1
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NET SALES INCREASED BY 47 % TO
SEK 10,450 MILLION
FIRST QUARTER, APRILJUNE 2023 COMPARED TO APRILJUNE 2022
> Net sales increased by 47 % (20 % organic growth) to SEK 10,450 million (7,118).
The sales split per operating segment:
> PC/Console Games: increased by 74 % to SEK 3,996 million (2,294).
> Mobile Games: decreased by –3 % to SEK 1,438 million (1,488).
> Tabletop Games: increased by 20 % to SEK 3,184 million (2,665).
> Entertainment & Services: increased by 173 % to SEK 1,832 million (671).
> EBIT
1)
amounted to SEK 421 million (–398), an EBIT margin of 4 % (–6 %). Adjusted EBIT
increased by 27 % to SEK 1,673 million (1,322), an Adjusted EBIT margin of 16 % (19 %).
> Cash flow from operating activities amounted to SEK 1,359 million (347). Net investments in
intangible assets amounted to SEK –1,911 million (–1,204).
> Basic earnings per share was SEK 1.99 (–0.16) and diluted earnings per share SEK 1.99 (–0.16).
Adjusted earnings per share was SEK 1.33 (1.28). Adjusted earnings per share after full dilution
was SEK 1.23 (1.18).
> The company reiterates its forecast for the financial year 2023/24 of an Adjusted EBIT of SEK
7,000 - 9,000 million.
Key performance indicators, Group
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales, SEK m , , ,
EBIT
1)
, SEK m –
EBIT margin % – % %
Adjusted EBIT, SEK m , , ,
Adjusted EBIT margin % % %
Cash flow from operating activities, SEK m , ,
Net investments in intangible assets, SEK m , , ,
Net sales growth % % %
Total game development projects
Total game developers , , ,
Total headcount , , ,
1)
EBIT equals Operating profit in the Consolidated statement of profit or loss.
In this report, all figures in brackets refer to the corresponding period of the previous year, unless otherwise stated.
EMBRACER GROUP
INTERIM REPORT
Q1
APRIL – JUNE 2023FY 2023/24
2
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Embracer’s Q1 Net sales grew by 47 % to SEK 10.5 billion.
Organic growth amounted to 20 %, driven by solid per-
formance for Dead Island 2 in the PC/Console Games
segment, as well as solid topline development in the
Tabletop Games and Entertainment & Services segments.
Adjusted EBIT came in at SEK 1.7 billion, representing a
notable improvement sequentially. The Q1 result is also
ahead of management expectations for the quarter. The
positive sequential margin development in the quarter
is a result of how we deliver on our games pipeline, and
our Q1 execution builds a strong foundation to further
improve the margin during the year after a challenging FY
2022/23. The free cash flow of SEK –0.6 billion in Q1 is
largely in line with the plan for the year given the contin-
ued imbalance between investments and completed PC/
Console game development (SEK 1,672 million vs SEK 803
million). We expect a significantly improved free cash flow
already in Q2, and expect to reach a financial net debt
below SEK 8 billion by year-end, as announced on June
13, with notable positive effects from the restructuring
program in the second half of the year.
CONTINUING TO EXECUTE ON KEY RELEASES
WILL IMPROVE PC/CONSOLE PROFITABILITY
In the PC/Console Games segment, sales grew by 38 %
organically in Q1 driven by the release of Dead Island 2.
Released on April 21, the game reached a sell-through
of over two million units in its first month. The Adjusted
EBIT margin for the segment remains impacted by
games development amortization combined with the soft
performance of the previous financial year’s releases,
impacting back catalog revenue this year. It is encour-
aging to see that Crystal Dynamics – Eidos’s turnaround
to solid profitability is ahead of plan, driven by cost
efficiency improvements, a stable back catalog business
and increased external funding for ongoing develop-
ment. This is a testament to the commitment and focus of
Crystal Dynamics – Eidos’s management, and is support-
ive of our larger PC/Console business.
Developed by Gunfire Games, Remnant II was suc-
cessfully released on July 25 and sold over one million
units in the first four days. Developing and publishing
great games is our core business and I would like to
highlight the great achievement from the teams behind
the recent successes of Dead Island 2 (PLAION and
Dambuster Studios), Jagged Alliance 3 (THQ Nordic &
Haemimont Games) and RemnantII (Gearbox Publishing
SF and Gunfire Games). Looking ahead, several additional
large-budget games are expected in FY 2023/24, includ-
ing Payday 3 and Warhammer 40,000: Space Marine2,
as well as several other exciting titles such as South Park:
Snow Day!, Homeworld 3, Hot Wheels Unleashed2:
Turbocharged, Teardown (console), Alone in the Dark, and
Outcast – A New Beginning.
In the Tabletop Games segment, Asmodee delivered
9% organic growth, with Net sales of SEK 3.2 billion.
The Adjusted EBIT margin was 6.5 %, a result in line
with our expectations during a seasonally weak quarter.
The product mix in the segment was more geared
towards trading card games, which impacts the mar-
gin negatively year-over-year. Operating costs also
increased YoY due to inflation and the run rate impact
of prior year recruitments. In addition, the comparative
quarter last year benefitted from cost phasing into
later quarters as a result of a shift of activities during
the initial integration phase after transaction closing.
These impacts are expected to moderate over the next
quarters. We are now entering a period of higher activ-
ity for Asmodee, with seasonality expected to be more
pronounced this financial year, driven by cost phasing,
timing of new releases and product mix. The free cash
flow in Q1 was positive and Asmodee is expected to
convert above 100% of its Adjusted EBIT into free cash
flow in FY 2023/24, with a positive contribution also in
the first half of the financial year.
The Mobile Games segment had a solid performance in
profitability which was ahead of management expecta-
tions. Net sales show –12 % organic growth, but underly-
ing market trends have improved somewhat sequentially
and the organic decline moderated notably compared
to Q4. Despite a sequential increase in user acquisition
cost, profitability was strong, with an Adjusted EBIT
DEAD ISLAND 2 AND REMNANT II PERFORMANCE
JUMPSTART FY 2023/24
In Q1, we achieved organic growth of 20 % and Adjusted EBIT of SEK 1.7 billion. In recent
months, we have released two successful sequels, Dead Island 2 and Remnant II. We now
have increased confidence regarding earnings this year and we are on track to deliver on the
restructuring program announced on June 13, 2023, with a series of initial actions now taken.
Even though it’s a challenging time for everyone impacted, I am confident we will emerge a
stronger company.
CEO COMMENTS
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EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
margin of 29%, driven by systematic investments to
balance growth and profitability. The mobile businesses
are expected to show positive organic growth for the
full-year and continue to add to both earnings and cash
flow diversification.
In the quarter, the Entertainment & Services segment
also made a notable contribution, growing by 70 %
organically with a 15 % Adjusted EBIT margin. The
high margin is primarily explained by a strong contri-
bution from Middle-earth Enterprises, driven by strong
licensing revenue for The Lord of the Rings. The
performance of Middle-earth Enterprises is well ahead
of the business plan developed at the time of acquisi-
tion a year ago. It is encouraging to see many exciting
external projects based on this incredible IP, including
the recently successfully released Magic the Gather-
ing trading card game The Lord of the Rings: Tales of
Middle-earth™, the upcoming PC/Console survival-craft-
ing game The Lord of the Rings: Return to Moria as
well as many other exciting new products that will grow
the IP further. Furthermore, PLAION Partner Publish-
ing division had two notable releases from partners in
the quarter, also contributing to organic growth in the
segment.
For FY 2023/24, we reiterate our Adjusted EBIT fore-
cast of SEK 7.0-9.0 billion. Based on the performance
year-to-date, we have increased confidence in our
forecast range. Beyond FY 2023/24 and based on the
restructuring program outlined in June, we expect to
deliver positive organic growth combined with a lower
capex run-rate and a more efficient cost structure. We
have for several years made strategic investments into
accelerated long-term organic growth in PC/Console
Games. Ongoing investments into future game releases
has outpaced completed development by 2-3x, increas-
ing the value of on-going game development to more
than SEK 10 billion by the end of June. Although we now
reduce capex and prioritize within our portfolio, com-
pleted development should continue to increase as our
development pipeline matures. After the program is com-
pleted, more focused investments into our highest-ROI
titles should drive both growth and profitability.
RESTRUCTURING PROGRAM ON TRACK
We are making good progress on the restructuring
program. We are tracking towards the targets, including
reducing capex by at least SEK 2.9 billion and overhead
costs by at least SEK 0.8 billion by FY 2024/25, as well
as reaching a financial net debt below SEK 8 billion by
the end of this financial year. Initial actions have been
taken on closure and other initiatives to reduce the
number of projects and studios and overhead savings
initiatives have been defined in co-ordination with the
Operative Groups. In addition, we have set a high priority
on increasing external funding of certain larger projects
and potential divestment opportunities.
With a series of initial actions now taken, we expect
further savings after the completion of a global review
of the existing pipeline, which is currently ongoing. This
review will guide our capital allocation to optimize return
on investment.
The purpose of the program is to operate with efficiency
across the group and to reduce business risk in the
short-term. This, in turn, will enable us to continue to
EMBRACER GROUP AB PUBL | APRILJUNE 2023
3
Lake Fryken, Värmland, Sweden
4
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023EMBRACER GROUP AB PUBL | APRILJUNE 2023
4
grow and to deliver high-quality products in the long-
term. A painful consequence of the program is that
a number of talented and passionate team members
have left us, or will be leaving us before the end of the
financial year. We understand and respect that this is a
challenging time for everyone impacted. Where we can,
we will try to provide opportunities for our colleagues
to transition onto other projects. Throughout the pro-
gram, we are working to ensure that everyone affected
receives information first.
SETTING THE DIRECTION FOR YEARS TO COME
We continue to prioritize a strong balance sheet and are
on track to be well within our leverage target by financial
year-end. We raised SEK 2.0 billion through a directed
share issue in early July and, as previously communi-
cated, expect to reach a net debt of SEK 8 billion by
March 31, 2024.
We will continue to take important steps in FY 2023/24
to set the direction for the years to come and I am
confident that we will emerge a stronger company. I
want to be clear that our long-term strategy to support
and empower entrepreneurs and creators remains
unchanged. I would like to send my thanks to all our
shareholders, employees, fans, and business partners for
contributing to the continued prosperity and success of
Embracer Group.
August 17, 2023, Karlstad, Värmland, Sweden
Lars Wingefors
Co-founder & Group CEO
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EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NET SALES
Net sales, SEK m
Apr–Jun
2023
Apr–Jun
2022 Change
Apr 2022–
Mar 2023
PC/Console Games , , % ,
Mobile Games , , – % ,
Tabletop Games , , % ,
Entertainment & Services , % ,
Total , , % ,
Total net sales in the first quarter amounted to SEK 10,450 million, an increase of 47 % YoY.
Netsales growth was primarily driven by organic growth in the PC/Console Games segment
and the Entertainment & Services segment. Inorganic growth was driven mainly by Crystal
Dynamics – Eidos in the PC/Console Games segment and by Middle-earth Enterprises in the
Entertainment & Services segment.
Organic growth in the quarter amounted to 20 % and the pro forma growth amounted to
17 %. The strong organic growth in the PC/Console Games segment is explained by the
successful release of Dead Island 2. The Mobile Games segment is aected by lower ad
prices compared to the previous year, which largely explains the negative organic growth.
The Tabletop Games segment’s organic growth is mainly explained by increased net sales
of trading card games compared to the previous year. In the Entertainment & Services
segment, the strong organic growth was driven by a couple of successful releases in the
PLAION Partner Publishing and Film division.
Apr–Jun 2023
Net sales growth
Net sales
growth
Organic
growth
Pro forma
growth
PC/Console Games % % %
Mobile Games – % – % – %
Tabletop Games % % %
Entertainment & Services % % %
Total % % %
FINANCIAL COMMENTS
FINANCIAL
COMMENTS
Last Train Home
6
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
EBIT AND ADJUSTED EBIT
EBIT amounted to SEK 421 million (–398) in the quarter, yielding an EBIT margin of 4 % (–6%).
The increase is mainly driven by increased net sales compared to the previous year. Other
external expenses and personnel expenses increased primarily due to acquisitions and to a
lesser extent due to increased headcount. Personnel costs related to acquisitions amounted
to SEK 412 million (1,107) including FX eects. The decrease is driven by that several obliga-
tions has been fulfilled since the comparing quarter, meaning that there are lesser obligations
to accrue costs for in the actual quarter compared to the same quarter last year. There is also
an eect driven by revisions of estimated target fulfillment. Depreciation, amortization, and
impairment amounted to SEK 1,781 million (1,100), an increase of SEK 681 million.
Adjusted EBIT increased by 27 % and amounted to SEK 1,673 million (1,322) in the quarter,
yielding a 16 % margin (19 %). The increase is mainly driven by the Entertainment & Services
segment and the PC/Console Games segment. The gross margin declined and amounted
to 63% (65%), primarily driven by a product mix shift in the Tabletop Games segment.
Depreciation, amortization and impairment (D&A) excluding amortization of surplus values
of acquired intangible assets amounted to SEK 1,024 million (545), an increase of SEK 479
million, driven by increased D&A for released games in the PC/Console Games segment.
Costs aecting comparability amounted to SEK 78 million in the quarter and are excluded
from Adjusted EBIT (see page 47-50). These are mainly related to the restructuring program
as communicated by Embracer Group on June 13, 2023, and the strategic partnership nego-
tiations that did not materialize, as further communicated in connection to the publication of
the Q4 report on May 24.
EBIT, SEK m
Apr–Jun
2023
Apr–Jun
2022 Change
Apr 2022–
Mar 2023
PC/Console Games – %
Mobile Games – % –
Tabletop Games – – %
Entertainment & Services – , % –
Governance – – – % –
Total – %
Adjusted EBIT, SEK m
Apr–Jun
2023
Apr–Jun
2022 Change
Apr 2022–
Mar 2023
PC/Console Games % ,
Mobile Games % ,
Tabletop Games – % ,
Entertainment & Services , %
Governance – – – % –
Total , , % ,
FINANCIAL
COMMENTS
SpongeBob SquarePants: The Cosmic Shake
7
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
FINANCIAL
COMMENTS
FORECAST
Forecast Adjusted EBIT
Financial year 2023/24 SEK 7,000 million - SEK 9,000 million
For the overall group, the forecast for FY 2023/24 is an Adjusted EBIT of SEK 7.0 billion - 9.0
billion. The forecast is based on scheduled game releases, market and macro conditions, and
exchange rates being unchanged from current conditions.
