Embracer Group AB

Latest Results (18.05.2026):

Embracer Group AB — Third quarter 2025 (Oct–Dec 2025): The group reported Q3 net sales of SEK 5,176m and EBIT of SEK 663m (13% margin), with adjusted EBIT of SEK 528m (10% margin). Sales declined year‑on‑year but profitability improved versus earlier quarters, supported by strong holiday performance from core IPs such as Kingdom Come: Deliverance II. The company completed the spin‑off of Coffee Stain Group in December and reiterated an adjusted EBIT outlook of at least SEK 750m for FY 2025/26 (on a comparable basis excluding Coffee Stain).

Key financials

Q3 (Oct–Dec 2025): Net sales SEK 5,176m (−26% vs Oct–Dec 2024); EBIT SEK 663m (13% margin) vs SEK 454m (7%); adjusted EBIT SEK 528m (10%) vs SEK 948m (14%). Nine months (Apr–Dec 2025): Net sales SEK 11,975m (−26%); EBIT SEK 250m vs SEK −1,107m year‑earlier; adjusted EBIT SEK 545m vs SEK 1,796m.

Profitability and margins

Operating profitability recovered: Q3 EBIT rose to SEK 663m and EBIT margin improved to 13% (from 7%), driven by core IP performance and seasonal sales. Adjusted EBIT is lower versus prior year comparatives but shows quarter‑by‑quarter improvement versus Q1–Q2.

Sales, growth and drivers

Net sales fell 26% YoY in Q3, with organic growth −8% excluding FX effects. Management attributes outperformance in the quarter to core IPs—especially Kingdom Come: Deliverance II, Dead Island and Tomb Raider—plus seasonal promotions and marketing.

Cash flow and investments

Cash flow from operating activities in Q3 was SEK 443m (vs SEK 1,474m prior year); free cash flow was slightly negative in the quarter due to working‑capital effects in physical businesses but exceeded internal expectations overall and is expected to normalize in Q4. Net investments in intangible assets were SEK 763m in Q3.

Guidance and outlook

Embracer now expects adjusted EBIT of at least SEK 750m for FY 2025/26 (previously at least SEK 1.0bn when Coffee Stain was included for the full year). The company sees upside potential from the underlying business and a stronger release pipeline into FY 2026/27.

Strategic moves

The spin‑off of Coffee Stain Group was completed on 11 Dec 2025. Embracer is pursuing an IP‑first strategy, divesting non‑strategic third‑party publishing and work‑for‑hire units (these divested assets had ~SEK −178m adjusted EBIT on a trailing‑12m basis) and targeting reduced opex and capex to improve capital efficiency and cash generation.

Product and franchise highlights

Kingdom Come: Deliverance II delivered a standout quarter (3rd expansion Mysteria Ecclesiae), surpassed 5 million copies sold within its first year, and earned industry recognition. Reanimal (Tarsier Studios) was scheduled for release the next day; Gothic 1 Remake release moved to 5 June. Management flagged other upcoming titles (including Milestone’s Screamer).

Headcount and development capacity

Total headcount declined to 6,369 (from 7,558 a year earlier); total game developers 4,739 (vs 5,508); game development projects down to 87 (from 106), reflecting consolidation and focus on core IPs.

Risks and headwinds

The strengthened SEK created currency headwinds during the quarter (partly offset by a natural European/North‑American cost hedge). Management emphasizes execution discipline, cost initiatives and selective capital allocation to realize improved profitability and free cash flow.