1
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NET SALES INCREASED BY 79 % TO
SEK 9,356 MILLION
FOURTH QUARTER, JANUARYMARCH 2023 COMPARED TO JANUARYMARCH 2022
> Net sales increased by 79 % (–4 % organic growth) to SEK 9,356 million (5,238).
The sales split per operating segment:
> PC/Console Games: increased by 66 % to SEK 3,478 million (2,097).
> Mobile Games: decreased by –25 % to SEK 1,317 million (1,759).
> Tabletop Games: increased by 438 % to SEK 3,074 million (571).
> Entertainment & Services: increased by 83 % to SEK 1,487 million (811).
> EBIT
1)
amounted to SEK –95 million (–967), an EBIT margin of –1 % (–18 %). Adjusted EBIT decreased by
–14 % to SEK 915 million (1,069), an Adjusted EBIT margin of 10 % (20 %).
> Cash flow from operating activities amounted to SEK 1,643 million (1,431). Net investments in intangible
assets amounted to SEK –1,807 million (–998).
> Basic earnings per share was SEK 0.68 (0.17) and diluted earnings per share SEK 0.67 (0.16). Adjusted
earnings per share was SEK 0.38 (0.81). Adjusted earnings per share after full dilution was SEK 0.35 (0.76).
> An Adjusted EBIT of SEK 7,000 - 9,000 million is forecasted for the financial year 2023/24. It is a down-
ward adjustment compared to the previously communicated forecast (SEK 10,300 - 13,600 million).
FULL YEAR, APRIL 2022MARCH 2023 COMPARED TO APRIL 2021MARCH 2022
> Net sales increased by 121 % (2 % organic growth) to SEK 37,665 million (17,067).
The sales split per operating segment:
> PC/Console Games: increased by 58 % to SEK 13,444 million (8,498).
> Mobile Games: increased by 19 % to SEK 5,819 million (4,896).
> Tabletop Games: increased by 2,199 % to SEK 13,132 million (571).
> Entertainment & Services: increased by 70 % to SEK 5,270 million (3,102).
> EBIT
1)
amounted to SEK 194 million (–1,126), an EBIT margin of 1 % (–7 %). Adjusted EBIT increased by 43%
to SEK 6,366 million (4,465), an Adjusted EBIT margin of 17 % (26 %).
> Cash flow from operating activities amounted to SEK 5,383 million (4,070). Net investments in intangible
assets amounted to SEK –5,996 million (–3,712).
> Basic earnings per share was SEK 4.17 (1.08) and diluted earnings per share SEK 4.12 (1.06). Adjusted earn-
ings per share was SEK 4.41 (3.69). Adjusted earnings per share after full dilution was SEK 4.06 (3.50).
Key performance indicators, Group
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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
Q4 & FULL YEAR REPORT
Q4
APRIL 2022– MARCH 2023FY 2022/23
2
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Embracer’s Net sales in Q4 grew by 79 % to SEK 9.4
billion. The organic growth in Q4 amounted to –4 %, with
solid organic growth within PC/Console Games, Tabletop
Games, and Entertainment & Services negated by tough
comparisons and soft market conditions in the Mobile
Games segment. In a seasonally quieter quarter across
all segments and with limited new game releases in the
PC/Console Games segment, we generated Adjusted
EBIT of SEK 915 million and free cash flow of SEK –32
million. The Adjusted EBIT was also impacted by a few
impairments related to ongoing canceled game devel-
opment projects within Amplifier Game Invest and DECA
Games, amounting to approximately SEK 100 million.
Arevaluation of earnout commitments resulted in a
reduction of SEK 2.1 billion in cash earnouts and 14 mil-
lion in number of shares expected to be issued.
For FY 2022/23, Net sales grew by 121 % YoY to SEK
37.7 billion, with organic growth of 2 %. We reached
an Adjusted EBIT of SEK 6.4 billion. Compared to our
guidance a year ago for FY 2022/23, we estimate that
approximately 40 % of the shortfall in Adjusted EBIT is
due to pipeline shifts, 30 % is due to weaker ROI in the
PC/Console Games segment, and the balance is due to a
softer gaming market and cost inflation factors.
UPDATE ON STRATEGIC PARTNERSHIP
NEGOTIATIONS AND FY 2023/24 FORECAST
We would like to describe some background and ratio-
nale for the aforementioned strategic partnership deal.
Even if it serves little financial value going forward, it
hopefully answers some questions about our communi-
cation and decisions.
In Q2 2022/23 we outlined our ambition to close a
number of partnership and licensing deals that would
be jointly transformative for Embracer. We have already
entered into multiple partnerships and licensing agree-
ments with industry partners on both AAA games and
movies based on some of our iconic IPs. Except for
the already announced deals that have more limited
short-term financial value, we have been working on
one groundbreaking strategic partnership agreement
that would have set a new benchmark for the gaming
industry.
Negotiations have been taking far longer than originally
anticipated considering we had a verbal commitment
already in October 2022. The specific deal included
more than USD 2 billion in contracted development
revenue over a period of six years. The deal would have
enabled a catch-up payment at closing for already capi-
talized 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 develop-
ment projects.
The transaction had many of the highest rated global
advisories onboard with several hundred people
engaged on both sides. All documentation was finalized
and ready to go as of yesterday. We asked for the exe-
cution of the agreement before our Q4 announcement.
However late last night we received a negative outcome
from the counterparty. This decision was unexpected to
the management and the Board of Directors of Embracer.
Capitalizing on our collective value through our partner-
ship approach remains a key priority for the Group. We
will continue to seek partnerships and collaborations
with third parties across all our segments, including
opportunities within transmedia. The demand for content
has never been greater, and Embracer is well-positioned
to meet that demand. We still have ongoing discussions
about additional partnership and licensing deals, but the
impact of potential deals is not included in the manage-
ment forecast for the current financial year. That said, our
ambition is still to increase the share of externally funded
game development.
We have a solid pipeline of ongoing development proj-
ects, but multiple projects will need more time to live up
to our high expectations of quality and to reach their full
commercial potential. There have recently been several
changes in expected release dates moving forward for
unannounced titles in FY 2023/24. Consequently, several
games with the potential to generate more than SEK
1billion in net sales are now slated for FY 2024/25. Due
to these delays and without the significant, transformative
CEO COMMENTS
It has been a challenging year, adversely impacted by game delays, weaker consumer demand
and lackluster reception for certain notable releases. Late last night, we were informed that
one major strategic partnership that has been negotiated for seven months will not materialize.