FY 2023/24 vs. FY 2022/23
In the PC/Console Games segment, a solid earnings growth is expected, driven by the release
of more large- and mid-sized, internally developed games during the financial year. Two key
titles have been successfully released by the date of this report. Two additional large-budget
games and a range of mid-sized titles are expected during the year. Adjusted EBIT within PC/
Console Games is expected to be weighted towards the second half of the year, driven by
improved ROI and solid back catalog revenue from games released in H1, as well as a strong
lineup of new releases across operative groups in H2.
In the Mobile Games segment, a low single-digit organic growth is expected, with gradually
stronger growth during the financial year. Underlying market trends are assumed to be stable,
with gradual improvements to ad monetization throughout the year. The Adjusted EBIT margin
is expected to be largely in line or slightly above FY 2022/23.
In the Tabletop Games segment, high single-digit organic growth is expected, driven by the
trading cards product area, with an Adjusted EBIT margin slightly below FY 2022/23. Earn-
ings seasonality is expected to be more pronounced compared to the previous financial year,
driven by cost phasing, timing of new releases and product mix.
Specific items related to historical acquisitions
The forecast is based on the average exchange rates for the period April to June 2023. The forecast
includes closed acquisitions as per June 30, 2023. The forecast is based on the purchase price allo-
cations as per July 25, 2023, which contain both preliminary and finalized purchase price allocations.
23/24
SEK m Q2 Q3 Q4 24/25 25/26 26/27 27/28 28/29 29/30 30/31 Total
Amortization of surplus
values of acquired
intangible assets , , , , , , , ,
Personnel costs related
to acquisitions , ,
Specific items related to
historical acquisitions , , , , , , , , , , ,
8
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
FINANCIAL
COMMENTS
RESTRUCTURING PROGRAM
Background
The restructuring program presented and announced by Embracer Group on June 13, 2023,
includes the main focus areas: capex and opex savings, capital allocation, and eciency
improvements.
The program is expected to deliver:
> Reduced capex by at least SEK 2.9 billion by FY 2024/25, compared to the annualized
run-rate of SEK 7.9 billion in Q4 FY 2022/23.
> Reduce overhead costs by at least 10 % or at least SEK 0.8 billion on a yearly basis,
compared to the annualized run-rate in Q4 FY 2022/23.
> Reaching financial net debt below SEK 8 billion by the end of FY 2023/24 (including
impact of SEK 2.0 billion direct share issue completed in July 2023).
Progress
Embracer Group is tracking toward the announced targets. As of August 17, 2023, the
following actions have been executed:
Capex and opex savings:
> First round review of Capital Expenditure completed – initial initiatives to reduce number
of projects and studios have commenced.
> Review of Operative Group overheads completed – overhead savings initiatives identified
with commitments from each Operative Group within the range of targets communicated.
> Implementation of initiatives has started and will continue to accelerate with full imple-
mentation expected in Q3 and Q4.
Capital allocation:
> Global review of the existing pipeline is in progress, guiding the allocation of capital to
optimize returns on investment.
> New group-wide investment greenlighting process designed and being rolled out for new
investments.
> Increased external funding of internally developed games and potential divestment
opportunities are being worked on as a matter of high priority.
Eciency improvements:
> Important steps taken to create a new process for game investment and game develop-
ment progress review.
Updates
Embracer Group will update the market on restructuring program progress on a regular
basis, in connection with Interim Reports or otherwise as required by applicable legislation.
9
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OPERATING SEGMENT
PC/CONSOLE GAMES
SHARE OF
GROUP SALES
38 % (32 %)
INTELLECTUAL
PROPERTY (IP)
266 (243)
INTERNAL
HEADCOUNT
10,469 (8,103)
INTERNAL
STUDIOS
103 (86)
OPERATING SEGMENT
PC/CONSOLE GAMES
The PC/Console Games operating segment includes seven operative
groups: THQ Nordic, PLAION, Amplifier Game Invest, Gearbox Entertainment,
SaberInteractive, Coffee Stain and Crystal Dynamics – Eidos. PC and con-
sole games have been a core business for Embracer Group ever since its
inception. The segment develops and publishes games for PC and console.
It includes AAA, AA+, Indie, MMO, Free-to-play, Asset Care, VR, Work-for-Hire
and other games development.
Key performance indicators,
PC/Console Games
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales, SEK m , , ,
of which Digital products, SEK m , , ,
of which Physical products, SEK m ,
of which Other
1)
, SEK m ,
Net sales growth from previous period % % %
EBIT, SEK m –
EBIT margin % – % %
Adjusted EBIT, SEK m ,
Adjusted EBIT margin % % %
Type of income
New releases sales, SEK m , ,
Back catalog sales
2)
, SEK m , , ,
Other
1)
, SEK m ,
1)
Primarily Work-for-Hire and other game development.
2)
See Definitions, quarterly information.
SEGMENT HIGHLIGHTS
Net sales in the quarter for PC/Console Games amounted to SEK 3,996 million, an increase
by 74 % compared to the same period last year, or 38 % organically and 20 % pro forma in
constant currency. The strong organic growth development is mainly explained by the new
release of Dead Island 2. The inorganic growth was primarily driven by the acquisitions of
Crystal Dynamics – Eidos, Coffee Stain GBG and Tripwire.
EBIT amounted to SEK 126 million (–407), yielding a 3 % (–18 %) EBIT margin. Adjusted EBIT
amounted to SEK 837 million (602), yielding a 21 % (26 %) Adjusted EBIT margin. The profitabil-
ity notably improved sequentially driven by stronger game releases, but remained impacted by
games development amortization combined with the soft performance of the previous finan-
cial year’s releases, impacting back catalog revenue this year. New releases with better ROI at
the start of the year provides a strong base for a continued margin improvement throughout
the year.
Revenue from new releases amounted to SEK 1,607 million in the quarter, an increase of 341 %
YoY. The main revenue driver among new releases in the quarter was Dead Island 2, developed
by internal studio Dambuster and published by Deep Silver (PLAION). The game, released on April
21, reached a sell-through of over two million units in its first month. The downloadable content
10
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
roadmap for Dead Island2 was revealed in June, with two major expansions announced for
the financial year 2023/24.
Another notable new release in the quarter was All Elite Wrestling: Fight Forever, developed by
external studio Yuke’s and published by THQ Nordic. The game was released late in the quarter,
on 29 June and had a solid contribution in line with management expectations in the first two
days despite a mixed reception from critics. Other new releases included the System Shock
Remake (PC only) and MotoGP 23, which both had a solid reception from critics and users.
Revenue from back catalog titles (including platform deals) amounted to SEK 1,589 million in
the quarter, an increase of 10 % YoY. The top-10 back catalog revenue drivers included Star
Trek Online, Deep Rock Galactic, Borderlands 3, Neverwinter Online, Welcome to Bloxburg,
Chivalry II, Risk of Rain 2, SnowRunner, Valheim and Metro: Exodus.
Other revenue amounted to SEK 800 million in the quarter, an increase by 67 % YoY. The
growth was primarily driven by acquisitions, including Crystal Dynamics – Eidos, as well as an
increased share of externally funded game development projects.
In Q2 FY 2023/24, notable new game releases include Remnant II, developed by Gunfire Games
(THQ Nordic) and published by Gearbox Publishing. The game was successfully released on
July 25 and sold over one million units in the first four days. Jagged Alliance 3, developed
by external studio Haemimont Games and published by THQ Nordic, was released on July
14. It has seen a solid reception from critics and users, with a performance in line with man-
agement expectations. Additional titles that will be released include Payday 3, developed by
external studio Starbreeze Studios and published by Deep Silver (PLAION), RIDE 5, developed
and published by Milestone, and Trine 5: A Clockwork Conspiracy, developed by external studio
Frozenbyte and published by THQ Nordic.
The release of Payday 3 was confirmed in January 2023 and quickly reached 1 million wishlists
on Steam, which has up until early August reached 1.5 million. The game was revealed in Xbox
‘E3 Showcase’, as one of the biggest third-party reveals. Payday has recently exited a success-
ful closed Beta which was well received by the Payday community, driving a notable pre-order
uplift. The full game will be released on September 21.
Since the release of Saints Row a year ago, Deep Silver and Volition have been improving and
adding to the game over the last 12 months with a catalog of fixes, improvement and new free
and premium content. The Saints Row upcoming Steam release on August 24 will bring an
expanded and improved game.
OPERATING SEGMENT
PC/CONSOLE GAMES
Trine 5: A Clockwork Conspiracy
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EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
In early August THQ Nordic hosted a digital showcase revealing the following upcoming
releases: Teenage Mutant Ninja Turtles – The Last Ronin, Titan Quest II, plus South Park:
Snow Day!, which is planned to be released in Q4 FY 23/24.
GAME DEVELOPMENT INVESTMENTS AND COMPLETED GAMES
The PC/Console Games segment continues to make considerable investments in game devel-
opment. In total, SEK 1,672 million (1,114) were invested in game development during the quar-
ter. The finalized value of the completed and released games during the quarter amounted
to SEK 803 million (545), driven by the release of Dead Island 2. The ratio of investments
to completed games was thus largely stable year-over-year, at 2.1x, with a continued higher
pace of ongoing investment into future game releases than completed investment in released
games. When new games are released, capitalized development costs are amortized, based
on a degressive depreciation model over two years.
OPERATING SEGMENT
PC/CONSOLE GAMES
45% 45%
1,0
0,8
0,6
0,4 0,4 21–35
0,2 0,2 10–20
0,0 0,0
1,0
0,8 51–65
0,6 36–50
1030
882
793
631
1133
629
857
644
466
493
396
1154
728
939
1002
973
742
930
1611
1834
357
334
256
395
29%
35%
35%
64%
50%
66%
70%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
20/21 Q1 20/21 Q2 20/21 Q3 20/21 Q4 21/22 Q1 21/22 Q2 21/22 Q3 21/22 Q4
Premium Classic Premium / Live Ops Mo bile Development revenue Recurring Revenue
Completed games Investments in game development
Investment in game development as X times completed games
SEK million Times
0
500
1,000
1,500
2,000
Apr-JunJan-Mar
2023
Oct-DecJul-SepApr-JunJan-Mar
2022
Oct-DecJul-SepApr-JunJan-Mar
2021
Oct-DecJul-SepApr-JunJan-Mar
2020
Oct-DecJul-SepApr-Jun
2019
0
1
2
3
4
5
1.8x
1.4x
3.3x
4.8x
2.6x
3.1x
2.5x
3.6x
2.1x
2.0x
2.1x
3.3x
2.5x
2.5x
0.8x
3.2x
3.3x
Remnant II
12
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
ANNOUNCED PC/CONSOLE RELEASES AS OF AUGUST 17, 2023
OPERATING SEGMENT
PC/CONSOLE GAMES
CONT. >>
Title Publishing Label IP Owner
Main
developer Platforms
MythForce Aspyr Own Internal PS5, XB X|S, Switch,
PS4, XB1
Combustion 3D Realms License Internal PC
Core Decay 3D Realms License Internal PC, PS5, XB X|S, XB1
Phantom Fury 3D Realms Own Internal PC, PS5, XB X|S, Switch
Ripout 3D Realms External External PC, XB X|S, PS5
Kingpin: Reloaded 3D Realms & External License Internal PC, PS5, XB X|S, XB1
Lightyear Frontier Amplifier Own Internal PC, XB X|S, XB1
Payday 3 Deep Silver External External PC, PS5, XB X|S
John Carpenter’s Toxic Commando External Own Internal PC, PS5, XB X|S
Star Wars™: Knights of the Old
Republic -Remake
External License Internal PC, PS5
Tomb Raider (final title TBC) External Own Internal TBC
Warhammer 40,000: Space Marine II External External Internal PC, PS5, XB X|S
Homeworld 3 Gearbox Publishing Own External PC
Hyper Light Breaker Gearbox Publishing External External PC
Relic Hunters Legend Gearbox Publishing External External PC
Risk of Rain Returns Gearbox Publishing Own External PC, Switch
Deep Rock Galactic: Survivor Ghost Ship Publishing Own External PC
Spellrouge Ghost Ship Publishing External External PC
DarkSwarm Ghost Ship Publishing External External PC
Airhead HandyGames External External PC, PS4, XB1, Switch
A Rat´s Quest HandyGames External External PC, PS4, XB1, Switch
Lethal Honor
– Order of the Apocalypse
HandyGames External External PC, PS5, XB X|S, Switch,
PS4, XB1
Oddsparks HandyGames Own Internal PC
PERISH: Exodus HandyGames External Internal PS5, XB X|S, PS4, XB1
Hot Wheels Unleashed™ 2
– Turbocharged
Milestone License Internal PC, PS5, XB X|S, Switch,
PS4, XB1
RIDE 5 Milestone Own Internal PC, PS5, XB X|S
Ships at Sea Misc Games Own Internal PC
The Siege and the Sandfox PLAION External External PC, PS5, XB X|S, Switch,
PS4, XB1
Undisputed PLAION External External PS5, XSX
Warhammer 40,000: Speed Freeks PLAION External External PC
Echoes of The End Prime Matter External External PC, PS5, XB X|S
Final Form (final title TBD) Prime Matter Shared External PC, PS5, XB X|S
New Painkiller (final title TBD) Prime Matter Own Internal TBC
System Shock Remake Prime Matter External External PS4, PS5, XB X|S
Kona 2: Brume Ravenscourt External External PC, PS5, XB X|S, Switch,
PS4, XB1
Night is Coming Ravenscourt External External PC
A Quiet Place Saber External External TBC
Teardown Saber Own Internal PS5, XB X|S
Tempest Rising Saber Own Internal PC
WarPaws Saber External Internal PC, PS5, XB X|S, Switch
Wild Card Football Saber Own Internal PC, PS5, XB X|S,
Switch, PS4, XB1
* PC/Console titles from the operating segments Mobile Games, Tabletop Games and Entertainment & Services
are also included in the release list.
For latest release dates please refer to above mentioned publishers.
Please note: Limited Run Games distributed games are not included in the release list.
The release list does not include games where we only have physical distribution rights.
The release list does not include DLC’s.
