK 310 million from a modest SEK 69 million previously.
In comments to Reuters, CEO Phil Rogers indicated that the company’s restructuring efforts have reached completion. “The groundwork we feel is done,” Rogers stated, referencing organizational changes implemented throughout the previous four to five quarters.
Cash EBIT flipped to positive SEK 47 million from a negative SEK 99 million recorded during the comparable quarter last year. This improvement stemmed from enhanced revenue performance, improved gross margins, and reduced capital spending within the Embracer division.
Earnings Metrics Show Mixed Results
Despite the revenue strength, certain profitability metrics fell short. EBIT registered a loss of SEK 79 million versus consensus forecasts calling for an SEK 80 million profit. EBITDA of SEK 697 million also trailed the SEK 871 million analyst estimate.
Adjusted EBIT of SEK 151 million came in below the SEK 248 million consensus projection, although it more than doubled the company-compiled forecast of SEK 69 million. Cash EBIT of SEK 47 million underperformed compared to the SEK 129 million consensus.
On a per-share basis, EPS of SEK 0.18 exceeded the SEK 0.08 consensus estimate. Adjusted EPS of SEK 1.04 similarly outperformed the SEK 0.80 consensus figure.
Free cash flow after adjusting for working capital stood at SEK 3 million, representing a substantial improvement from the negative SEK 383 million generated in the prior year.
Forward Outlook and Upcoming Releases
The company upheld its full-year Cash EBIT projection of at least SEK 1 billion for the fiscal year ending 2026/27. Management expressed increased confidence in achieving this target following the first-quarter performance.
Financial results are expected to be weighted toward the second half of the fiscal year. Both Metro 2039 and Tomb Raider: Legacy of Atlantis are slated for February 2027 launches. Rogers indicated the annual guidance remains attainable even if one of these major releases experiences a delay.
Entertainment & Services division revenue climbed to SEK 1.768 billion from SEK 967 million, supported by fresh releases and robust catalogue performance at PLAION Partners.
Analysts at Redeye highlighted that the quarter exceeded their projections, with both the Fellowship division and the broader Embracer operations surpassing their Cash EBIT estimates.
The company’s planned separation of Fellowship Entertainment continues progressing on schedule for completion during calendar year 2027. Additionally, Embracer is executing an active share repurchase program valued at up to SEK 750 million, authorized through March 31, 2027.
Pre-tax profit of SEK 69 million topped the SEK 50 million consensus, while net profit of SEK 39 million landed slightly beneath the SEK 44 million analyst estimate.
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