Wenow expect to generate SEK 7 to 9 billion in Adjusted EBIT with improving cash conversion for
FY 2023/24 and a healthy growth outlook in the following years.
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EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
partnership deal, we expect to generate SEK 7 billion to
SEK 9 billion (previously SEK 10.3 billion to SEK 13.6 billion)
in Adjusted EBIT with improving cash conversion for FY
2023/24 and a healthy growth outlook in the following
years.
In the PC/Console Games segment, we expect underlying
earnings growth driven by more owned and self-published,
large-budget game releases during the financial year. The
forecast includes more cautious assumptions for certain
releases and certain categories of games. In the Mobile
Games segment, we expect a low single-digit organic
growth, with gradually stronger growth during the financial
year. We assume stable, soft underlying market trends with
some gradual improvements to ad monetization through-
out the year. The Adjusted EBIT margin is expected to be
largely in line or slightly above FY 2022/23. In the Table-
top Games segment, we expect high-single-digit organic
growth driven by the trading cards product area, with an
Adjusted EBIT margin slightly below FY 2022/23.
Looking further ahead, in FY 2024/25 and FY 2025/26
we expect to deliver consecutively higher net sales,
Adjusted EBIT and free cash flow, driven by a strong
pipeline of highly anticipated games based on our iconic
own and licensed IP. We are confident that we are near-
ing a notable inflection point in our business, and that we
can utilize our scale and our significant collective value
to the best effect.
FY 2023/24 is not the year when we maximize the value
in Embracer – but we will continue to take important
steps and set the foundation for the years to come. We
will hold a Capital Markets Day in the second half of the
calendar year to give a detailed overview of both strat-
egy and mid-term financial targets.
SOFT PERFORMANCE IN A
SEASONALLY QUIET Q4
In the PC/Console Games segment, sales grew by 17%
organically in Q4 driven by several publishing deals
accounted for as work-for-hire agreements as well as a
continued strong back-catalog performance for Coffee
Stain and a number of other strong franchises. However,
delays have led to a limited number of large-budget
game releases and a temporary under-absorption of
fixed costs in FY 2022/23, impacting margins.
I am confident of notable organic growth, as well as
profit and cash flow generation FY 2023/24.
Dambuster Studios and PLAION released Dead Island2
on April 21, and it is encouraging to see the positive
reception from both critics and players. Dead Island2
sold 1 million units in its first weekend (21-23 April),
exceeding management expectations. Measured over
the first seven days of the sale period, it has become
Deep Silver and PLAION’s biggest launch in history in
both units and revenue. I am happy to state that the
game has now reached a sell-out of well over 2 million
units. It is rewarding to see that the decision to give the
studio time to polish the game has paid off.
Several additional large-budget games are expected in
FY 2023/24, including already-announced titles, such as
Warhammer 40,000: Space Marine 2, Remnant 2 and
Payday 3. There are still a number of unannounced nota-
ble titles awaiting to be announced for FY 2023/24.
In the Tabletop Games segment, Asmodee delivered a
solid Q4 in a seasonally quiet quarter, with 6 % pro forma
growth driven by strong performance in the UK and Cen-
tral Europe. Trading cards continued to perform strongly,
impacting the revenue mix and gross margin. Asmodee
delivered a full-year Adjusted EBIT largely in line with
our expectations from last year as well as a notably
improved free cash flow in the second half of the year.
In FY 2023/24, we expect a free cash flow conversion of
above 100 % for Asmodee as the inventory levels fully
normalize, with positive free cash flow also in the first
half of the financial year.
The Mobile Games segment had a challenging Q4,
with –36 % organic growth, but managed to deliver a
solid Adjusted EBIT margin and free cash flow due to
optimized user acquisition investments. Organic growth
was impacted by very tough YoY comparisons, lower ad
prices, and recent platform privacy changes. Excluding
the effect of an ad mediation platform deal last year,
organic growth was –24 % in Q4 while Adjusted EBIT
grew by around 50% YoY driven by lower user acquisi-
tion spending. There are positive signals with regard to
ad monetization into FY 2023/24, with revenue behavior
and advertising prices exceeding expectations toward
the end of the quarter.
STRONG FOUNDATION FOR THE FUTURE
We have amazing publishers and studios across Embracer
Group working on exciting development projects that will
be driving profitable growth for many years ahead. Our
operations within Mobile, Tabletop and Entertainment
& Services provide a solid foundation with predictable,
profitable and cash-generative businesses. Our roster
of profitable PC/console franchises includes Border-
lands, Deep Rock Galactic, Insurgency, Metro, Remnant,
Satisfactory, Snowrunner, Tiny Tina’s Wonderland, Tomb
Raider, Valheim, World War Z and many others, and the list
grows longer on steady basis with the latest installment
in the Dead Island franchise as a recent testament of the
creative engine within our studio network.
The long-term ambition for Embracer is to build something
significant and long-lasting, and to do it together with suc-
cessful entrepreneurs and creators. Today, we have one
of the industry’s largest portfolios of games and intellec-
tual property, with more than 850 owned and controlled
IPs, over 130 internal development studios and over 200
games in the pipeline, combined with transmedia exper-
tise within tabletop games, comics and movies.
4
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023EMBRACER GROUP AB PUBL | APRIL 2022 MARCH 2023
4
WORKING ACTIVELY ON EFFICIENCY
IMPROVEMENT INITIATIVES
We are working actively on efficiency improvement
initiatives, which will be announced in due course. These
efforts are likely to benefit profit margins and cash con-
version for FY 2023/24 and reach full run-rate during FY
2024/25. We expect to reduce capitalized development
projects, while continuing to invest to grow our estab-
lished, profitable, and beloved franchises and IP’s. We
will de-emphasize third-party publishing and externally
developed games based on external IP’s.
We will increase focus on net cash flow and with further
initiatives, we expect to reach a financial net debt below
SEK 10 billion by the end of this financial year.
The special review that was announced by the Board
of Directors in our Q2 report in November is still ongo-
ing. The Board of Directors and the management team
remain committed to maximizing long-term value cre-
ation for all businesses within Embracer.
To conclude, I would like to send my thanks to all our
shareholders, employees, customers, industry col-
leagues, and business partners for contributing to the
continued prosperity and success of Embracer Group.
May 24, 2023, Karlstad, Värmland, Sweden
Lars Wingefors
Co-founder & Group CEO
5
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NET SALES
Net sales, SEK m
Jan-Mar
2023
Jan-Mar
2022 Change
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
PC/Console Games , , % , ,
Mobile Games , , – % , ,
Tabletop Games , % ,
Entertainment & Services , % , ,
Total , , % , ,
Total net sales in the fourth quarter amounted to SEK 9,356 million, an increase of 79 % YoY.
