Embracer plans another spin off as Q4 profit beats estimates (updated)

Asmodee AB

20/05/2026 06:16

Updates with CEO comment on Fellowship's model in paragraph 4, outlook, analyst comment and shares in paragraphs 10-11. Adds chart illustrating share performance since earlier three-way split was announced.

Video game group plans to split into Fellowship Entertainment and Embracer

Fellowship Entertainment to focus on major IPs like Lord of the Rings

Key executives to move to Fellowship, search for Embracer CEO, CFO initiated

Q4 adj. EBIT beats consensus, but annual forecast seen below it, analyst says

By Vera Dvorakova

May 20 (Reuters) - Embracer EMBRACb.ST is planning another split into two listed companies, it said on Wednesday, after the Swedish video game group's quarterly operating profit beat analysts' expectations.

The Tomb Raider franchise owner, fresh out of last year's three-way split, said it planned to spin off Fellowship Entertainment with a listing on Nasdaq Stockholm in 2027.

The gaming industry has been rethinking business models and focusing more on intellectual property (IP) since the strong pandemic-driven growth tapered off.

Fellowship will be an "IP-led entertainment company" focused on development, publishing and licensing, Embracer said. Licensing, building on Middle Earth Enterprises, will be "at the heart" of the business, CEO Phil Rogers told Reuters.

Embracer, meanwhile, will position itself as a streamlined home for creators, with tighter cost control and a focus on profits and selective deals to boost shareholder returns.

"The main rationale to spin-off Fellowship is to increase management focus to capture the full joint potential of the IPs, their respective communities and some of the best game developers in the world," Embracer chairman and largest shareholder Lars Wingefors said in a letter to shareholders.

Fellowship will house the group's largest IPs, including The Lord of the Rings, Tomb Raider and Kingdom Come: Deliverance. Embracer will focus on niches, such as retro gaming and physical distribution of games.

Embracer CEO Rogers, Chief Financial Officer Müge Bouillon and Chief Operating Officer Lee Guinchard will move to the same roles at Fellowship. Bouillon has also been appointed the deputy CEO of Embracer Group until the spin-off. Embracer has started recruitment for a new CEO and CFO.

It reported adjusted earnings before interest and taxes of 360 million Swedish crowns ($38.3 million) for its fiscal fourth quarter, nearly 100 million above analysts' consensus. It also announced a share buyback programme of up to 750 million crowns.

Embracer expects its cash EBIT, a new reporting metric, to be at least 1 billion crowns in the 2026/27 financial year. SpareBank 1 Markets estimated that this would put the adjusted EBIT forecast about 20% below consensus.

Embracer's shares rose as much as 9% in early trading, before changing course to trade 1.5% lower by 0910 GMT.

($1 = 9.4105 Swedish crowns)

Embracer's shares have had a wild ride amid spin-offs https://www.reuters.com/graphics/EMBRACER-SPLIT/gkvlkyanlpb/chart.png

(Reporting by Vera Dvorakova in Gdansk; Editing by Milla Nissi-Prussak)

((vera.dvorakova@thomsonreuters.com))