Today, the Embracer Group presented its Q4 2022-23 earnings report, including the full-year financials.
Net sales increased by 79% in the last quarter and by 121% year-over-year compared to the previous year, though the figure is largely influenced by acquisitions as organic growth was negative (-4%) in Q4 and only slightly positive (+2%) for the entire year.
As covered in our previous report, Dead Island 2 performed well, selling over two million units and becoming Deep Silver and Plaion's biggest launch to date. However, many other games didn't.
Embracer Group CEO Lars Wingefors also announced the delay of several games with strong sales potential from fiscal year 2023-2024 to 2024-2025. However, the day's biggest news was that the previously teased transformative deal worth $2 billion in development revenue fell through at the last minute.
In his remarks, Wingefors said the deal would have set a 'new benchmark' for the whole gaming industry. He added that the Group received a verbal commitment as far back as last October, but negotiations went on slowly. Despite hundreds of people working on the deal from both sides and the documentation being ready, the deal fell through at the last minute when the Embracer Group requested the execution of the agreement before its Q4 report.
Between the loss of this partnership with an unnamed party and the aforementioned game delays, the Group was forced to revise its Adjusted EBIT forecast down from $0.97-1.28 billion to $660-840 million.
Embracer Group CEO Lars Wingefors said there are still many games coming out in fiscal year 2023-24 (before the end of March 2024), including Remnant II, Warhammer 40,000: Space Marine 2, and Payday 3, as well as a number of notable unannounced games. He also stressed that the while the next fiscal year won't deliver maximized value as they had hoped, the company is poised for growth in the subsequent two fiscal years (2024-25 and 2025-26), where the company estimates consecutively higher net sales, Adjusted EBIT and free cash flow thanks to the large pipeline of games based on owned IPs. As of today, the Embracer Group owns over 850 IPs, more than 130 development studios, and has over 200 games in development, making it one of the largest portfolios in the entire industry.
However, investors are heavily punishing today's news, especially the missed transformative deal. Embracer Group stock is crashing today, with a current 43% loss on the market.
About the author: With over two decades of experience in gaming journalism, Alessio Palumbo has led the gaming vertical at Wccftech since August 2015. He started working at a young age for Italian websites like Everyeye.it, Gamestar.it, Nextgame.it, and Multiplayer.it before kickstarting the indie English-language publication Worlds Factory as its founder and Editor in Chief. In the last decade, he has coordinated the overall output of Wccftech's gaming section, managed PR relations, assigned reviews, produced daily news coverage, edited gaming content as needed, and delivered game reviews. Arguably, his trademark content is the long series of exclusive developer interviews that have been cited by Wikipedia and by the biggest news media and gaming publications. His passion for technology also makes him knowledgeable when it comes to gaming hardware and tech. His favorite genres include RPGs, MMORPGs, and action/adventure games.
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