Inorganic growth through acquisitions was the contributor, most notably through Crystal Dynam-
ics – Eidos and Gearbox San Fransisco (formerly Perfect World) in the PC/Console Games
segment, Asmodee in the Tabletop Games segment, where the acquisition was closed in March
2022, and Dark Horse and Limited Run Games in the Entertainment & Services segment. In the
period April 2022 to March 2023, total net sales amounted to SEK 37,665 million, an increase
of 121% compared to the same period last year. The increase was mainly driven by inorganic
growth through acquisitions.
Organic growth in the quarter was –4% and the pro forma growth was –5 %. The Mobile Games
segment is facing tough comparison versus previous year, where an ad platform deal in Easybrain
was recognized. This combined with lower ad prices explains the negative growth figure. The
strong organic growth in PC/Console Games segment is mainly explained by positive eects from
platform deals combined with positive impact from publishing deals. The organic and pro forma
growth in Entertainment & Services was primarily driven by PLAION Publishing and Film division.
Jan-Mar 2023 Apr 2022-Mar 2023
Net sales growth
Net sales
growth
Organic
growth
Pro forma
growth
Net sales
growth
Organic
growth
Pro forma
growth
PC/Console Games % % % % % %
Mobile Games – % – % – % % – % – %
Tabletop Games % n/a % , % n/a %
Entertainment & Services % % % % % %
Total % – % – % % % %
FINANCIAL COMMENTS
FINANCIAL
COMMENTS
Trine 5: A Clockwork Conspiracy
6
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
EBIT AND ADJUSTED EBIT
EBIT amounted to SEK –95 million (–967) in the quarter, an EBIT-margin of –1 % (–18 %).
The addition of acquired companies contributed to EBIT, but was partly oset by increased
depreciation, amortization, and impairment, which increased by SEK 957 million. Personnel
cost related to acquisition decreased SEK 1,327 million in the quarter related adjustments in
estimated target fulfilment of earnouts, this decrease was mitigated by an increase in other
personnel expenses by SEK 1,465 million due to acquisitions and additional headcount. Per-
sonnel expenses increased by SEK 138 million in the quarter.
In the period April 2022 to March 2023, EBIT amounted to SEK 194 million (–1,126).
Items aecting comparability amounted to SEK 203 million in the quarter and are excluded from
Adjusted EBIT (see page 56). The items are related to three dierent events. The restructur-
ing costs in Crystal Dynamics – Eidos for its closing of publishing QA team and mobile studio
Onoma, restructuring costs related to the closed operations for the studio Plucky Bytes and
divestment of the studio Vermila in the Operative Group Amplifier Game Invest in PC/Console
Games segment, and costs related to project of changing listing venue to a regulated market.
Adjusted EBIT decreased by 14 % and amounted to SEK 915 million (1,069) in the quarter, yield-
ing an 10 % margin (20 %). The gross margin declined and amounted to 59 % (73 %). The lower
margin is primarily attributable to the acquisition of Asmodee in the Tabletop Games segment.
While contributing significantly to earnings, Asmodee has a lower gross margin profile and
thus dilutes the Group’s margin.
In the period April 2022 to March 2023, Adjusted EBIT amounted to SEK 6,366 million (4,465),
yielding an 17 % (26 %) margin, primarily impacted by the acquisition of Asmodee in the Table-
top Games and lower margin in the PC/Console Games segment.
EBIT, SEK m
Jan-Mar
2023
Jan-Mar
2022 Change
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022 Change
PC/Console Games – % %
Mobile Games – – % – –, %
Tabletop Games – – % – %
Entertainment & Services – –, % – – %
Governance – – – % – – – %
Total – – % –, %
Adjusted EBIT, SEK m
Jan-Mar
2023
Jan-Mar
2022 Change
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022 Change
PC/Console Games – % , , – %
Mobile Games – % , , – %
Tabletop Games % , , %
Entertainment & Services % %
Governance – – % – – %
Total , – % , , %
FINANCIAL
COMMENTS
SpongeBob SquarePants: The Cosmic Shake
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EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
FINANCIAL
COMMENTS
FORECAST
Adjusted EBIT Current Forecast Previous Forecast
Financial year 2023/24 SEK 7,000 million - SEK 9,000 million SEK 10,300 million - SEK 13,600 million
For the overall group, we lower our Adjusted EBIT forecast for FY 2023/24 to SEK 7.0 bil-
lion-9.0 billion (10.3 billion-13.6 billion). The forecast for 2023/24 includes all acquisitions
announced as per May 24. The forecast is based on scheduled game releases, market and
macro conditions, and exchange rates being unchanged from current conditions.
Current forecast vs. Previous forecast
Compared to the previous guidance, provided in conjunction with the Q3 report, a specific,
significant transformative partnership will not materialize. There have recently also been several
changes in expected release dates moving forward for unannounced titles in FY 2023/24.
Consequently, several games with the potential to generate more than SEK 1 billion in net sales
are now slated for FY 2024/25. Due to these delays and without the significant, transformative
partnership deal, we expect to generate SEK 7 billion to SEK 9 billion in Adjusted EBIT with
improving cash conversion for FY 2023/24 and a healthy growth outlook in the following years.
To give some background to the financial guidance for FY 2023/24, when comparing to the
original forecast given in Q2 FY 2021/22, it is worth noting that at least six notable releases
have moved out from FY 2023/24 to later years, net of added releases.
FY 2023/24 vs. FY 2022/23
In the PC/Console Games segment, we expect a solid underlying earnings growth driven by
more owned and self-published, large-budget game releases during the financial year. The
forecast includes more cautious assumptions for certain releases and certain categories of
games.
Several additional large-budget games are expected in FY 2023/24, including Dead Island2
and additionally already-announced titles, such as Warhammer 40,000: Space Marine 2, Rem-
nant 2 and Payday 3. There are still a number of unannounced, notable titles awaiting to be
announced for FY 2023/24.
In the Mobile Games segment, we expect a low single-digit organic growth, with gradually
stronger growth during the financial year. We assume stable, soft underlying market trends
with some 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, we expect high-single-digit organic growth driven by the trad-
ing cards product area, with an Adjusted EBIT margin slightly below FY 2022/23.
Specific items related to historical acquisitions
The forecast is based on the average exchange rates for the period April 2022 to March 2023.
The forecast includes closed acquisitions as per March 31, 2023. The forecast is based on the
purchase price allocations as per April 26, 2023, which contain both preliminary and finalized
purchase price allocations. For more information, see Obligations related to historical business
combinations, page 21.