13
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Wreckreation
OPERATING SEGMENT
PC/CONSOLE GAMES
Title Publishing Label IP Owner
Main
developer Platforms
Alone in the Dark THQ Nordic Own Internal PC, PS5, XB X|S
Biomutant THQ Nordic Own Internal Switch
Gothic Remake THQ Nordic Own Internal PC, PS5, XB X|S
Last Train Home THQ Nordic Own Internal PC
Outcast – A New Beginning THQ Nordic Own Internal PC, PS5, XB X|S
Space For Sale THQ Nordic Own Internal PC
South Park: Snow Day! THQ Nordic External External
PC, PS5, XB X|S, Switch
Söldner: Secret Wars
Remastered
THQ Nordic Own External
PC
Teenage Mutant Ninja Turtles
– The Last Ronin
THQ Nordic External Internal PC, PS5, XB X|S
Titan Quest II THQ Nordic Internal Internal PC, PS5, XB X|S
Trine 5: A Clockwork
Conspiracy
THQ Nordic External External PC, PS5, XB X|S, Switch, PS4, XB1
Wreckreation THQ Nordic External External PC, PS5, XB X|S, Switch, PS4, XB1
Arizona Sunshine 2 Vertigo games Own Internal PS VR2, PC VR, Standalone VR
Hellsweeper VR Vertigo Games External External Oculus Quest 2, PC VR, PS VR2
The 7th Guest VR Vertigo games External Internal Oculus Quest 2, PC VR, PS VR2
Toss! Vertigo Games External External Oculus Quest 2, Standalone VR,
PS VR2, PC VR
World of diving Vertigo Games External External Oculus Quest 2, Steam VR,
Viveport
Bloomtown: A Dierent Story* Twin Sails Interactive External External PC
Wantless* Twin Sails Interactive External External PC
News Tower* Twin Sails Interactive External External PC
Gloomhaven* Twin Sails Interactive License Internal PS5, XB X|S ,Switch, PS4, XB1
Innchanted* Twin Sails Interactive External External PS5,PS4, XB X|S, XB1, Switch
* PC/Console titles from the operating segments Mobile Games, Tabletop Games and Entertainment & Services
are also included in the release list.
For latest release dates please refer to above mentioned publishers.
Please note: Limited Run Games distributed games are not included in the release list.
The release list does not include games where we only have physical distribution rights.
The release list does not include DLC’s.
14
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OPERATING SEGMENT
MOBILE GAMES
SHARE OF
GROUP SALES
14 % (21 %)
INTELLECTUAL
PROPERTY (IP)
48 (41)
INTERNAL
HEADCOUNT
1,196 (1,117)
INTERNAL
STUDIOS
11 (11)
OPERATING SEGMENT
MOBILE GAMES
The Mobile Games operating segment consists of two operative groups:
DECA Games and Easybrain. In the past years, the segment has grown
to account for a sizable share of Embracer Group’s business. The Mobile
Games segment includes free-to-play, ad centric, in-app-purchase centric
and pay-to-play mobile games.
Key performance indicators,
Mobile Games
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales, SEK m , , ,
Net sales growth from previous period – % % %
EBIT, SEK m – –
EBIT margin % – % – %
Adjusted EBIT, SEK m ,
Adjusted EBIT margin % % %
User Acquisition Cost (UAC), SEK m ,
User Acquisition Cost (UAC), % of net sales % % %
Total installs, million ,
Total Daily Active Users (DAU), million
Total Monthly Active Users (MAU), million
SEGMENT HIGHLIGHTS
Net sales in the quarter for Mobile Games amounted to SEK 1,438 million, a decrease of –3 %
compared to the same period last year, or by –12% organically and pro forma in constant cur-
rency. The Mobile Games saw some headwind from lower ad prices YoY, impacted by platform
changes related to privacy, lower player engagement post-covid and macroeconomic factors.
The negative growth is also a result of lower user acquisition investments in recent quarters as
a response to new market circumstances, aimed to keep desired profitability levels. Underly-
ing market trends have started to improve including some positive trends with regard to mone-
tization.
EBIT amounted to SEK 291 million (–117), yielding a 20 % (–8 %) EBIT margin. Adjusted EBIT
amounted to SEK 424 million (277), yielding a 29 % (19 %) Adjusted EBIT margin. User acquisi-
tion costs amounted to SEK 641 million (883), or 45 % (59 %) of net sales. Easybrain and DECA
(including CrazyLabs) have optimized user acquisition investment, leading to a solid profit
margin in the quarter despite negative organic growth.
Easybrain had a solid quarter, with profitability above management expectations, and is scaling
up user acquisition investments in a systematic way to balance growth and profitability. The
company had no new full releases in the quarter, but has more than six games in soft launch
or in development. CrazyLabs launched Drawing Carnival in the quarter and its hyper casual
back catalog saw an improved performance. DECA has several ongoing projects and saw
sequential growth and improved profitability. The strongest back catalog titles in the quarter
were Sudoku.com, BlockuDoku, Jigsaw Puzzles, Number Match and Art Puzzle.
15
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OPERATING SEGMENT
TABLETOP GAMES
OPERATING SEGMENT
TABLETOP GAMES
The Tabletop Games operating segment consists of the operative group
Asmodee. The segment represents the publishing and distribution of board
games, card games and strategic trading card games. Asmodee is one of
the global leaders in this segment through its 22 creative studios and its
22local, owned distribution offices across the globe. With 40+ million games
sold annually in more than 50 countries, Asmodee’s portfolio hosts fan &
family favorite board games such as Ticket to Ride, Catan, Splendor, 7 Wonders,
Azul, Exploding Kittens, Dobble/Spot It!, Star Wars: Legion and many more.
Key performance indicators,
Tabletop Games
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales, SEK m , , ,
of which Digital products, SEK m
of which Physical products, SEK m , , ,
of which Other, SEK m
Net sales growth from previous period
1)
% - , %
EBIT, SEK m –
EBIT margin – % % %
Adjusted EBIT, SEK m ,
Adjusted EBIT margin % % %
1)
Asmodee became part of Embracer Group in March 2022.
SEGMENT HIGHLIGHTS
Net Sales for the Tabletop Games segment amounted to SEK 3,184 million, an increase of 20%
compared to the same period last year or by 9 % organic growth and 7 % pro forma in constant
currency. Growth was driven by the trading card games product category, with more contained
growth for board games. From a geographical perspective, growth in Europe notably outper-
formed growth in the US.
EBIT amounted to SEK –71 million (153), yielding a –2 % (6 %) EBIT margin. Adjusted EBIT
amounted to SEK 206 million (445), yielding a 6 % (17 %) Adjusted EBIT margin. Adjusted EBIT
was in line with management expectations in one of the seasonally weakest quarters of the
year. On a YoY basis, profitability was impacted by a product mix more geared towards trading
card games. Operating costs also increased YoY due to inflation and the run rate impact of
prior year recruitments. In addition, the comparative quarter last year benefitted from notable
cost phasing into later quarters as a result of a shift of activities during the initial integra-
tion phase after transaction closing. These impacts are expected to moderate over the next
quarters as Asmodee laps the run-rate and inflation effects and as the timing differences on
operating costs unwind.
The effects of the continued inventory unwinding mentioned in previous quarters can be seen
in Asmodee’s free cash flow generation. While the first fiscal quarter is a period where historic
seasonal trends reflect a significant inventory build-up in preparation for the peak season, the
inventory increase in Q1 this year was moderated by the unwinding effect and the action plans
previously implemented by management to control inventory levels. As a result, the working
SHARE OF
GROUP SALES
30 % (37 %)
INTELLECTUAL
PROPERTY (IP)
397 (369)
INTERNAL
HEADCOUNT
2,579 (2,388)
INTERNAL
STUDIOS
22 (22)
16
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
capital investment in inventory during Q1 decreased by more than SEK 400 million compared
to the same period last year. This drives a significant improvement in cash generation with
Asmodee delivering a positive free cash flow for the quarter.
The company is expected to convert above 100% of its Adjusted EBIT into free cash flow in FY
2023/24, with a positive contribution in the first half of the financial year compared to the cash
consumption seen in H1 last year.
Asmodee has a strong pipeline of novelties and new releases with a number of new titles
reaching the market during Q1 FY 2023/24, including new original titles such as Anarchy
Pancakes from Exploding Kittens, Setup from Bezzerwizzer and The Number from Repos Prod
along with new licensed games such as MARVEL D.A.G.G.E.R from Fantasy Flight Games and a
successful launch of Shatterpoint, a new Star Wars miniatures game from Atomic Mass.
In the coming quarters new releases will include original titles such as Champions! and
Spellbook, a new legacy game in the successful Ticket to Ride franchise as well as new titles
base on popular licenses such as Dixit Disney and Bridgerton. The release of an exciting new
trading card game, Star Wars Unlimited published by Asmodee’s Fantasy Flight Games studio,
is scheduled for release in the fourth quarter.
Asmodee also received 3 prestigious Spiel des Jahres awards at the recent ceremony in July.
> Mysterium Kids: Captain Echo’s Treasure from Space Cow and Libellud received the Kinder-
spiel des Jahres 2023 recognising the best childrens’ game.
> Challengers! from Z-Man received the Kennerspiel des Jahres 2023 recognising the
advanced games category.
> Unlock! and Unlock! Kids from Space Cowboys and Space Cow received the Sonder-
preis 2023, a Special Jury prize acknowledging the games’ innovation and impact on the
board gaming industry.
OPERATING SEGMENT
TABLETOP GAMES
Fun Facts
17
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OPERATING SEGMENT
ENTERTAINMENT
& SERVICES
OPERATING SEGMENT
ENTERTAINMENT & SERVICES
The Entertainment & Services segment consists of three operative groups:
Dark Horse Media, Freemode and parts of PLAION. Dark Horse is a leading
developer, publisher and distributor of comic books in the US. Freemode is a
diverse mix of companies, including Middle-earth Enterprises and Limited Run
Games as well as companies active in different parts of the gaming and enter-
tainment value chain. The segment also includes PLAION´s partner publishing
and Film businesses.
Key performance indicators,
Entertainment & Services
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales, SEK m , ,
of which Digital products, SEK m
of which Physical products, SEK m , ,
of which Other, SEK m
Net sales growth from previous period % % %
EBIT, SEK m – –
EBIT margin % – % – %
Adjusted EBIT, SEK m
Adjusted EBIT margin % % %
SEGMENT HIGHLIGHTS
Net sales in the quarter for Entertainment & Services amounted to SEK 1,832 million, an
increase of 173 % compared to the same period last year, or 70 % organically and 83 %
pro forma in constant currency. The organic and pro forma growth was primarily driven by
PLAION Publishing division, with two notable releases from partners in the quarter. The inor-
ganic increase in net sales was primarily driven by the acquisitions of Limited Run Games
and Middle-earth Enterprises.
EBIT amounted to SEK 185 million (–4), yielding a 10 % (–1 %) EBIT margin. Adjusted EBIT
amounted to SEK 284 million (21), yielding a 15 % (3 %) Adjusted EBIT margin. The higher margin
is primarily explained by stronger-than-expected licensing revenue for the Lord of the Rings
IP. In the quarter, two external games were released, including the mobile game The Lord of
the Rings: Heroes of Middle-earth (EA) and PC/console game The Lord of the Rings: Gollum
(Daedalic Entertainment). Middle-earth-Enterprises, part of the operative group Freemode, also
announced a licensing agreement for Amazon Games to develop and publish a new massively
multiplayer online (MMO) game based on the IP.
Late in the quarter, on June 23, the Magic the Gathering trading card game The Lord of the
Rings: Tales of Middle-earth™, was released by Middle-earth Enterprises’ licensing partner
Wizards of the Coast, garnering positive acclaim from fans and critics. Middle-earth Enter-
prises is the licensor and thereby receives royalty revenues based on the sales of the TCG
series. Additionally, later this year, The Lord of the Rings: Return to Moria, a new, exciting
PC/console survival-crafting game from external licensee North Beach Games and the devel-
opment studio Free Range Games is expected to be released. These two titles are examples
of potential key revenue drivers for Middle-earth Enterprises during this financial year.
SHARE OF
GROUP SALES
18 % (9 %)
INTELLECTUAL
PROPERTY (IP)
194 (163)
INTERNAL
HEADCOUNT
967 (820)
INTERNAL
STUDIOS
3 (1)
18
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NET PROFIT FOR THE PERIOD
Net profit for the first quarter amounted to SEK 2,251 million (–182), an increase of SEK 2,433 mil-
lion YoY, primarily driven by non-cash eects in net financial items.
Net financial items amounted to SEK 2,171 million (538) in the quarter. Net interest income/
expenses and other financial income/expenses amounted to SEK –236 million (–67). Changes
in fair value of contingent consideration and put/call options on non-controlling interests and
related interest expenses including deferred considerations amounted to SEK 1,667 million (–65).
The increase is mainly explained by a reduction in the Embracer share price which lowers the
fair value. Exchange rate gain/losses amounted to SEK 740 million (670), mainly related to the
revaluation of intercompany financial receivables.
Income tax amounted to SEK –341 million (–322) in the quarter. Current income tax amounted to
SEK –504 million (–275) and deferred income tax amounted to SEK 163 million (–47).
CONDENSED CASH FLOW
SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Operating activities
Cash flow from operating activities before changes
in working capital , , ,
Cash flow from changes in working capital – –, –,
Cash flow from operating activities , ,
Cash flow from investing activities –, –, –,
Cash flow from financing activities , ,
Cash flow for the period – , –,
Cash and cash equivalents at the beginning of period , , ,
Exchange-rate dierences in cash and cash equivalents
Cash and cash equivalents at the end of period , , ,
Cash flow from operating activities amounted to SEK 1,359 million (347) whereof cash flow from
working capital amounted to SEK –511 million (–1,260) in the quarter. Compared to the previous
year there is a significantly reduced inventory build-up in the Tabletop Games segment. The
increase in working capital in the quarter is driven by seasonal build-up of inventory in Tabletop
Games segment. Operating receivables increased driven by strong sales in Entertainment &
Services and Tabletop towards the end of the quarter. The increase in operating liabilities was
relatively lower due to reduction of prepaid income and trade payables.
Cash flow from investing activities amounted to SEK –2,350 million (–3,688) in the quarter. The
eects in the cash flow from investing activities is driven by increased investments in intangible
assets SEK –1,911 million (–1,204) where SEK –1,757 million (–1,114) is invested in the portfolio of
on-going game development and the majority –1,672 million relates to the PC/Console Segment.
