Embracer misses quarterly profit forecast on higher costs, weak box office

Asmodee AB

13/02/2025 08:01

By Jesus  Calero
       Feb 13 (Reuters) - Swedish games developer Embracer's
 EMBRACb.ST  third-quarter operating profit came below market
expectations on Thursday, as  higher user acquisition costs in
mobile games and weaker-than-expected box office performance
weighed on results.
    
    WHY IT'S IMPORTANT
    Embracer, like other gaming groups, benefited from growing
demand for video games during COVID-19 lockdowns, but has since
been hit by development delays, falling demand and poor
reception for some of its new titles.
    In recent years, Embracer has begun to divest some of its
studios as part of restructuring efforts aimed at reducing costs
and managing debt, and is charting a new course by splitting
into three publicly traded entities.
    The Swedish group owns more than a hundred studios worldwide
and is known for popular game franchises, such as Tomb Raider,
The Lord of the Rings and Kingdom Come: Deliverance.
    
    KEY QUOTES
    "The industry is still in a consolidation phase where there
are layoffs driven by lack of capital and new technology tools
in efficiency progress... We will make sure we are adapting to
the changes in the industry and consumer demands," CEO Lars
Wingefors told Reuters.
    "Delays are always part of the industry, and we will give
(games) more time if needed. For 'Kingdom Come: Deliverance II',
for example, we delayed from releasing in November to now in
February, and I think that three months gave a much more
polished, bug-free experience for players", Wingefors added. 
    
    BY THE NUMBERS
        The owner of the Tomb Raider franchise said its adjusted
operating profit fell 11% to 1.18 billion Swedish crowns 
($109.05 million) in the quarter through December, lagging
analysts' forecast of 1.73 billion crowns seen in a
company-provided consensus.
    Embracer's PC/Console games segment fell 23% to 2.6 billion
crowns from 3.38 billion a year ago.
     Looking into the upcoming three financial years, Embracer
said it has 10 AAA games under development, of which eight are
from internal studios and two from external studios.

($1 = 10.8210 Swedish crowns)

 (Reporting by Jesus Calero
Editing by Tomasz Janowski)
 ((Jesus.calero@thomsonreuters.com))