23/24
SEK m Q1 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 2022–MARCH 2023
OPERATING SEGMENT
PC/CONSOLE GAMES
SHARE OF
GROUP SALES
37 % (40 %)
INTELLECTUAL
PROPERTY (IP)
258 (241)
INTERNAL
HEADCOUNT
10,436 (7,162)
INTERNAL
STUDIOS
102 (84)
OPERATING SEGMENT
PC/CONSOLE GAMES
The PC/Console Games operating segment includes the following seven
operative groups: THQ Nordic, PLAION, Amplifier Game Invest, Gearbox
Entertainment, SaberInteractive, Coffee Stain and Crystal Dynamics – Eidos.
PC and console 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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022–
Mar 2023
Apr 2021–
Mar 2022
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 games development.
2)
See Definitions, quarterly information.
SALES AND EARNINGS
Net sales in the quarter for PC/Console Games amounted to SEK 3,478 million, an increase by
66 % compared to the same period last year, or 17 % organically and 0 % pro forma in constant
currency. The strong organic growth development is explained by the contribution of several
publishing deals which are accounted for as work-for-hire agreements, both new deals for
Saber Interactive and previously signed deals by Crystal Dynamics – Eidos, as well as a contin-
ued strong back catalog performance for Coffee Stain.
EBIT amounted to SEK 370 million (–468), yielding a 11 % (–22 %) EBIT margin. Adjusted EBIT
amounted to SEK 338 million (553), yielding a 10 % (26 %) Adjusted EBIT margin. Delays
announced in previous quarters have led to a limited number of game releases and a lower
gross profit contribution in FY 2022/23, impacting the Adjusted EBIT margin. The profitability
in Q4 is also impacted by the amortization of game development costs for titles released with
lower-than-expected ROI earlier in the financial year, including the Saints Row reboot. Further,
the Adjusted EBIT margin is also affected by the impairment of ongoing game development
projects in Amplifier Games Invest, amounting to SEK 34 million.
Further, the operative group Amplifier Game Invest closed operations for the studio Plucky
Bytes and made a divestment of the studio Vermila, leading to SEK –60 million in non-recur-
ring items in Q4. Additionally, the closing of Crystal Dynamics – Eidos’ mobile games business,
announced in November 2022, led to non-recurring items of SEK –126 million in the quarter.
These non-recurring items impact EBIT, but do not impact Adjusted EBIT.
9
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
The main revenue driver among new releases in the quarter was SpongeBob SquarePants:
The Cosmic Shake, developed by internal studio Purple Lamp Studios and published by THQ
Nordic. The game received solid review scores from critics and strong customer review scores
across all platforms. The game has however initially performed below management expecta-
tions but is expected to have a long tail of revenue. Another notable release in the quarter was
Scars Above, developed by internal studio Mad Head Games and published by PLAION. The
reception from players and critics was mixed, and the performance in Q4 was below manage-
ment expectations. Further, Deceive Inc., Tripwire’s first published indie title, has received a
solid critical reception and a strong player reception. The game has performed in line with
management expectations and is expected to have a long tail of revenue.
The top-10 back catalog revenue drivers (including platform deals) in the quarter were
Valheim, Deep Rock Galactic, Star Trek Online, SnowRunner, Welcome to Bloxburg, Metro:
Exodus, Borderlands 3, Neverwinter Online, Satisfactory and Risk of Rain 2.
Valheim, developed by Iron Gate and published by Coffee Stain, was released on Xbox Game
Pass on 14 March, driving a notable contribution. Deep Rock Galactic, developed by inter-
nal studio Ghost Ship Games and published by Coffee Stain, also continued to perform well,
supported by the release of new content. Metro remains a resilient and timeless intellectual
property (IP). In comparison to the same period last year, Metro: Exodus achieved a signifi-
cant increase in revenue, with a remarkable half a million units sold in Q4 alone. The game’s
sales have now surpassed an impressive 8.5 million units, attracting over 10 million players to
embark on its immersive journey.
Dead Island 2, developed by internal studio Deep Silver Dambuster (PLAION), was released
after the quarter, on April 21, by internal publisher Deep Silver (PLAION). It has enjoyed a
highly successful start, surpassing 1 million units sold within its first weekend (21-23 April). Cur-
rently, the game has achieved an impressive milestone of over 2 million units sold. When mea-
sured over the initial seven-day sales period, Dead Island 2 has become the largest launch in
both units sold and revenue generated in the history of Deep Silver and PLAION. The game’s
performance has far surpassed the management’s initial expectations.
Looking ahead, Q1 FY 2023/24 includes new game releases such as AEW - Fight Forever
and Jagged Alliance3, published by THQ Nordic, and System Shock remake, published by
PLAION. Additionally, Destroy All Humans! 2 – Reprobed will be released on PlayStation 4 and
Xbox One and Evil Dead: The Game will be released on Steam.
OPERATING SEGMENT
PC/CONSOLE GAMES
Homeworld 3
10
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
PC/CONSOLE GAMES
GAME DEVELOPMENT INVESTMENTS AND COMPLETED GAMES
The PC/Console Games segment continues to make considerable investments in game devel-
opment. In total, SEK 1,633 million were invested in game development during the quarter.
These investments lay the foundation for future sales. The increase in game development
investments is in line with the Group’s long-term strategy to grow sales organically.
The finalized value of the completed and released games during the quarter was SEK 501
million, driven by Scars Above, SpongeBob SquarePants: The Cosmic Shake, Warlander and
Mato Anomalies. When new games are released, capitalized development costs are amortized
through a degressive depreciation model over two years.
BUSINESS DEVELOPMENT
Internal studio Volition, now transitioned to work under the operative group Gearbox Entertain-
ment, released its first major DLC for Saints Row on May 12. This marks a significant milestone
for the game, which has been consistently enhanced with noteworthy updates and exciting
features. Thanks to the ongoing support from Publisher Deep Silver (PLAION) and Volition,
players can look forward to an array of upcoming updates in the following months, further
enriching their gaming experience.