Current investments amounted to SEK 0 million (–1 533) and the cash flow from Acquisitions of
subsidiaries amounted to SEK –113 million (–842). Acquisition of financial assets amounted to
–226 million (–35) and mainly relates to a long-term licensing contract in Entertainment & Ser-
vices segment.
Free cash flow after changes in working capital amounted to SEK –599 million (–794) (see page
47-50) which is largely in-line with management expectations for the quarter.
Cash flow from financing activities amounted to SEK 120 million (7,393) in the quarter. Comparing
this quarter to the same quarter last year the decrease mainly relates to the proceeds from bor-
rowings that amounted to 635 million during the quarter compared with SEK 2,739 million during
the same quarter last year. A new share issue that amounted to SEK 4,875 million was made in
the first quarter of the financial year 2022/2023.
OTHER FINANCIAL
INFORMATION
OTHER FINANCIAL INFORMATION
19
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OTHER FINANCIAL
INFORMATION
NET DEBT AND AVAILABLE FUNDS
SEK m
Jun 30,
2023
Jun 30,
2022
Mar 31,
2023
Cash , , ,
Current investments ,
Current liabilities to credit institutions –, –, –
Current account credit facilities – – –
Non-current liabilities to credit institutions –, –, –,
Net Debt (–) / Net Cash (+) –, –, –,
As per June 30, 2023 the group had non-interest-bearing deferred considerations and obliga-
tions related to historical business combinations with an expected cash settlement of SEK 8.8
billion with an estimated maturity structure according to page 20.
In July, agreements were signed for the parent company’s main credit- and loan facilities,
extending the maturity until October 2024. Thus, as of August 17, the parent company has no
material short-term loans. Further negotiations regarding a longer-term extension of the loans
continue according to plan and are expected to conclude during the autumn.
Embracer Group AB has a leverage covenant in its credit agreements. The terms for these
are 2.5x net debt through Adjusted EBITDA trailing twelve months calculated according to
agreement with lenders. As per June 30, 2023 Embracer has substantial headroom to the
covenants.
SEK m
Jun 30,
2023
Jun 30,
2022
Mar 31,
2023
Cash , , ,
Current investments ,
Unutilized credit facilities amounts to 1,066 , ,
Available funds , , ,
Embracer Group HQ
20
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OBLIGATIONS RELATED TO HISTORICAL ACQUISITIONS
In connection to certain business combinations, agreements have been entered regarding
contingent considerations that are not classified as part of the transferred purchase consider-
ation since there is a requirement for continued employment for the seller or other reasons for
the contingent consideration to be accounted for as a separate transaction. Therefore, the item
is classified as payment for future services. The contingent consideration could be paid in cash
or through shares, whereby transactions are accounted for according to IFRS 2 Share-based
payment for remuneration that is equity and share-based, or according to IAS 19 Benefits for
employees through cash-settled benefits. As the benefits are earned, the item is accounted for
as a personnel expense in the group’s income statement.
Contingent considerations that are classified as part of transferred purchase considerations and
put/call options on non-controlling interests are described in note 5. Contingent considerations
classified as part of the purchase consideration are accounted for as either equity or debt in the
group’s balance sheet. On June 30, the debt portion amounted to SEK 4,074 million and the equity
portion amounted to SEK 1,999 million. The value of these obligations is based on the estimated
degree of fulfillment and timing for such fulfillment, which is continuously monitored and evaluated.
Obligations related to historical business combinations to be settled in cash
The table below gives an overview of obligations related to historical acquisitions in SEK million
to be settled in cash on June 30, 2023. The table is based on the closing exchange rates as
of June 30. The present value of contingent considerations has been calculated based on the
expected outcome for financial and operational targets for each individual agreement. The
financial liability will vary over time depending on, among other things, the degree of fulfillment
of conditions for payment, the development of certain exchange rates in relation to the Swedish
krona and interest rates.
During the quarter the obligations has increased with SEK 196 million driven by exchange rates
and discount rates. The changes in the settlement structure since last quarter is explained by
changes in the estimation of timing on target fulfillment.
Financial year when
settlement might occur
Contingent consideration
classified as part of
purchase price
1)
,SEK m
Obligations in relation to future
personnel costs related to
acquisitions, SEK m
Total obligations
related to historical
acquisitions, SEK m
2023/2024 , ,
2024/2025
2025/2026
2026/2027 , ,
2027/2028 , ,
2028/2029
2029/2030
2030/2031
, , ,
1)
Includes cash portion of put/call options on non-controlling interests and deferred consideration
Contingent considerations classified as part of the purchase consideration and which will be
settled in cash are accounted for as debt in the group’s balance sheet, divided into current and
non-current debt. Additional information is available in note 5. Obligations related to future per-
sonnel costs related to acquisitions which will be settled in cash are accounted for in the group’s
balance sheet, to the extent that it has been earned by the employee and is classified as debt.
On June 30, the debt amounted to SEK 1,073 million, divided into current and non-current debt.
Deferred consideration refers to future payments from business combinations and asset deals
where the payment is not contingent upon future financial or operational targets. Additional
information is available in note 5. Put/call options on non-controlling interest refers to put/call
option on non-controlling interests in business combinations where the selling shareholders
keep some ownership and there is a contractual obligation where Embracer will purchase the
remaining interest if the holder of the option determines to exercise. Additional information is
available in note 5.
OTHER FINANCIAL
INFORMATION
21
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Obligations related to historical acquisitions to be settled in shares
The table below provides an overview of obligations related to historical acquisitions on June
30, 2023, which will be settled in shares, with information on the number of shares. Contin-
gent considerations classified as part of the purchase consideration are accounted for as
either equity or debt in the group’s balance sheet. Additional information is available in note
5. Obligations related to future personnel costs related to acquisitions which will be settled in
shares are accounted for in the group’s balance sheet, to the extent that it has been earned by
the employee and is classified as equity in the group’s balance sheet.
Number of shares,
million
Contingent consideration
classified as part of
purchase price
Obligations in relation to
future personnel costs
related to acquisitions
Total obligations
related to historical
acquisitions
Already issued
To be issued
Total number of shares
The number of shares to be issued as additional purchase price can vary but never exceed 107
million according to the earnout agreements. If all shares are issued, the dilution will amount
to 7.86 % of capital and 5.46 % of the voting rights as of June 30, 2023, and the total number
of shares after full dilution will be 1,367 million.
Current expectations of shares to be issued based on target achievement are within the inter-
val 63 to 76 million. If shares within this interval are issued, the dilution will amount to 4.74-
5.70 % of capital and 3.26-3.93 % of the voting rights as of June 30, 2023.
The 90 million shares that have so far been issued are subject to clawback restrictions (claw-
back shares). Clawback shares are defined as shares of the company issued to sellers at the
completion of acquisitions of companies or assets. Clawback shares are part of the earnout
consideration to sellers of companies or assets. Clawback shares are held by sellers, either in
escrow accounts or on regular accounts, with an agreed right for the company to receive the
shares back, at no consideration, if specific earnout targets are not met. Clawback shares are
kept by the sellers if earnout targets are met.
During the quarter the number of already issued shares under clawback restrictions
decreased with 40 million shares due to several target achievements.
FINANCIAL LEVERAGE POLICY
The Board of Directors of Embracer Group has set goals for the capital structure. The leverage
target is to have net debt to Adjusted EBIT of 1.0x on a 12-month forward looking basis. The
Group may exceed this ratio for the right inorganic growth opportunity, but with the ambition to
return to below 1.0x in the medium term.
PARENT COMPANY
The parent company acquires and conducts operations through its subsidiaries and underlying
companies
The parent company’s net sales for the quarter were SEK 31 million (18), and profit before tax
was SEK 532 million (493). Profit after tax was SEK 445 million (389).
Cash and current investments as of June 30, 2023 were SEK 0 million (7,396). Available funds
amounted to SEK 173 million as of June 30, 2023. The parent company’s equity at the end of
the period was SEK 60,099 million (52,458).
OTHER FINANCIAL
INFORMATION
22
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
SIGNIFICANT EVENTS DURING THE QUARTER
> On May 15, Middle-earth-Enterprises announced an agreement with Amazon Games to
develop and publish a new massively multiplayer online (MMO) game based on The Lord of
the Rings.
> On May 15, Embracer Group AB estimated that the Adjusted EBIT for Q4 FY 2022/23 would
amount to SEK 0.9 billion. Adjusted EBIT for FY 2022/23 was estimated to SEK 6.35 billion,
compared to the previously communicated forecast range of SEK 8.0-10.0 billion. The differ-
ence was primarily due to not closing the transformative partnership- and licensing deals, as
announced by a press release on 27 March 2023.
> In connection to the publication of the Q4 FY 2022/23 report on May 24, Embracer Group
communicated that a major strategic partnership would not materialize. The deal would
have enabled a catch-up payment at closing for already capitalized costs for a range of
large-budget games, but also notably improved medium-to-long-term profit and cash flow
predictability for the duration of the game development projects.
> On June 13, Embracer Group AB announced a comprehensive restructuring program for FY
2023/24, running until the end of March 2024. The program’s main focus areas are capex
and opex savings, capital allocation, and efficiency improvements.
> On June 13, and in connection with the announcement of the restructuring program Matthew
Karch was appointed interim Chief Operating Officer, and Phil Rogers was appointed interim
Chief Strategy Officer, who will co-lead the program planning and implementation.
> On June 29, the nomination committee of Embracer Group resolved, in accordance with the
audit and sustainability committee’s recommendation, to propose PwC as new auditor at
the annual general meeting 2023. PwC has notified that Magnus Svensson Henryson will be
proposed as main responsible auditor.
SIGNIFICANT EVENTS AFTER THE QUARTER
> On July 5, Embracer Group announced and successfully carried out an issue of 80,000,000
new B shares directed to Swedish and international institutional investors, thereby raising
gross proceeds of SEK 2 billion. The subscription price in the share issue amounted to SEK
25.00 per B share and was determined through an accelerated book-building procedure
led by Goldman Sachs, Nordea Bank, SEB and Swedbank. Embracer Group intends to
use the net proceeds to further strengthen its financial position, improve financing costs
and operational flexibility in addition to previously announced restructuring program. The
rights issue increased the number of shares in Embracer Group to 1,339,242,167, of which
66,798,274 are A shares carrying ten votes each and 1,272,443,893 are B shares carrying
one vote each.
OTHER FINANCIAL
INFORMATION
23
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
During Q1 FY 2023/24, Embracer Group enrolled in the UN Global Compact Target Gender
Equality Accelerator program. It is a six-month program that activates participating companies
of the UN Global Compact to move from commitment to action through performance analysis,
capacity-building workshops, learning from best-practice, and multi-stakeholder dialogue. The
program will support companies in setting and reaching ambitious corporate targets for women’s
representation and equal pay for work of equal value.
Further, Embracer also participated in the S&P Global Corporate Sustainability Assessment
(CSA), an annual evaluation of companies’ sustainability practices. CSA covers over 10,000
companies around the world. The assessment focuses on sustainability criteria that are both
industry-specific and financially material and is used to benchmark companies’ sustainability per-
formance relative to their industry peers. It also provides internal and external stakeholders with
important insights into a company’s sustainability performance and value drivers.
To meet the upcoming legal requirements for EU’s Corporate Sustainability Reporting Directive
(CSRD), Embracer launched an internal CSRD readiness project, ensuring that the Group is pre-
pared to meet those obligations.
During the quarter different initiatives were taken to create interest in the industry among young-
sters and girls. To encourage young people and introduce them to the gaming industry Embracer
cooperates with partners addressing these topics and one of the initiatives is Kodcentrum. This
summer, Kodcentrum organized a five-day camp, including game development workshops for
children and young people in Karlstad, Sweden. Kodcentrum organized the camp together with
Karlstad Municipality, Embracer Group, and The Great Journey. The operative group Crystal
Dynamics – Eidos hosted their second annual summer camp “Girls Make Games” to inspire the
next generation of designers, creators, and engineers.
In the quarter an internal accessibility webinar week was launched and shared across the group,
hosted by Gearbox and Eidos. Topics included were; “2022-2023 Game Accessibility Industry
Recap”, “QA’s role in Accessibility”, “How To Be A Game Accessibility Champion in Your Organi-
zation”, “Developing Closed Captions in Marvel’s Guardians of the Galaxy” and “Audio Descrip-
tion Best Practices in Games”.
During the reporting quarter, a new annual training on privacy was launched for all 16,500
employees in the group.
SUSTAINABILITY
AND GOVERNANCE
SUSTAINABILITY AND GOVERNANCE
The Lord of the Rings: Tales of Middle-earth™
24
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Embracer Group currently operates in four segments; PC/Console and Mobile Games (jointly
‘Video games’), Tabletop Games and Entertainment & Services.
VIDEO GAMES MARKET
The underlying market conditions have improved, compared to last year, despite a challeng-
ing macro environment. Gaming continues to permeate the mainstream, with many gaming
IPs crossing medias successfully to Film and TV. Furthermore, the number of players globally
continues to rise, up 6 % to 3.4 billion in 2023
1)
.
In 2023 the global video games market is expected to generate USD 188 billion, an increase
of 3% YoY
1)
.
The video games market growth is being driven by better console supply, a stronger new
release line-up (several titles previously delayed by the pandemic), digital sales generally,
subscription business, VR and Games as a Service (in-game revenue). In the first half of 2023,
PS5 console sales are off to a good start, over doubling YoY in Europe and almost doubling
YoY in the US
2)
.
The gaming market is more resilient than other markets to deal with economic pressures. This
comes from its good perceived value for money and the many different ways and levels of
playing and paying. Furthermore, people are expected to spend more time at home during a
spending squeeze.
The longer-term growth prospects also remain strong, and total games market values are pre-
dicted to reach USD 212 billion in 2026, a 6 % CAGR between 2019 and 2026
1)
. In fact 2022
represents the only declining year for the games market (in the 8 years between 2019 and
2026) and analyst firm Newzoo predict market growth in each of the next 4 years.
MARKET
OVERVIEW
MARKET REVIEW
45% 45%
1,0
0,8
0,6
0,4 0,4 21–35
0,2 0,2 10–20
0,0 0,0
1,0
0,8 51–65
0,6 36–50
1030
882
793
631
1133
629
857
644
466
493
396
1154
728
939
1002
973
742
930
1611
1834
357
334
256
395
29%
35%
35%
64%
50%
66%
70%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
20/21 Q1 20/21 Q2 20/21 Q3 20/21 Q4 21/22 Q1 21/22 Q2 21/22 Q3 21/22 Q4
Premium Classic Premium / Live Ops Mo bile Developm ent revenue Recurring Re venue
USD billion
0
50
100
150
200
250
20262025202420232022202120202019
205
196
188
183
193
179
Global Game Revenue
Source: Newzoo
Forecast
144
MARKET TRENDLINE
212
A note on the above market estimations from Newzoo: Values and growth levels are slightly lower than their previous
predictions (May) mainly due to a lowering of 2023 estimations for mobile gaming revenues (total 2023 revenue is USD
0.8 billion / 0.4 % lower than the previous forecast in May).
PC / Console Games Market
The Console sector, estimated at USD 52 billion (2022), accounts for 29 % of the global video
games market and is expected to increase in 2023 by 7 % YoY
1)
thanks largely to an acceleration
of the new-gen console installed base, with more freely available supply, growing subscription
revenues and a stronger new release line-up. Furthermore, Sony has reported that PS5 owners
are generally more engaged and spend more on average (30 % more) than PS4 owners previ-
ously. Overall, console will be the fastest growing sector of the video games market in 2023.
The PC sector continues its steady performance. It is estimated at USD 39 billion (2022), account-
ing for 21 % of the global games market. It is expected to see growth of 0.5 % in 2023
1)
. The sec-
tor has benefitted from the large increase in home PCs and laptops during the pandemic. Steam
is still the dominant retailer and, noticeably, their global player base reached its highest ever (at
250 million) last year growing with a 2-year CAGR of 9 % between 2020 and 2022
1)
.
25
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Growth in both the PC and Console markets are expected to be helped (this year and onwards)
by increasing “in-game revenue” stemming from purchases within games (either in premium
games or free-to-play games).
Mobile Gaming Market
The mobile gaming market, estimated at USD 92 billion (2022), is the largest game sector, rep-
resenting 50 % of the global gaming market. It is expected to see modest growth of 0.8 % YoY
in 2023
1)
. The sector’s performance is good considering persistent headwinds including ongo-
ing pressures of privacy regulation which is taking time for developers to adjust to, China’s
slow license approval process and the fact that the more casual mobile users are seemingly
more affected by economic pressures than other gaming sectors.
TABLETOP GAMES MARKET
The tabletop market (EU + US, STCG, Card & Board Games), in which Embracer Group’s Asmodee
is a key player, was slightly down by 1.3 % YoY in Q1 FY 2023/24. Tabletop market growth was
driven by the EU, growing by 8.1 %, while the US Tabletop market decreased by 5.9 %
3)
. Growth in
Europe was driven primarily by the STCG market, which was up 25.1% YoY, while the Boardgame
market also grew slightly at 2 % YoY. The US Boardgame market was down 5 % YoY
3)
.
ENTERTAINMENT & SERVICES MARKET
Comics and Books
Book sales in the US continue to be lower compared to the record levels of 2020-2022 but
are higher than pre-pandemic levels. In Q1 FY 2023/24 sales fell 2.7 % YoY
4)
. After years of
constant growth, manga slowed down and declined by 19 % for 2023 YTD (as of week 24,
ending June 17). Excluding manga, the comics and graphical novels category is down 13 %
YoY in value, although still trending above pre-pandemic levels. Dark Horse published manga
Berserk, the top selling manga series in the US during the first half of 2023
5)
.
TV and Film
The strikes by both the Writers’ and Screen Actor’s Guilds have had an impact on the entertain-
ment industry with a vast number of projects and productions halted, resulting in delays until
after the strikes are settled
6)
. Industry revenues are expected to decline in the coming quarters
as major films and TV series are delayed. The strikes affect scripted content produced in the US
which means that unscripted content, like reality TV shows and game shows, together with films
and TV series produced outside of the US, can fill the void of delayed productions.
The strike aside, the trend for global box office revenues has been positive and hit USD 4.54
billion in the month of July 2023, making it the single highest grossing month since before the
pandemic began, tracking 17 % above the July-average of the last three pre-pandemic years
(2017-2019)
7)
. For 2023 YTD (as of end of July) the global box office revenue is estimated at
USD 20.95 billion, which is 31 % up YoY but 11 % below the 2017-2019 average for the same
period. The US box office revenue reached USD 5.83 billion for 2023 YTD which is down 18 %
compared to the 2017-2019 average.
Film and TV series based on video games continue to perform well. The Super Mario Bros.
movie continued its stellar performance grossing USD 1.35 billion in global box office rev-
enues
8)
from the premiere in April until end of July. Furthermore, Season 3 of The Witcher
was the most watched TV series for three weeks in July on Netflix
9)
. The trend of film and TV
adaptations is set to continue with major properties like Sonic the Hedgehog 3 (Paramount
Pictures), Borderlands (Lionsgate) and Minecraft (Warner Bros Pictures) coming to the silver
screen in 2024 and 2025.
MARKET
OVERVIEW
1)
Source: Newzoo
2)
Source: VG Chartz
3)
Source: NPD / Circana and Asmodee
4)
Source: Circana BookScan
5)
Source: ICv2.com analysis of data from Circana BookScan (book channel) and ComicHub (comic store channel)
6)
Source: Business Insider
7)
Source: Gower Street Analytics
8)
Source: Box Office Mojo
9)
Source: Netflix
26
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Embracer Games Archive
OTHER
INFORMATION
The Embracer Games Archive preserves and tributes the games culture with an archive of phys-
ical games and consoles. By building an extensive archive of physically released games for the
consumer market, the aim is to be a resource for the gaming industry and its community. Games
should be shared with future and current generations for cultural and educational purposes and
the archive aims to contribute to these preservation efforts.
During the reporting quarter the Games Archive started a collaboration with Karlstad University,
which will lead to researching and studying in the archive.
The Games Archive now has its own and dedicated homepage with regular updates and more
accessible information where stakeholders can navigate and follow the work of the archive:
www.embracergamesarchive.com
GAMES ARCHIVE
27
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
ANALYSTS FOLLOWING EMBRACER GROUP
AS OF AUGUST 17, 2023
Company Name Mail
Exane BNP Paribas Nicholas Langlet nicholas.langlet@exanebnpparibas.com
Jeeries Sebastian Patulea spatulea@jeeries.com
At www.embracer.com consensus estimates are provided as an IR-service. The estimates presented are delivered from
Modular Finance and based on predictions made by analysts who cover Embracer Group.
TOP 10 OWNERS AS OF JUNE 30, 2023
Change from
Mar 31, 2023
Name
Class A
shares
Class B
shares
Share of
capital, %
Share of
votes, %
Class A and B
shares
Lars Wingefors AB ,, ,, . % . % -
Savvy Gaming Group - ,, . % . % -
S3D Media Inc ,, ,, . % . % -
Founders/Management - Easybrain - ,, . % . % –,,
Canada Pension Plan Investment Board (CPP) - ,, . % . % -
PAI Partners - ,, . % . % -
Alecta Tjänstepension - ,, . % . % –,,
DNB Asset Management AS - ,, . % . % ,,
Handelsbanken Fonder - ,, . % . % ,
Swedbank Robur Fonder - ,, . % . % –,,
TOP 10 ,, ,, . % . %
OTHERS ,, ,, . % . %
TOTAL ,, ,,, . % . %
Source: Monitor by Modular Finance.
Shareholder lists are available on embracer.com and are updated in real time.
THE SHARE
OTHER
INFORMATION
45% 45%
1,0
0,8
0,6
0,4 0,4 21–35
0,2 0,2 10–20
0,0 0,0
1,0
0,8 51–65
0,6 36–50
1030
882
793
631
1133
629
857
644
466
493
396
1154
728
939
1002
973
742
930
1611
1834
357
334
256
395
29%
35%
35%
64%
50%
66%
70%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
20/21 Q1 20/21 Q2 20/21 Q3 20/21 Q4 21/22 Q1 21/22 Q2 21/22 Q3 21/22 Q4
Premium Classic Premium / Live Ops Mo bile Developm ent revenue Recurring Re venue
Swedish
institutions
55.1 %
International
institutions
44.9 %
Top 20
Management
/Co-Founders
38.1 %
Top 50
institutions
43.2 %
Other shareholders
18.7 %
INTERNATIONAL OWNERSHIP
TOP 50 INSTITUTIONAL
AS OF JUNE 30, 2023
BY CAPITAL
INSTITUTIONAL OWNERSHIP
VS MANAGEMENT
AS OF JUNE 30, 2023
BY CAPITAL
28
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
TOP 20 MANAGEMENT & COFOUNDER OWNERS AS OF JUNE 30, 2023
Owner Co-Founder
Class A
shares
Class B
shares
Share of
capital, %
Share of
votes, %
Lars Wingefors AB Embracer Group ,, ,, . % . %
Matthew Karch and Andrey Iones Saber Interactive ,, ,, . % . %
Founders/Management
1)
Easybrain - ,, . % . %
Ken Go Deca Games - ,, . % . %
Randy Pitchford Gearbox - ,, . % . %
Matthew Karch
2)
Saber interactive - ,, . % . %
Founders/Management 4a - ,, . % . %
Erik Stenberg Embracer Group - ,, . % . %
Management Crazy Labs - ,, . % . %
Founders
3)
Ghostship Games - ,, . % . %
Luisa Bixio Milestone - ,, . % . %
Founders/Management Aspyr - ,, . % . %
Richard Stitselaar and Kimara Rouwit Vertigo Games - ,, . % . %
Pelle Lundborg Embracer Group ,, ,, . % . %
Anton Westbergh Coee Stain - ,, . % . %
Klemens Kundratitz Koch Media - ,, . % . %
William Munk II Tripwire - ,, . % . %
David Hensley Tripwire - ,, . % . %
Alan Wilson Tripwire - ,, . % . %
Dennis Gustafsson Tuxedo Labs - ,, . % . %
TOP 20 ,, ,, . % . %
ALL OTHER SHAREHOLDERS - ,, . % . %
TOTAL ,, ,,, . % . %
Holdings by management above are in general owned trough various wholly owned companies. Holdings include clawback
shares that are issued but subject to restrictions and in some cases are these shares not part of the transferred consideration in
the PPA but is classified as remuneration for future services according to IFRS2.
1)
Easybrain founders sold 2,267,448 B-shares during quarter.
2)
Matthew Karch has bought 6,500,000 B-shares during quarter and 1,000,000 B-shares after quarter end.
3)
Ghostship Games founders sold 10,000 B-shares during quarter.
OTHER
INFORMATION
Homeworld 3
29
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
TOP 50 INSTITUTIONAL OWNERS AS OF JUNE 30, 2023
Change from
Mar 31, 2023
Name
Class A
shares
Class B
shares
Share of
capital, %
Share of
votes, %
Class B
shares
Savvy Gaming Group ,, . % . % -
Canada Pension Plan Investment Board (CPP) ,, . % . % -
PAI Partners ,, . % . % -
Alecta Tjänstepension ,, . % . % –4,000,000
DNB Asset Management AS ,, . % . % ,,
Handelsbanken Fonder ,, . % . % ,
Swedbank Robur Fonder ,, . % . % –,,
Didner & Gerge Fonder ,, . % . % –,,
SEB Fonder ,, . % . % 4,211,447
BlackRock ,, . % . % 878,386
Länsförsäkringar Fonder ,, . % . % ,,
Andra AP-fonden ,, . % . % –,
TIN Fonder ,, . % . % -
Skandia Fonder ,, . % . % –306,787
ODIN Fonder ,, . % . % –6,000,000
AMF Pension & Fonder ,, . % . % –,,
DNB Asset Management SA ,, . % . % ,
Baillie Giord & Co ,, . % . % –,
Nordea Fonder ,, . % . % ,,
Första AP-fonden ,, . % . % –,,
Martin Larsson (Chalex AB) ,, . % . % -
LOYS AG ,, . % . % ,,
Government of Japan Pension Investment Fund ,, . % . % -
Livförsäkringsbolaget Skandia ,, . % . % –,,
Storebrand Fonder ,, . % . % 2,760,787
State Street Global Advisors ,, . % . % 114,473
Handelsbanken Liv Försäkring AB ,, . % . % 850,525
Swedbank Försäkring ,, . % . % 845,591
Enter Fonder ,, . % . % –,,
Fidelity Investments (FMR) ,, . % . % ,
Northern Trust ,, . % . % ,
Aktia Asset Management ,, . % . % –,
Kåpan Pensioner Försäkringsförening ,, . % . % ,,
Folksam ,, . % . % 2,688,592
Nordea Liv & Pension ,, . % . % 519,635
Naventi Fonder ,, . % . % -
Tredje AP-fonden ,, . % . % ,
RAM Rational Asset Management ,, . % . % ,
Svenska Handelsbanken AB for PB ,, . % . % –87,150
1832 Asset Management ,, . % . % -
Aviva ,, . % . % ,,
M&G Investment Management ,, . % . % -
KBC Asset Management ,, . % . % -
Öhman Fonder ,, . % . % –3,719,391
Lancelot Asset Management AB ,, . % . % -
TIAA - Teachers Advisors ,, . % . % -
Global X Management Company LLC ,, . % . % –,
Fondita Fund Management ,, . % . % -
DWS Investments ,, . % . % 14,666
Provobis Holding AB ,, . % . % 800,000
TOP 50 ,, . % . %
ALL OTHER SHAREHOLDERS ,, ,, . % . %
TOTAL ,, ,,, . % . %
Source: Monitor by Modular Finance.
OTHER
INFORMATION
30
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
RISKS AND UNCERTAINTY FACTORS
Embracer Group is exposed to risks, particularly the dependence on key persons for the success
of game development, the sales performance of launched games, dependence on a few distrib-
utors and the success and performance of acquisitions. The complete risk analysis is found in
the company’s most recent Annual Report.
AUDITOR’S REVIEW
This Interim Report has not been subject to review by the Company’s auditor.
FORTHCOMING REPORTS
Annual General Meeting 2023 September 21, 2023
Interim Report Q2, July-September 2023 November 16, 2023
Interim Report Q3, October-December 2023 February 15, 2024
FOR MORE INFORMATION
Find more information about the Company at its website: embracer.com
For any questions on this report, please contact:
Lars Wingefors, Co-Founder & CEO
lars.wingefors@embracer.com
Johan Ekström, Group CFO & Deputy CEO
johan.ekstrom@embracer.com
Oscar Erixon, Head of Investor Relations
oscar.erixon@embracer.com, +46 54 53 56 40
Beatrice Flink Forsgren, Head of Brand & Communication
beatrice.forsgren@embracer.com, +46 54 53 56 07
OTHER
INFORMATION
Lightyear Frontier
31
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
OTHER
INFORMATION
This report is information that is mandatory for Embracer Group to make public pursuant to the EU Market
Abuse Regulation. The information was submitted for publication, through the agency of the contact person
set out above, at 07:00 CET on August 17, 2023.