Initiated in Q2 2022/23, PLAION’s new strategic direction “Focused. Better. Together.” marks a
significant shift in approach that will be realized over the next three to five years. Affecting the
entire PLAION games division, this strategy prioritizes a selective, high-quality portfolio, lever-
aging both PLAION’s and Embracer Group’s extensive IP catalogs. It also promotes superior
entertainment experiences and fosters stronger internal collaboration. While the new strategy
impacts the whole division, the team reorganization is primarily taking place within the brand
& marketing teams. Further details on the implementation will be shared as they become
available. This forward-looking strategy underscores PLAION’s commitment to innovation
and growth in the global entertainment landscape, promising to add significant value to the
Embracer Group
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
Jan-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
3.3x
2.0x
2.1x
3.3x
2.5x
2.5x
0.8x
3.2x
11
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Title Publishing Label IP Owner Main developer Platforms
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
Gimmick! Special Edition Bitwave Games External External PC, XB1, PS4, Switch
Gangs of Sherwood External External 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
Remnant 2 Gearbox Publishing Own Internal PC, PS5, XB X|S
Risk of Rain Returns Gearbox Publishing Own External PC, Switch
DarkSwarm Ghost Ship Publishing External External PC
Deep Rock Galactic: Survivor Ghost Ship Publishing Own External PC
SpellRogue Ghost Ship Publishing External External PC
A Rat´s Quest HandyGames External External PC, PS4, XB1, Switch
Airhead HandyGames External External PC, PS4, XB1, Switch
Lethal Honor - Order of the
Apocalypse
HandyGames External External PC, PS5, XB X|S, Switch,
PS4, XB1
MotoGP™ 23 Milestone External Internal PC, PS5, XB X|S, Switch,
PS4, XB1
RIDE 5 Milestone Own Internal PC, PS5, XB X|S
The Siege and the Sandfox PLAION External External PC, PS5, XB X|S, Switch,
PS4, XB1
Undisputed PLAION External External PC, PS5, XB X|S
ANNOUNCED PC/CONSOLE RELEASES AS OF MAY 24, 2023
OPERATING SEGMENT
PC/CONSOLE GAMES
CONT. >>
Space for Sale
Wreckreation
12
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Title Publishing Label IP Owner
Main
developer Platforms
Echoes of The End Prime Matter External External PC, PS5, XB X|S
Final Form Prime Matter Shared External PC, PS5, XB X|S
New Painkiller (final title TBC) Prime Matter Own External TBC
Payday 3 Prime Matter External External TBC
System Shock Remake Prime Matter External External PC, PS4, PS5, XB X|S
Kona 2: Brume Ravenscourt External External PC, PS5, XB X|S, Switch, PS4,
XB1
ProtoCorgi Ravenscourt External External PC, Switch
A Quiet Place Saber External External TBC
AEW: Fight Forever THQ Nordic License External PC, PS5, XB X|S, Switch, PS4,
XB1
Alone in the Dark THQ Nordic Own Internal PC, PS5, XB X|S
Biomutant THQ Nordic Own Internal Switch
Destroy All Humans! 2
– Reprobed Singleplayer
THQ Nordic Own Internal PS4, XB1
Gothic Remake THQ Nordic Own Internal PC, PS5, XB X|S
Jagged Alliance 3 THQ Nordic Own External PC
Outcast 2 - A New Beginning THQ Nordic Own Internal PC, PS5, XB X|S
Space For Sale THQ Nordic Own Internal PC
Tempest Rising THQ Nordic &
3D Realms
Own Internal PC
The Valiant THQ Nordic Own External 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
Another Fisherman's Tale Vertigo Games External External PC VR, Quest 2, PS VR2
Hellsweeper VR Vertigo Games External External PC VR, Quest 2, PS VR2
The Wizards: Dark Times -
Brotherhood
Vertigo Games External External TBC
Toss! Vertigo Games External External TBC
Combat Champions* TBC Own Internal PC
Mystical Mixing* External Own External Switch
Wantless* Twin Sails Interactive External External PC
News Tower* Twin Sails Interactive External External PC
Gloomhaven* Twin Sails Interactive License External PS5, XB X|S ,Switch, PS4, XB1
Ember Knights* Twin Sails Interactive External External PS5, XB X|S ,Switch, PS4, XB1
Innchanted* Twin Sails Interactive External External PS5, XB X|S ,Switch, PS4, XB1
Amberial Dreams* Twin Sails Interactive External External PC
Survival : Fountain of Youth* Twin Sails Interactive External External PS5, XB X|S
* 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.
OPERATING SEGMENT
PC/CONSOLE GAMES
13
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
MOBILE GAMES
SHARE OF
GROUP SALES
14 % (34 %)
INTELLECTUAL
PROPERTY (IP)
48 (41)
INTERNAL
HEADCOUNT
1,177 (1,085)
INTERNAL
STUDIOS
11 (11)
OPERATING SEGMENT
MOBILE GAMES
The Mobile Games operating segment encompasses the 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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022–
Mar 2023
Apr 2021–
Mar 2022
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
SALES AND EARNINGS
Net sales in the quarter for Mobile Games amounted to SEK 1,317 million, a decrease by 25%
compared to the same period last year, or by –36 % organically and –36 % pro forma. The
Mobile Games segment saw seasonally lower activity and ad prices in Q4, as well as more
contained growth investments in recent periods. In the comparable period, Q4 FY 2021/22,
Easybrain received notable income from an ad mediation platform deal. On a year-over-year
basis, the comparisons were tough, and the segment also saw some headwind from lower
ad prices which were impacted by platform changes related to privacy, lower player engage-
ment post-covid and macroeconomic factors. The hyper-casual games segment is especially
impacted by low advertising prices.
EBIT amounted to SEK –140 million (–263), yielding a –11 % (–20%) EBIT margin. Adjusted EBIT
amounted to SEK 324 million (494), yielding a 25 % (28%) Adjusted EBIT margin. User acquisi-
tion costs (UAC) amounted to SEK 555 million (898), or 42% (51%) of net sales. Easybrain and
DECA (including CrazyLabs) have optimized UAC investment due to low visibility with regard
to returns, leading to a solid profit margin in the quarter despite negative organic growth. The
Adjusted EBIT margin is impacted by the impairment of an ongoing game project in DECA
Games, amounting to SEK 57 million. Excluding the effect of last year’s notable income from
an ad mediation platform deal of SEK 282 million Adjusted EBIT grew with 53% from SEK 212
million to SEK 324 million.
The strongest back catalog titles in the quarter were BlockuDoku, Sudoku.com, Jigsaw
Puzzles, Art Puzzle and Nonogram.com. Underlying market trends remained soft, but largely
stable compared to the previous quarter, with some signs of improvement. Despite continued
14
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
MOBILE GAMES
uncertainty regarding macro economic factors and platform privacy changes, some positive
signals with regards to ad monetization have started to appear, with revenue behavior and
advertising prices exceeding expectations late in the quarter. The Mobile Games segment is
expected to show continued profitable growth in the years ahead.