This report contains forward-looking statements that reflect the Board of Directors’ and management’s
current views with respect to certain future events and potential financial performance. Forward-looking
statements are subject to risks and uncertainties. Results could dier materially from forward-looking statements as a
result of, among other factors, (i) changes in economic, market and competitive conditions,
(ii) success of business initiatives, (iii) changes in the regulatory environment and other government actions,
(iv) fluctuations in exchange rates and (v) business risk management.
This report is based solely on the circumstances at the date of publication and except to the extent required
under applicable law or applicable market place regulations, Embracer Group AB is under no obligation to
update the information, opinions or forward-looking statements in this report.
Karlstad, Sweden, August 17, 2023
SIGNATURES AND ASSURANCE
The Board of Directors and Chief Executive Officer offer their assurance that this interim report
for the first quarter gives a true and fair view of the Group’s and parent company’s operations,
financial position and results of operations and describes the significant risks and uncertain-
ties facing the Group and the parent company.
David Gardner
Board member
Cecilia Driving
Board member
Jacob Jonmyren
Board member
Matthew Karch
Board member
Erik Stenberg
Board member
Lars Wingefors
CEO and Board member
Kicki Wallje-Lund
Chair of the Board
AEW: Fight Forever
32
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Amounts in SEK m Note
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net sales , , ,
Other operating income
Total operating income , , ,
Work performed by the Company for its own use and capitalized , ,
Goods for resale –, –, –,
Other external expenses –, –, –,
Personnel expenses –, –, –,
Depreciation, amortization and impairment –, –, –,
Other operating expenses – – –
Share of profit of an associate
Operating profit (EBIT) –
Net financial items , ,
Profit before tax , ,
Income tax – – –
Net profit for the period , – ,
Net profit for the period attributable to:
Equity holders of the parent , – ,
Non-controlling interests –
Earnings per share
Basic earnings per share (SEK)
. –. .
Diluted earnings per share (SEK) . –. .
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Amounts in SEK m Note
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net profit for the period , – ,
Other comprehensive income
Items that may be reclassified to profit or loss (net of tax):
Exchange differences on translation of foreign operations , , ,
Cash flow hedges – -
Items that will not be reclassified to profit or loss (net of tax): - - -
Remeasurement of defined benefit plans for employees -
Total other comprehensive income for the period, net of tax , , ,
Total comprehensive income for the period, net of tax , , ,
Total comprehensive income attributable to:
Equity holders of the parent , , ,
Non-controlling interests –
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
33
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Amounts in SEK m Note
Jun 30,
2023
Jun 30,
2022
Mar 31,
2023
ASSETS
Non-current assets
Goodwill , , ,
Intangible assets 47,909 , 45,579
Property, plant and equipment 1,214 1,148
Right-of-use assets 1,597 , 1,423
Investments in associates
Non-current financial assets
Deferred tax assets , , ,
Total non-current assets , , ,
Current assets
Inventories 4,545 , 4,081
Trade receivables , , ,
Contract assets -
Other receivables , , ,
Prepaid expenses ,
Current investments 5 17 , 18
Cash and cash equivalents 3,952 , 4,662
Total current assets 17,629 , 16,998
TOTAL ASSETS , , ,
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
34
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Amounts in SEK m Note
Jun 30,
2023
Jun 30,
2022
Mar 31,
2023
EQUITY AND LIABILITIES
Equity
Share capital
Other contributed capital , , ,
Reserves , , ,
Retained earnings, including net profit , – ,
Total equity attributable to equity holders of the parent , , ,
Non-controlling interests
Total equity , , ,
Non-current liabilities
Liabilities to credit institutions , , ,
Other non-current liabilities
Lease liabilities , ,
Other provisions
Contingent considerations 5, 6 , , ,
Non-current put/call options on non-controlling interests 5 ,6 , ,
Deferred considerations 5
Non-current employee benefits
Non-current liabilities to employees related to historical acquisitions 5
Deferred tax liabilities , , ,
Total non-current liabilities , , ,
Current liabilities
Liabilities to credit institutions
1)
, ,
Current account credit facilities
Advances from customers
Trade payables , , ,
Lease liabilities
Contract liabilities , , ,
Contingent considerations 5, 6 , ,
Current put/cal options on non-controlling interests 5, 6 -
Deferred considerations 5 , ,
Tax liabilities
Current liabilities to employees related to historical acquisitions 5
Other current liabilities
Accrued expenses , , ,
Total current liabilities , , ,
TOTAL EQUITY AND LIABILITIES , , ,
1)
SEK 17,059 million of the reported amount relates to the parent company’s main credit- and loan facilities, which were extended on July 11, 2023.
CONT. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
35
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Equity attributable to equity holders of the parent
Amounts in SEK m
Share
capital
Other
contributed
capital Reserves
1)
Retained
earnings
including profit
for the period
Total equity
attributable to
equity holders of
the parent
Non-
controlling
interests
Total
equity
Opening balance 2022-04-01 , – , ,
Net profit - - - – – –
Other comprehensive income - - , , ,
Total comprehensive income for the period - - , – , – ,
Transactions with the owners
New share issue - 5,125 - - 5,125 - 5,125
Share-based remuneration according to IFRS 2 - - -
Total - , - - , - ,
Closing balance 2022-06-30 , , – , ,
Opening balance 2023-04-01 , , , , ,
Net profit - - - , , ,
Other comprehensive income - - , - , - ,
Total comprehensive income for the period - - , , , ,
Transactions with the owners
Share-based remuneration according to IFRS 2 - , - , - ,
Transactions with non-controlling interests - - - -
Total - , - - , ,
Closing balance 2023-06-30 , , , , ,
1)
Includes currency translation dierence and cash flow hedge reserve.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
36
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
CONSOLIDATED CASH FLOW STATEMENT
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Operating activities
Profit before tax , ,
Adjustments for non-cash items, etc. – , ,
Income tax paid – – –
Cash flow from operating activities before changes in working capital , , ,
Cash flow from changes in working capital
Change in inventories – – –
Change in operating receivables – – –
Change in operating liabilities – –,
Cash flow operating activities , ,
Investing activities
Acquisition of property, plant and equipment – – –
Proceeds from sales of property, plant and equipment -
Acquisition of intangible assets –, –, –,
Proceeds from sales of intangible assets - -
Acquisition of subsidiaries, net of cash acquired
1)
– – –,
Change in current investments - –, –
Acquisition of financial assets – – –
Proceeds from sales of financial assets
Cash flow from investing activities –, –, –,
Financing activities
New share issue - , ,
Issuance costs - - –
Proceeds from borrowings , ,
Repayment of loans – – –,
Payment of lease liabilities – – –
Cash flow from financing activities , ,
Cash flow for the period – , –,
Cash and cash equivalents at the beginning of period , , ,
Exchange-rate dierences in cash and cash equivalents
Cash and cash equivalents at the end of period , , ,
1)
Of which SEK 102 million is related to historical acquisitions
37
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
This interim report comprises of the Swedish parent company
Embracer Group AB (“Embracer”), with corporate registration
number 556582-6558, and its subsidiaries. The Group conducts
management and development of intellectual property rights,
publishing, development of computer, video and mobile games,
and publishes and distributes films. The parent company is a lim-
ited liability company with its registered oce in Karlstad, Sweden.
The address of the head oce is Tullhusgatan 1 B, 652 09 Karlstad.
The Group’s interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and applica-
ble parts of the Swedish Annual Accounts Act (1995:1554). For
the parent company, the interim report has been prepared in
compliance with the Swedish Annual Accounts Act and Recom-
mendation RFR 2 Accounting for Legal Entities.
For the Group, the same accounting policies and methods of
computation have been applied as in the Annual Report for
FY 2022/2023. A complete description of the Group’s applied
accounting policies can be found in Note 1 in the Annual Report
for FY 2022/2023. For the parent company’s applied accounting
policies, see note P1.
Disclosures in accordance with IAS 34.16A appear in addition to
the financial statements and its related notes in the interim infor-
mation on page 37-43 that from an integral part of this financial
report.
All amounts are presented in million Swedish kronor (”SEKm”),
unless otherwise indicated. Rounding dierences may occur.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
NOTES
When preparing the financial statements, management and
the Board of Directors must make certain assessments and
assumptions that impact the carrying amount of asset and liabil-
ity items and revenue and expense items, as well as other pro-
vided information. Actual outcome may dier from the estimates
if the estimates or circumstances change. The key estimates
and assumptions made when preparing the interim report cor-
respond to the ones described in Note 2 in the Annual Report
for FY 2022/2023.
NOTE 2 KEY ESTIMATES AND ASSUMPTIONS
For accounting and monitoring, the Group has divided its oper-
ations into four operating segments based on how the chief
operating decision maker reviews the operations for alloca-
tion of resources and assessment of performance. Embracer’s
CEO is identified as the Group’s chief operating decision maker
(CODM). The division of operating segments is based on dier-
ences in the goods and services that Embracer oers.
PC/Console Games - This part of the business conducts devel-
opment and publishing of premium games for PC and console.
Mobile Games - This part of the business conducts develop-
ment and publishing of mobile games.
Tabletop Games - This part of the business conducts devel-
opment, publishing and distribution of tabletop games, card
games and strategic trading card games.
Entertainment & Services - This part of the business is engaged
in development, publishing and distribution of comic books, con-
ducts wholesale of publishing titles of games for console and PC
as well as films, conducts publishing and external distribution of
films and TV-series and produce and distribute merchandise.
The CODM primarily uses the performance measure Adjusted
EBIT to assess the operating segments’ performance. The CODM
does not follow up on the assets and liabilities of the segments
for allocation of resources or assessment of performance.
NOTE 3 OPERATING SEGMENTS
CONT. >>
38
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Apr–Jun 2023
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Total
segments Eliminations
Group
functions
Group
total
Revenue from external customers , , , , , - - ,
Revenue from transactions with
other operating segment 6 - - 6 –12 -
Total revenue , , , , , – - ,
Adjusted EBIT , - – ,
Amortization of surplus values of
acquired intangible assets – – – – – - - –
Transaction costs – - – – - - –
Personnel costs related to
acquisitions
– – – – – - - –
Remeasurement of participation in
associated companies - - - -
Items aecting comparability – - - - – - – –
EBIT – - –
Net financial items ,
Profit before tax ,
Apr–Jun 2022
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Total
segments Eliminations
Group
functions
Group
total
Revenue from external customers , , , , - - ,
Revenue from transactions with
other operating segment - - – -
Total revenue , , , , – - ,
Adjusted EBIT , - – ,
Amortization of surplus values of
acquired intangible assets – – – – – - - –
Transaction costs – – – – – - - –
Personnel costs related to
acquisitions
– – – - –, - - –,
Remeasurement of contingent
consideration - - - - -
EBIT – – - – - – –
Net financial items
Profit before tax
Apr 2022–Mar 2023
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Total
segments Eliminations
Group
functions
Group
total
Revenue from external customers , , , , , - - ,
Revenue from transactions with
other operating segment - - –
Total revenue , , , , , – - ,
Adjusted EBIT , , , , - – ,
Amortization of surplus values of
acquired intangible assets –, – – – –, - - –,
Transaction costs – – – – - – –
Personnel costs related to
acquisitions
–, –, – – –, - - –,
Items aecting comparability – - - - – - – –
EBIT – – - –
Net financial items ,
Profit before tax ,
>> NOTE 3 CONTINUED
39
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NOTE 4 REVENUE FROM CONTRACTS WITH CUSTOMERS
Apr–Jun 2023
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Group
total
Type of products
Digital products , , ,
Physical products - , , ,
Other
1)
,
Revenue from contracts with customers , , , , ,
Apr–Jun 2022
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Group
total
Type of products
Digital products , , ,
Physical products - , ,
Other
1)
Revenue from contracts with customers , , , ,
Apr 2022–Mar 2023
PC/Console
Games
Mobile
Games
Tabletop
Games
Entertainment
& Services
Group
total
Type of products
Digital products , , ,
Physical products , - , , ,
Other
1)
, ,
Revenue from contracts with customers , , , , ,
1)
See Operating segment, page 9-17.
IP-rights
PC/Console Games Owned titles Publishing titles Total
Apr-Jun 2023 , , ,
Apr-Jun 2022 , ,
PC/Console Games New releases Back-catalog Other Total
Apr-Jun 2023 , , ,
Apr-Jun 2022 , ,
In addition to the breakdown by revenue from contracts with customers for PC/Console Games, Mobile Games and Tabletop Games
and Entertainment and Services, Embracer also monitor PC/Console in categories below:
IP-rights
PC/Console Games Owned titles Publishing titles Total
Apr 2022-Mar 2023 , , ,
PC/Console Games New releases Back-catalog Other Total
Apr 2022-Mar 2023 , , , ,
40
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The table below
presents financial instruments measured at fair value based on
the classification in the fair value hierarchy. The dierent levels
are defined as follows:
Level 1 - Quoted (unadjusted) market prices for identical assets or
liabilities in active markets.
Level 2 - Inputs other than quoted prices in level 1 that are observ-
able for the asset or liability, either directly (i.e. price quotations)
or indirectly (i.e. derived from price quotations).
Level 3 - Input data for the asset or liability which is not based on
observable market data (i.e. unobservable input data).
Financial assets measured at fair value
Financial assets measured at fair
value as of Jun 30, 2023 Level 1 Level 2 Level 3 Total
Ownership interests in other entities - -
Current investments - -
Financial assets measured at fair
value as of Jun 30, 2022 Level 1 Level 2 Level 3 Total
Ownership interests in other entities - -
Current investments - -
Derivatives - -
Financial assets measured at fair
value as of Mar 31, 2023 Level 1 Level 2 Level 3 Total
Other non-current receivables - -
Derivatives - -
Financial liabilities measured at fair value
Financial liabilities measured
at fair value as of Jun 30, 2023 Level 1 Level 2 Level 3 Total
Contingent consideration - - , ,
Put/call options on non-
controlling interests - - , ,
Liabilities to employees related
to acquisitions - - , ,
Financial liabilities measured
at fair value as of Jun 30, 2022 Level 1 Level 2 Level 3 Total
Contingent consideration - - , ,
Put/call options on non-
controlling interests - - , ,
Liabilities to employees related
to acquisitions - -
Financial liabilities measured
at fair value as of Mar 31, 2023 Level 1 Level 2 Level 3 Total
Contingent consideration - - , ,
Put/call options on non-controlling
interests - - , ,
Liabilities to employees related to
acquisitions - - , ,
Derivatives - -
Current receivables and current liabilities
For current receivables and liabilities, such as trade receivables
and trade payables and for liabilities to credit institutions with vari-
able interest rate, the carrying amount is considered to be a good
approximation of the fair value.