BUSINESS DEVELOPMENT
At the end of Q4, Easybrain crossed the threshold of 1.5 billion downloads. The volume of
cumulative downloads comes from a diverse range of Easybrain’s titles. Their top-tier games
Sudoku.com, Blockudoku, Jigsaw Puzzles, Nonogram.com and Art Puzzle have contributed
significantly to the latest half a billion installs. The consistent growth of the game downloads
over the years clearly reflects the ongoing demand and positive reception from Easybrain´s
players.
The company released Logic Puzzle on iOS following strong performance on Google Play, and
has five additional games in soft launch.
CrazyLabs using its automated big data platform for creative testing, marketing potential
estimation and its hit prediction KPI based process (improved through thousands of tests per-
formed) is working with 350 developers world wide and 7 hubs to deliver new successful top
downloaded games almost every month.
CrazyLabs recently passed 6 billion downloads with a running rate of 1-1.2 billion downloads
per year now. CrazyLabs has 15 games with more than 100 million downloads, leading exam-
ples such as Superstylist (most downloaded fashion game in 2022) with 127 million downloads,
Ladybug (Zag trademark) runner with 189 million downloads and DIY phone case with over
230 million downloads.
Dragonvale
15
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
TABLETOP GAMES
OPERATING SEGMENT
TABLETOP GAMES
The Tabletop Games operating segment includes 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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022–
Mar 2023
Apr 2021–
Mar 2022
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.
SALES AND EARNINGS
Net Sales for the Tabletop Games segment amounted to SEK 3,074 million, an increase of
438% compared to the same period last year. On a pro forma basis, net sales increased by
6%. In a seasonally quiet quarter, Asmodee had a solid Q4, driven by a strong performance in
the UK and Central Europe. Across its two main main categories, trading cards continued to
perform strongly while board games declined slightly in a more hesitant market environment.
EBIT amounted to SEK –43 million (–124), yielding a –1 % (–22 %) EBIT margin. Adjusted EBIT
amounted to SEK 250 million (74), yielding an 8 % (13 %) Adjusted EBIT margin. On a year-
over-year basis, the profit contribution is impacted by a slightly lower gross margin stem-
ming from a product mix more geared towards trading card games and distributed board
games. Operating costs increased year-over-year by only mid-single-digits despite cost
inflation, driven by disciplined cost management.
Asmodee has a strong pipeline of novelties and new releases with a number of new titles
reaching the market during Q4 2022/23, including a new Star Wars deckbuilding game,
Dobble Disney 100 and 7 Wonders Edifice, another novelty in the successful 7 Wonders
franchise.
After a seasonal peak at the end of Q2, Asmodee’s inventory level has decreased sig-
nificantly by SEK 453 million and around 21 days of coverage on a like for like basis. This
brought closing net inventory in line with our internal forecast that was completed at the
time of the Q2 2021/22 report and was included in the presentation as part of the deep-dive.
SHARE OF
GROUP SALES
33 % (11 %)
INTELLECTUAL
PROPERTY (IP)
397 (370)
INTERNAL
HEADCOUNT
2,582 (2,346)
INTERNAL
STUDIOS
22 (22)
16
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
TABLETOP GAMES
The combination of inventory reduction, collection of receivables from peak season sales
and careful management of working capital led to a very strong free cash flow generation
over Q3 and Q4. This is consistent with the plans outlined in conjunction with the Q2 report
2022/23 and exceeded our internal forecast in terms of magnitude. Asmodee expects 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 2023/24.
BUSINESS DEVELOPMENT
After the period, Netflix France announced their upcoming release of the Werewolves of Mill-
er’s Hollow movie based off Asmodee’s pop-culture boardgame phenomenon with 7 million
copies sold. This announcement is one of numerous active projects in development around
Asmodee IPs towards movies, scripted series and unscripted series – and comes off the heels
of a larger partnership between Netflix and Asmodee successfully publishing and distributing
boardgames based off Squid Game, Stranger Things and Queen’s Gambit.
Ticket to Ride and Catan continue to hold the top spots on Board Game Arena with 1.7 million
cumulated play hours in the quarter. Board Game Arena is Asmodee’s leading, digital, browser-
based board game platform with 9 million lifetime players and 630+ games. The newly
awarded Challengers game from Asmodee will be made available on the platform in the next
quarter, another step towards the ambitious strategy of creating a holistic, digital first approach
to promote and propel physical boardgames into consumer homes.
Asmodee continues to make good progress on synergies with the other Embracer Operating
Units with 25 projects underway. These entail boardgame, video game, comics and consumer
products projects either signed or at advanced project stages within the Embracer Group on
IPs such as Lord of the Rings, Exploding Kittens, Catan, 7 Wonders, Arkham Horror or Legend
of the Five Rings.
Exploding Kittens
17
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022–
Mar 2023
Apr 2021–
Mar 2022
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 % % % %
SALES AND EARNINGS
Net sales in the quarter for Entertainment & Services amounted to SEK 1,487 million, an
increase by 83 % compared to the same period last year, or 20 % organically and 8 % pro
forma in constant currency. The increase in net sales was primarily driven by the acquisitions
of Limited Run Games and Dark Horse Media. The organic and pro forma growth was primar-
ily driven by PLAION Publishing division, with a back catalog contribution from two notable
releases from partners in the previous quarter as well as a notable new release in Q4.
EBIT amounted to SEK –203 million (3), yielding a 14 % (0%) EBIT margin. Adjusted EBIT
amounted to SEK 66 million (30), yielding a 4 % (4 %) Adjusted EBIT margin. The low margin
is primarily explained by a revenue mix geared towards PLAION Publishing.
The biggest revenue drivers for Limited Run Games, part of the operative unit Freemode, for
the quarter were Dead Space Collector’s Edition and Contra Anniversary Collection.
Dark Horse Comics continues to have strong sales of manga, in the particular the hard cover
volume of the manga series Berserk is a constant bestseller. Other major contributors during
the quarter were colouring books tied to the Critical Role franchise that generated large
mass market orders, as well as key backlist titles such as Stranger Things, The Legend of
Zelda Encyclopedia, and Avatar: The Last Airbender. The success of HBO’s The Last of Us
has also increased the interest in Dark Horse’s titles based on the game franchise.