Derivatives
Derivative instruments are measured at fair value in accordance
with Level 2 in the fair value hierarchy. Interest rate derivatives are
measured in accordance with the market valuation determined by
the issuing party.
Contingent consideration
The fair value of contingent considerations has been calculated
based on expected outcome of financial and operational targets
for each individual agreement. The estimated expected settlement
will vary over time depending on, among other things, the degree
of fulfillment of the conditions for the contingent considerations,
the development of certain exchange rates against the Swedish
krona and the interest rate environment. Contingent consider-
ations to be settled with shares are also dependent on the devel-
opment of Embracer’s share price.
Contingent considerations classified as financial liabilities are
measured at fair value by discounting expected cash flows at a
risk-adjusted discount rate of 1.8 %-10.2 %. Measurement is there-
fore in accordance with Level 3 in the fair value hierarchy. Signifi-
cant unobservable input data consists of forecasted turnover and a
risk-adjusted discount rate as well operational targets.
Contingent considerations
Apr–Jun
2023
Apr–jun
2022
Apr 2022–
Mar 2023
Opening balance , , ,
Acquisitions - ,
Payment - shares to be issued - - –
Payment - clawback shares –1,366 –154 –450
Payment - cash – – –
FX eects –70 561 47
Reclassifications –32 - –338
Change in fair value recognized in
consolidated statement of profit or loss – –,
Closing balance , , ,
During the period, unrealized gains or losses for contingent consid-
erations recognized at the end of the reporting period amounted
to SEK 906 million. This amount is included as part of net financial
items in the consolidated statement of profit or loss.
Given the contingent considerations recognized at the end
of the reporting period, a higher discount factor of 1.5 per-
centage points will have an impact on the fair value of SEK
–305 million and a lower discount factor of 1.5 percentage
points will have an impact with SEK 291 million.
The Group´s contingent considerations will be settled in cash or
with issued shares. As at June 30, 2023 , the contingent consid-
erations are expected to be settled according to the table below.
NOTE 5 FINANCIAL INSTRUMENTS
Contingent consideration
classified as financial liability
Total contingent
consideration
classified as
financial liability
Contingent consideration
classified as equity
Total contingent
considerationExpected settlement
Cash
settlement
Newly
issued shares
Newly
issued shares
Total 2,509 , , , ,
As of Jun 30, 2023
Classified as
financial liability
Of which
already issued
Classified
as equity
Of which
already issued
Maximum number of shares related to contingent considerations ,, ,, ,, ,,
41
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Put/call options on non-controlling interest
Total, classified
as financial liabilityExpected settlement Cash settlement Newly issued shares
Total 1,147 , ,
As of Jun 30, 2023
Classified as put/call options
on non-controlling interest Of which already issued
Maximum number of shares related to put/call options
on non-controlling interest ,, -
Put/call option on non-controlling interests
Put/call options on non-controlling interest refers to put/call
option on non-controlling interests in business combination
where the selling shareholders keep some ownership and there
is a contractual obligation where Embracer will purchase the
remaining interest if the holder of the option determines to exer-
cise. The valuation and settlement is similar as for contingent
consideration (level 3 fair value measurement).
The fair value of put/call options on non-controlling interests have
been calculated based on expected outcome of financial and
operational targets for each individual agreement. The estimated
expected settlement will vary over time depending on, among
other things, the degree of fulfillment of the conditions for the put/
call option on non-controlling interests, the development of cer-
tain exchange rates against the Swedish krona and the interest
rate environment. Put/call option on non-controlling interests to
be settled with shares are also dependent on the development of
Embracer’s share price.
During the period, unrealized gains or losses for put/call options
on non-controlling interest recognized at the end of the reporting
period amounted to a gain of SEK 782 million.
This amount is included as part of net financial items in the consol-
idated statement of profit or loss.
Put/call option on
non-controlling interests
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Opening balance , , ,
Acquisitions - - -
FX-eects –
Change in fair value recognized in
consolidated statement of profit or
loss –782 –115 –1,185
Closing balance , , ,
As at June 30, 2023, the Group’s put/call option on non-controlling
interests will be settled in cash or with shares according to the
distribution below:
Liabilities to employees related to acquisitions
Liabilities to employees related to acquisitions refers to part of
the purchase price in historical acquisitions which according to
IFRS is classified as personnel debt. Fair value for liabilities to
employees related to acquisitions has been calculated based on
expected outcome of financial and operational targets for each
individual agreement. The estimated expected settlement will
vary over time depending on, among other things, the degree of
fulfillment of the conditions.
Liabilities to employees related to acquisitions
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Opening balance 1,090 593
Accrual of personnel cost in consolidated statement of profit or loss 196
Payment - cash after the acquisition day –272 – –
Change in fair value recognized in consolidated statement of profit or loss 53
Reclassifications - –
FX-eects 6 35 37
Closing balance 1,073 ,
As at June 30, the Group’s liabilities to employees related to acquisitions will be settled in cash.
42
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NOTE 6 BUSINESS COMBINATIONS AND ASSET DEALS
Purchase price allocations for acquisitions during
April-June 2023
In the first month of the quarter, two minor acquisitions were
closed with a total cash outflow of less than SEK 1 million. The
acquisitions were closed without any agreements of contingent
consideration or deferred consideration.
One of the acquisitions is classified as a business combination
achieved in stages and the other acquisition is classified as an
asset deal. The acquisitions are deemed immaterial and is thus
not presented as the relative amounts are not deemed material.
The acquisitions will be presented in the Annual report 2023/24.
The purchase price allocations for acquisitions during the period
are preliminary.
Purchase price allocations for historical acquisitions
The purchase price allocations for acquisitions made in the latest
12 months are considered to be preliminary while the purchase
price allocations for acquisitions made outside the 12 months-pe-
riod are final. Purchase price allocations for acquisitions made
in th previous financial year April 2022-March 2023 has been
presented in the Annual report 2022/23 available at Embracer
Group’s website.
The acquisitions impact on the consolidated statement of
profit or loss and statement of comprehensive income
Revenues and net profit for the acquired company since the
acquisition date have been included in the Group’s statement
of comprehensive income for the period and is not presented
separately. The revenue and EBIT that the company would have
contributed if the acquisition had taken place in the beginning
of the period have not been calculated due to the fact that this
would be disproportionately burdensome and are not deemed to
be material on an overall Group level.
Asset deals
Acquisitions can be classified as either a business combina-
tion or an asset acquisition. This is an assessment that must be
made in the case for each individual acquisition. For acquisitions
where the fair value of the acquired assets in essence consists
of one asset or a group of similar assets, is recognized as an
asset acquisition. When acquisitions of subsidiaries involve the
acquisition of net assets without any significant processes, the
acquisition cost of each identifiable asset and liability is divided
up based on its fair value at the time of acquisition. In the case of
assets acquisitions, no deferred tax is recognized at the time of
the acquisition and transaction costs are added to the purchase
price of the acquired net assets.
In the first month of the quarter, Embracer Group completed
the asset deal of a small IP-portfolio of mobile games to further
strengthen the mobile business.
Deferred Consideration
Total, classified
as financial liabilityExpected settlement Cash settlement Newly issued shares
Total 2,088 - 2,088
As of Jun 30, 2023 Classified as financial liability Of which already issued
Maximum number of shares related to deferred considerations - -
Other consideration that is not classified as financial instruments
Deferred Consideration
Deferred consideration refers to future payments from business
combinations and asset deals where the payment is not contin-
gent upon future financial or operational targets.
Deferred considerations
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Opening balance , - -
Acquisitions - - ,
Payment - cash – - –
FX-eects -
Reclassifications
Discount eect recognized in consolidated statement of profit or loss 20 - 36
Closing balance , - ,
As at June 30, 2023, the Group’s deferred consideration will be
settled in cash or with shares according to the distribution below:
43
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
NOTE 7 RELATED PARTY TRANSACTIONS
Related party transaction Related party
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Consulting services Logvreten AB
1)
(supplier) –
Transportation services Sola Service i Karlstad AB
2)
(supplier) – –
Transportation services Empterwik Special Services Ltd
2)
(supplier) – - –
Sale of goods/services Bröderna Wingefors AB
2)
(supplier) -
Acquisition of game collection Lars Wingefors AB
3)
(supplier) - -
Total – – –
1)
Kicki Wallje-Lund, chairman of the board, has controlling influence over the company
2)
The company is part of Lars Wingefors AB
3)
Lars Wingefors AB is owned by Lars Wingefors, Erik Stenberg, Mikael Brodén, Klemens Kreuzer, Reinhard Pollice and Jacob Jonmyren.
NOTE 8 PERSONNEL EXPENSES
SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Personnel expenses –, –, –,
Personnel costs related to acquisitions - Excluding FX gain/loss – –, –,
Total –, –, –,
NOTE 9 OTHER OPERATING EXPENSES
SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Other operating expenses – – –
Transaction costs related to acquisitions –7 –70 –290
Loss sale of subsidiaries –39 - -
FX gain/loss related to Personnel costs related to acquisitions – – –
Total – – –
NOTE 10 NET FINANCIAL ITEMS
SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Interest income and other financial income
Interest expense and other financial expense – – –
Sum – – –
Change in fair value contingent consideration and put/call options on
non-controlling interests , – ,
Interest deferred consideration – - –
Exchange rate gains/losses
Total financial net , ,
Exchange gains/losses net include both realized and unrealized
gains or losses. Change in fair value of contingent consider-
ation and put/call options on non-controlling interests consists of
interest expense and fair value change related to fluctuations in
Embracer’s share price. Change in fair value contingent consid-
eration and put/call options on non-controlling interests is mainly
related to the decrease in Embracer’s share price during the
quarter.
44
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
PARENT COMPANY’S INCOME STATEMENT
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022-
Mar 2023
Net sales
Other operating income -
Total operating income
Operating expenses
Other external expenses – – –
Personnel expenses – – –
Depreciation, amortization and impairment of
property, plant and equipment and intangible assets – – –
Other operating expenses – - –
Operating profit – – –
Net financial items ,
Profit after financial items ,
Appropriations – – –
Profit before tax
Income tax – – –
Net profit for the period
45
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Amounts in SEK m
Jun 30,
2023
Jun 30,
2022
Mar 31,
2023
ASSETS
Non-current assets
Intangible assets
Tangible assets
Shares in Group companies , , ,
Receivables from Group companies , , ,
Other longterm receivables
Total financial assets , , ,
Total non-current assets , , ,
Current assets
Receivables from Group companies , , ,
Current tax assets - -
Prepaid expenses and accrued income 45
, , ,
Current investments ,
Cash and cash equivalents ,
Total current assets , , ,
TOTAL ASSETS , , ,
EQUITY AND LIABILITIES
Restricted equity
Unrestricted equity , , ,
Total equity , , ,
Untaxed reserves
Provisions
Non-current liabilities , ,
Liabilities to credit institutions
1)
,
Trade payables
Liabilities to Group companies ,
Other current liabilities
Accrued expenses and prepaid income
Total current liabilities , ,
TOTAL EQUITY AND LIABILITIES , , ,
1)
SEK 17,059 million of the reported amount relates to the main credit- and loan facilities, which were extended on July 11, 2023.
PARENT COMPANY BALANCE SHEET
46
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
The interim report for the parent company has been prepared in
accordance with Chapter 9 of the Annual Accounts Act, Interim
reports, and RFR 2 Accounting for legal entities. The same account-
ing principles, basis for calculations and assessments have been
applied as applied in the Annual Report for FY 2022/2023, For
description of the Group´s applied accounting principles, see Note
P1 in the Annual Report for FY 2022/2023.
NOTE P1 THE PARENT COMPANY’S ACCOUNTING POLICIES
47
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
DEFINITIONS OF ALTERNATIVE PERFORMANCE MEASURES (APMs)
In accordance with the guidelines from ESMA (European Securities and Markets Authority), regarding the dis-
closure of alternative performance measures, the definition and reconciliation of Embracer’s alternative per-
formance measures are presented below. The guidelines entail increased disclosures regarding the financial
measures that are not defined by IFRS. The performance measures presented below are reported in the full
year report. They are used for internal control and follow-up. Since not all companies calculate financial mea-
sures in the same way, these are not always comparable to measures used by other companies. One import-
ant part of Embracer’s strategy is to pursue inorganic growth opportunities through acquisitions. Thereby
expanding the ecosystem to include more entrepreneurs within the gaming and entertainment markets. An
acquisitive strategy is associated with certain complexity in terms of accounting for business combinations.
The board and management of Embracer believes that it is important to separate the operational perfor-
mance of the business from the acquisition part. Certain APM’s are used to accomplish and give internal
and external stakeholders the best picture of the underlying operational performance of the business, by the
measurement of performance excluding specific items related to historical acquisitions and items aecting
comparability. The individual APMs, definitions, purpose are described more in detail below.
CONTINUED >>
Name Definition Reason for Use
Adjusted Earnings
per share
Net profit for the period excluding specific items related to historical ac-
quisitions and items aecting comparability net of tax, change in fair value
contingent consideration and put/call options on non-controlling interests
net of tax and Interest expense contingent consideration net of tax divided
by the average number of shares in the period. Net taxes are calculated
using the eective tax rate.
Shows earnings per share after
adjustments to specific items at-
tributable to historical acquisitions,
and items aecting comparability.
Adjusted Earnings
per share after full
dilution
Net profit for the period excluding specific items related to historical ac-
quisitions and items aecting comparability net of tax, change in fair value
contingent consideration net of tax and Interest expense contingent consid-
eration and put/call options on non-controlling interests net of tax divided by
the average number of shares after full dilution in the period. Net taxes are
calculated using the eective tax rate.
Shows earnings per share after
adjustments to specific items at-
tributable to historical acquisitions
and items aecting comparability
with regard for full dilution.