SHARE OF
GROUP SALES
16 % (15 %)
INTELLECTUAL
PROPERTY (IP)
193 (163)
INTERNAL
HEADCOUNT
900 (784)
INTERNAL
STUDIOS
3 (1)
18
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OPERATING SEGMENT
ENTERTAINMENT
& SERVICES
BUSINESS DEVELOPMENT
In the quarter, Middle-earth Enterprises, part of the operative group Freemode, together with
New Line Cinema and Warner Bros. Pictures concluded a multi-year agreement to collaborate
on feature films based on The Lord of the Rings and The Hobbit. The strategic agreement
covers multiple feature films based on the revered works of J.R.R. Tolkien, expanding upon the
much-loved world and characters of Middle-earth.
For Freemode, interest is high for the Lord of the Rings IP, across different media formats from
both internal and external partners. There are currently five games from external partners in
production. After the period, licensee Electronic Arts released a mobile game, The Lord of the
Rings: Heroes of Middle-earth, which received a warm reception, and it was the #1 RPG game
in both App Store and Google Play during its first three days. Additionally, in Q1 FY 2023/24,
licensee Daedalic Entertainment is expected to be release the PC/console adventure game
The Lord of the Rings: Gollum. For both these games Middle-earth Enterprises is the licensor
and thereby receives royalty revenues based on the games’ sales.
After the period 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. Set in a persistent world, the new MMO is in the early stages of production, with the
Amazon Games Orange County studio leading development. Amazon Games will publish the
game globally for PC and consoles.
Limited Run noted strong performance from Star Wars Jedi: Survivor Collector’s Edition that
sold out during the quarter and will ship in Q1 FY 2023/24. After the end of the quarter, Limited
Run announced Trip World DX, a classic title from Japanese publisher Sunsoft that will be
made available on modern platforms via Limited Run’s Carbon Engine. Leading the develop-
ment via Carbon Engine will entitle Limited Run to revenues from digital sales in addition to
their core business of physical sales. Furthermore, Limited Run continues with the plans to
expand their capabilities for sales and shipping in Europe via synergies in the group. The Euro-
pean operations is expected to go live end of Q1 or early in Q2 FY 2023/24.
Dark Horse notes increased interest in their comics and graphical novels by North American
mass market retailers such as Walmart and Target. This has included testing of manga titles as
well as wider placements involving thousands of stores taking place after Q4. For direct mar-
kets, the first comic books distributed by Penguin Random House will be released in June. The
previous agreement with Penguin Random House for graphical novels resulted in double-digit
sales jump with over one hundred titles going back into print.
On the entertainment side, the sixth film for the popular Dark Horse series Hellboy began
shooting in Bulgaria on March 31st. Hellboy: The Crooked Man is written by the series creator
Mike Mignola and Christopher Golden, and stars Jack Kasey. Earlier in the quarter, the filming
of the fourth and final season of The Umbrella Academy began for Netflix in Toronto, and
the third season of Resident Alien for SyFy began shooting in Vancouver BC. Both series are
based on Dark Horse comics and have been very successful with viewers and rank among the
most watched shows on those networks.
19
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NET PROFIT FOR THE PERIOD
Net profit for the period January to March amounted to SEK 770 million, an increase of SEK 618
million or 407 % over the same period last year. In the period April 2022 to March 2023, net
profit amounted to SEK 4,462 million, an increase of SEK 3,495 million or 361 % over the same
period last year.
Net financial items amounted to SEK 753 million (1,372) in the quarter. Net interest income/
expenses and other financial income/expense amount to SEK –205 million (–49). Change in fair
value of contingent consideration and put/call option on non-controlling interest and related
interest expenses including deferred considerations amount to SEK 1,066 million (1,119). Change
in fair value is mainly related to adjustments in estimated target fulfilment of earnouts. Exchange
rate gain/losses amount to SEK –108 million (303), mainly related to the revaluation of intercom-
pany financial receivables.
Income tax amounted to SEK 112 million (–253) in the quarter. Current income tax amount to SEK
106 million (–186) and deferred income tax amount to SEK 6 million (–67).
CONDENSED CASH FLOW
SEK m
Jan-Mar
2023
Jan-Mar
2022
Apr 2022–
Mar 2023
Apr 2021–
Mar 2022
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 1,643 million (1,431) in the quarter. The
increase mainly relates to positive eects change in working capital amounted to SEK 363
million (41) in the quarter, where a seasonal positive eect from Tabletop Games Segment was
mitigated by changes in operating liabilities in PC/Console Games Segment.
Free cash flow after working capital amounted to SEK –32 million (672) (see page 54-57). The
change is explained mainly by increased investments in intangible assets SEK –1,855 million
(–1,003), where SEK –1,710 million (–950) is invested in the portfolio of on-going game develop-
ment to support future growth.
Cash flow from investing activities amounted to SEK –2,327 million (–28,673) in the quarter. The
decrease is mainly explained by previous years acquisitions of Asmodee and Dark Horse.
Cash flow from financing activities amounted to SEK –877 million (18,014). The decrease is
related to previous years increased utilization of existing credit facilities coupled with cash flow
from share issue to finalize the acquisition of Asmodee and Dark Horse.
For the period April 2022 to March 2023 the cash flow for the period amounted to SEK –1,605
million (–8,393). The increase is mainly explained by substantial lower impact in net cash flow
from investing activities and financing activities related to acquisitions compared to previous
year.
OTHER FINANCIAL
INFORMATION
OTHER FINANCIAL INFORMATION
20
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OTHER FINANCIAL
INFORMATION
NET DEBT AND AVAILABLE FUNDS
SEK m
Mar 31,
2023
Mar 31,
2022
Cash
, ,
Current investments
Current liabilities to credit institutions – –,
Current account credit facilities – –
Non-current liabilities to credit institutions –, –,
Net Debt (–) / Net Cash (+) –, –,
As per March 31, 2023 the group had non-interest-bearing deferred considerations and obli-
gations related to historical business combinations with expected cash settlement of SEK 8.6
billion with an estimated maturity structure according to page 21.
SEK m
Mar 31,
2023
Mar 31,
2022
Cash
, ,
Current investments
Unutilized credit facilities amounts to 1,404 ,
Available funds , ,
Available funds as of the beginning of May 2023 amounted to SEK 5.2 billion, of which SEK 4.1
billion was cash and cash equivalents.
Embracer Group AB has an agreement on covenants 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 March 31, 2023 Embracer has substantial headroom to the
covenants.
Embracer
21
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OBLIGATIONS RELATED TO HISTORICAL BUSINESS COMBINATIONS
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 Sharebased
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.
The value of these obligations are based on estimated degree of fulfillment and timing for such
fulfillment, which is continuously monitored and evaluated. During the quarter several adjustments
has been made on certain obligations due to that estimated degree of fulfillment is assessed to be
lower and that the timing for fulfillment is assessed to occur at a later stage then previously.