Adjusted EBIT EBIT excluding specific items related to historical acquisitions and items
aecting comparability.
Adjusted EBIT in order to provide
a true and fair picture of the under-
lying operational performance, by
excluding Specific items related to
historical acquisitions and items
aecting comparability.
Adjusted EBIT
margin
Adjusted EBIT as a percentage of net sales.
Adjusted EBITDA EBITDA excluding specific items related to historical acquisitions and items
aecting comparability.
Provides the best picture of the
underlying entity’s performance by
measuring performance excluding
specific items related to historical
acquisitions and items aecting
comparability.
Adjusted EBITDA
margin
Adjusted EBITDA as a percentage of net sales.
Average number of
shares
Weighted average number of shares that are outstanding during the period.
Number of shares have been recalculated with respect to split of shares.
Average number
of shares after full
dilution
Weighted average number of ordinary shares and potential ordinary shares.
Number of shares have been recalculated with respect to split of shares.
EBIT margin EBIT as a percentage of net sales.
48
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
Name Definition Reason for Use
EBITDA Earnings before interest, taxes, depreciation and amortization. EBITDA and EBITDA margin are reported
because these are metrics commonly used
by investors, financial analysts and other
stakeholders to measure the Company’s
financial results.
EBITDA margin EBITDA as a percentage of net sales. EBITDA and EBITDA margin are reported
because these are metrics commonly used
by certain investors, financial analysts and
other stakeholders to measure the Compa-
ny’s financial results.
Free cash flow after
working capital
Cash flow for the period, excluding cash flow from financing activ-
ities and acquisitions of subsidiaries including transaction costs
and cash impact from personnel costs related to acquisitions.
Provide a true and fair picture of the under-
lying operational performance, by excluding
cash flow from Specific items related to
historical acquisitions.
Gross margin Net sales less goods for resale divided by net sales. Measuring the profitability from the net sales
of products and services.
Items aecting
comparability
Transactions that are not related to recurring business operations,
but aecting the financial outcome in a material way, and where
the probability of reoccurrence over the coming year is limited.
Items aecting comparability includes events
and transactions with significant eects,
which are relevant for understanding the
financial performance when comparing
income for the current period with previous
periods.
Net Debt (–) / Net
Cash (+)
The company’s cash and short-term investments decreased with
the company’s short- and long-term interest-bearing liabilities
excluding leasing liabilities according to IFRS16, pension provi-
sions, contingent consideration and put/call on non-controlling
interest.
The metric is commonly used by investors,
financial analysts and other stakeholders
to measure the debt compared to its liquid
assets. This metric is also used in calculating
the Company’s financial leverage.
Net investment in
acquired companies
Acquisition of subsidiaries, net of cash acquired plus cash impact
from specific items related to historical acquisitions, plus acquisi-
tion of IPs through asset deal structures.
A measure of cash flow allocated to inor-
ganic growth opportunities in the reporting
period.
Net sales growth Net sales growth for the current period compared to the same
period previous year.
Net sales growth is reported by the Company
because it regards this KPI as contributing
to investor understanding of the Company’s
historical progress.
Organic growth Growth between periods where net sales from companies
acquired/divested in the last five quarters have been excluded.
The comparison period is adjusted for dierences in exchange
rates.
Growth measure for companies that has
been part of Embracer Group for more than
one year excluding eects of dierences in
exchange rates.
Pro forma growth Growth between periods where net sales from companies
acquired/divested in the last five quarters have been added/
adjusted historically. The comparison period is adjusted for dier-
ences in exchange rates.
Growth measure for all companies that are a
part of Embracer Group as per reporting date
regardless of when the company became a
part of Embracer Group excluding eects of
dierences in exchange rates.
Specific items
related to historical
acquisitions
Specific income/expenses related to historical acquisitions con-
sist of personnel cost related to acquisitions (In connection with
certain business combinations an agreement has been entered
into relating to contingent consideration that is not classified
as part of the transferred purchase consideration as there is a
requirement for continued employment to receive the amount),
amortization of surplus values of acquired intangible assets (e.g.
IP-rights, publishing rights, brand name), transaction costs (Costs
for legal- financial- tax- and commercial due diligence for com-
pleted transactions.), remeasurement of participation in associ-
ated companies and remeasurement of contingent consideration.
Input used to calculate Adjusted EBITDA and
Adjusted EBIT.
>>
CONTINUED
49
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
ALTERNATIVE PERFORMANCE MEASURES
ADJUSTED EBIT AND ADJUSTED EBITDA DERIVATION
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
EBIT –
Depreciation, amortization and impairment , , ,
EBITDA , ,
Personnel costs related to acquisitions , ,
Remeasurement of participation in associated companies – - -
Remeasurement of contingent consideration –
Transaction costs
Items aecting comparability - 228
Adjusted EBITDA , , ,
Depreciation, amortization and impairment –, –, –,
Items aecting comparability
- -
Amortization of surplus values of acquired intangible assets ,
Adjusted EBIT , , ,
ADJUSTED EARNINGS PER SHARE DERIVATION
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022
Apr 2022–
Mar 2023
Net profit for the period attributable to equity holders of the parent , – ,
Adjustments
Personnel costs related to acquisitions , ,
Remeasurement of participation in associated companies – - -
Remeasurement of contingent consideration –
Transaction costs
Amortization of surplus values of acquired intangible assets ,
Change in fair value contingent consideration and put/call options on non-controlling interests
–, –,
Interest expense contingent consideration
Items aecting comparability -
Adjustments before tax – , ,
Tax eects on adjustments – – –
Adjustments after tax – , ,
Total , , ,
Average number of shares, million , , ,
Adjusted Earnings per share, SEK . . .
Average number of shares after full dilution, million , , ,
Adjusted Earnings per share after full dilution, SEK .
. .
50
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
ORGANIC GROWTH DERIVATION
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022 Change
Net sales , , %
Net sales from acquired companies
1)
–, –
Dierence in exchange rate - 492
Organic growth output , , %
PRO FORMA GROWTH DERIVATION
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022 Change
Net sales , , %
Net sales from acquired companies
2)
- ,
Dierence in exchange rate - 580
Pro forma growth output , , %
1)
Net sales from companies acquired in the last five quarters have been excluded.
2)
Net sales from acquired companies in the last five quarters have been added.
FREE CASH FLOW AFTER WORKING CAPITAL
Amounts in SEK m
Apr–Jun
2023
Apr–Jun
2022
Cash flow for the period – ,
Cash flow from financing activities – –,
Acquisition of subsidiaries, net of cash acquired
Transaction costs
Short-term investments - ,
Payment personnel cost related to acquisitions
Free cash flow after working capital – –
51
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
DEFINITIONS, QUARTERLY INFORMATION
Accumulated number of
additional operative groups
Number of closed acquisitions of new operative groups.
Accumulated number of
additional acquisitions added
Number of closed acquisitions which are not new operative groups including asset deals.
Clawback shares Shares of the company issued to sellers at completion of acquisitions of companies or assets. Claw-
back shares are part of the earnout consideration to sellers of companies or assets. Clawback shares
are held by sellers, either in escrow accounts or on regular accounts, with an agreed right for the com-
pany to receive the shares back, at no consideration, if specific earnout targets are not met. Clawback
shares are kept by the sellers if earnout targets are met.
Completed games Total book value of finished game development projects (released games) upon submission of com-
pletion. Upon completion the released games are reclassified from On-going Game Development
Projects to Finished Games and amortization starts.
DAU Average daily active users in the period.
Digital product Product sold/transferred through digital/electronic channels.
Digital sales Sales and transfer of products, physical and digital, through digital/electronic channels.
External game developers Game developers engaged in game development projects by studios that are not owned by the group
(external studios).
External Studios Studios not owned by the group engaged in game development project financed by the Group.
Game development projects On-going game development projects financed by the group and number of on-going game develop-
ment projects financed by third party with notable expected royalty income.
Internal employees,
non-development
Employees not directly engaged in game development (both employees and contractors).
Internal game developers Game developers (both employees and contractors) engaged in game development projects by stu-
dios that are owned by the group (internal studios).
Internal headcount Internal game developers + internal employees, non-development
Internal Studios Studios owned by the group.
MAU Average monthly active users in the period.
Net sales split – PC/Console segment
Owned titles Net sales of game titles that are owned IPs or titles that are controlled by the group.
Publishing titles Net sales of game titles of IPs the group does not own or control.
New releases Net sales of game titles that are released in the current quarter.
Back catalog Net sales of game titles that are not released in the current quarter.
Max cash consideration The maximum potential consideration to be paid in cash including upfront consideration and earnout
consideration. The earnout consideration is based on the maximum potential consideration and is
calculated based on the terms and FX-rates stated in each individual agreement.
Max share consideration The maximum potential consideration to be paid in Embracer B-shares including upfront consideration
and earnout consideration. The earnout consideration is based on the maximum potential consid-
eration and is calculated based on the terms, FX-rates and Embracer VWAP20 Share Price stated in
each individual agreement.
Max total consideration The sum of the max cash and share consideration. Note that the total max consideration might deviate
from the total consideration used in the Purchase Price Analysis following movements in FX-rates and
Embracer Share price between the signing and closing date as well as if the expected achievement
of the individual earnout targets deviate from the maximum scenario. The Max total consideration
includes contingent consideration in cash and shares that is classified as remuneration for future
services and not part of the transferred consideration in the PPA according to IFRS 2 and IAS 19. Also
note that for a limited amount of acquisitions, for which there is a material dierence between the
expected consideration and the maximum potential consideration, the expected cash and shares
consideration have been used as measure.
Number of IP:s Number of IPs owned by the group.
Physical product Product sold/transferred through physical channels.
Physical sales Sales and transfer of products, physical and digital, through physical channels.
Total installs Total accumulated installs in the period.
UAC (User Acquisition Cost) Marketing costs in the operating segment Mobile Games.
52
EMBRACER GROUP AB (PUBL) | APRIL–JUNE 2023
INFORMATION BY FINANCIAL YEAR AND QUARTER
2016 2017 2018 2019 2020
1)
2020/21 2021/22 2022/23 2023/24
Full
year
Full
year
Full
year
Full
year
Jan-
Mar
Full
year
Apr-
Jun
Jul-
Sep
Oct-
Dec
Jan-
Mar
Full
year
Apr-
Jun
Jul-
Sep
Oct-
Dec
Jan-
Mar
Full
year
Apr-
Jun
Net sales, SEK m , , , , , , ,
, ,
, ,
, , ,
,
Sales growth, Group, YoY % % % % % – % % % % % % % % % % % % %
EBIT, SEK m , – –, – –
EBIT, margin, % % % % % % % % % % – % – % – % % % – % % %
Adjusted EBIT, SEK m , , , , , , , , , , ,
Adjusted EBIT, margin, % % % % % % % % % % % % % % % % % %
Adjusted EBITDA, SEK m - - - - - , , , , , , , , , , , ,
Adjusted EBITDA, margin, % - - - - - % % % % % % % % % % % %
Basic shares weighted average, million
2)
- - - - - , , , , , ,
Diluted shares weighted average
2)
- - - - - , , , , , ,
Average number of shares, million
2)
, , , , , , , , , ,
Average number of shares after full dilution, million
2)
, , , , , , , , , , ,
Basic earnings per share, SEK . . . . . –. . . . . . –. . . . . .
Diluted earnings per share, SEK – – – – . –. . . . . . –. . . . . .
Adjusted Earnings per share, SEK
2)
. . . . . . . . . . . . . . . . .
Adjusted Earnings per share after full dilution, SEK . . . . . . . . . . . . . . . . .
Cash flow from operating activities, SEK m , , , , , , , , ,
Organic growth, YoY, % - - - - - - % % % – % - – % % – % – % - %
Gross Margin, % % % % % % % % % % % % % % % % % %
Specific items related to historical acquisitions
Amortization of surplus values of acquired
intangible assets – – – – – – – – –, – – – –, –,
–
Transaction costs, SEK m - - - - - – – – – – – – – – –
Personnel costs related to acquisitions - - - - - – – , , –, –, –, – – –, –
Remeasurement of participation in associated
companies, SEK m - - - - - - – - - - - -
Remeasurement of contingent consideration , SEK m - - - - - - - – – – -
Total – – – – – – –, – –, –, –, –, –, –, – –, –,
Investments
External game development and advances, SEK m , ,
Internal capitalized development, SEK m , , , , , , ,
Sub-total - Investment in Game development ,
all segments , , , , , , , ,
,
Other intangible assets/IP-rights, SEK m
Total , , , , , , , , , , ,
Completed games
Completed games, PC/Console, SEK m - , , ,
Other KPIs
Game development projects, PC/Console
Announced Game Dev projects - - - - - - -
Unannounced Game Dev projects - - - - - - -
Total - - - - - - -
Headcount
Total internal game developers - - - - , - , , , , - , , , , -
,
Total external game developers - - - - , - , , , , - , , , , - ,
Total internal employees, non-development - - - - - , , , , - , , , , - ,
Total - - - - , - , , , , - , , , , - ,
Number of studios
Total number External Studios - - - - - - -
Total number Internal Studios - - - - - - -
Total - - - - - - -
IP-rights - - - - - - -
M&A KPIs
Acc. Additional operative groups - - - - -
Acc. Additional acquisitions added - - -
Acc. Total - - -
Acc. Max cash consideration, SEK m - , , , , , , , , - , , , , - ,
Acc. Max share consideration, SEK m - , , , , , , , - , , , , - ,
Acc. Max total consideration, SEK m - , , , , , , , , - , , , , - ,
1)
Periods prior to April-June 2020/2021 are presented according to previous accounting standard K3 and are not recalculated according to IFRS
2)
Number of shares for previous periods have been adjusted and recalculated with respect to the 3:1 split carried out on October 8, 2019, and the 2:1 split carried out on September 30, 2021.
Embracer Group AB (publ)
Tullhusgatan 1B
SE-652 09 Karlstad
Sweden
embracer.com
Embracer Group is a global Group of creative and entrepreneurial
businesses in PC, console, mobile and board games and other
related media. The Group has an extensive catalog of over 900
owned or controlled franchises. With its head oce based in
Karlstad, Sweden, Embracer Group has a global presence through
its twelve operative groups: THQ Nordic, PLAION, Coee Stain,
Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox
Entertainment, Easybrain, Asmodee, Dark Horse, Freemode
and Crystal Dynamics – Eidos. The Group has 139 internal game
development studios and is engaging more than 16,500 employees
in more than 40 countries.