The adjustments has impacted the profit and loss with a gain of total SEK 2,388 million, of which
SEK 1,029 million relates to decreased personnel costs related to acquisitions and SEK 1,359
million relates to the financial net. Besides the gain in the profit and loss there is also a decrease
of estimated future costs personnel costs related to acquisitions with SEK 700 million, hence
the total decrease of future obligations amounts to SEK 3,088 million. Due to the structure of
certain agreements there has also been some adjustments in the settlement structure, which has
impacted that some obligations are estimated to be settled in shares and not in cash as previ-
ously estimated.
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 March 31, 2023. The present value of contingent considerations has
been calculated based on expected outcome for financial and operational targets for each indi-
vidual 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.
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 consolidated statement of financial position,
divided into current and non-current debt. Additional information is available in note 5. Obliga-
tions related to future personnel costs related to acquisitions which will be settled in cash are
accounted for in the consolidated statement of financial position, to the extent that it has been
earned by the employee and is classified as debt. On March 31, 2023, the debt amounted to
SEK 1,090 million, divided into current and non-current debt. Changes in expected obligations
to be settled in cash since previous quarter is mainly related to adjustments for estimated
target fulfilment of earnouts and estimated period of target fulfilment.
OTHER FINANCIAL
INFORMATION
22
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Obligations related to historical business combinations to be settled in shares
The table below provides an overview of obligations related to historical acquisitions on March
31, 2023, which will be settled in shares, with information on the number of shares. Contin-
gent considerations classified as part of the purchase consideration is accounted for as either
equity or debt in the consolidated statement of financial position. On March 31, 2023, the debt
portion amounted to SEK 6,334 million and the equity portion amounted to SEK 2,137 million.
Additional information is available in note 5. Obligations related to future personnel costs
related to acquisitions which will be settled in shares is accounted for in the consolidated
statement of financial position, to the extent that it has been earned by the employee and is
classified as equity in the consolidated statement of financial position. Changes in expected
obligations to be settled in shares since previous quarter is mainly related to adjustments of
estimated target fulfilment of earnouts and estimated period of target fulfilment.
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 paid as additional purchase price can vary but never exceed 108
million shares according to the earnout agreements. If all shares are issued, the dilution in
capital will amount to 7.88 % and 5.47 % of the voting rights as of March 31, 2023, and the total
number of shares after full dilution will be 1,367 million shares.
Current expectations of shares to be issued based on target achievement is within the interval
63 to 76 million shares. If shares within this interval is issued, the dilution in capital will amount
to 4.74-5.72 % and 3.26-3.95 % of the voting rights as of March 31, 2023.
The 130 million shares that have so far been issued are subject to clawback restrictions
(clawback shares). Clawback shares are defined as shares of the company issued to sellers at
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.
FINANCIAL LEVERAGE POLICY
The Board of Directors of Embracer Group have set goals for the capital structure. The lever-
age 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 ambi-
tion to return to below 1.0x in the medium term.
PARENT COMPANY
The Parent Company acquires and conducts operations through its subsidiaries and under-
lying companies.
The Parent Company’s net sales for the quarter were SEK 20 million (106), and profit before
tax was SEK 157 million (314). Profit after tax was SEK 147 million (283). The change in net sales
is explained by lower royalty revenues due to the move of intangible assets to subgroup THQ
Nordic in the beginning of financial year 2022/23. The change in profit before tax is mainly
related to changes in the financial net and lower revenues.
Cash and current investments as of March 31, 2023 were SEK 23 million (1,483).
The Parent Company’s equity at the end of the period was SEK 59,655 million (46,909).
OTHER FINANCIAL
INFORMATION
23
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
SIGNIFICANT EVENTS DURING THE QUARTER
> Careen Yapp was appointed Chief Strategic Partnerships Officer during the quarter, thereby
serving as part of the Group Executive Management Team.
> The members of the Nomination Committee for the Embracer Group AB Annual General
Meeting 2023 was announced and appointed on January 9. The following five members
were appointed: Per Fredriksson, Michael Levy, Ola Åhman, Lennart Francke and Henrik
Olsson.
> Middle-earth-Enterprises, part of Embracer Group’s operative group Freemode, announced
on February 23, an agreement with New Line Cinema and Warner Bros. Pictures to con-
clude a multi-year agreement to collaborate on feature films based on The Lord of the
Rings and The Hobbit. The strategic agreement covers multiple feature films based on the
revered works of J.R.R. Tolkien, expanding upon the much-loved world and characters of
Middle-earth. The agreement is one of the deals with several industry partners, previously
discussed in conjunction with Embracer’s Q3 report in February 2023, that are jointly trans-
formative. This specific partnership aims to create long-term value for Embracer Group and
is expected to have limited eects in the short term.
> On March 27, Embracer Group announced, in relation to the partnership- and licensing deals
with several industry partners that are jointly considered transformative, that these deals are
not likely to be completed in Q4 2022/23 as previously communicated, but instead in Q1
2023/24 (April-June 2023).
OTHER FINANCIAL
INFORMATION
Endling - Extinction is Forever
24
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Embracer Group currently operates in four entertainment segments; PC/Console and Mobile
Games (jointly ‘Video games’), Tabletop Games and Entertainment & Services.
VIDEO GAMES MARKET COMBINED
The underlying market conditions remain solid despite tough economic conditions and high
comparables previous years. The global games market generated USD 183 billion in 2022, a
decrease of 5% YoY
1)
. The trend is expected to reverse in 2023 when the market will grow by
3% YoY to reach USD 189 billion
1)
.
2022 was a ‘corrective year’ following two years of pandemic-induced growth, and in a period
still suffering from the after-effects of covid (console shortages and content delays), and com-
parisons with sales in 2021 (and 2020) are less relevant. A more relevant comparison should
be against the last full pre-covid year of 2019 (when the market value was at just USD 144 bil-
lion). In this respect the games market was up by 27% over the 3-year period (2019 to 2022)
1)
.
Looking forward, the games market growth in 2023 (+3% YoY
1)
), is expected to be driven by
much 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 Q1 2023, PS5 console sales (the main engine of the console market) are
already off to a fantastic start, over trebling YoY in Europe and over doubling YoY in the US
2)
.
The market is also now in a much stronger position (than other categories) to deal with eco-
nomic 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 206 billion in 2025, a 6% CAGR between 2019 and 2025
1)
. In fact 2022
represents the only ‘declining year’ for the games market (in the 7 years between 2019 and
2025) and analyst firm Newzoo predict market growth in each of the next 3 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 Development revenue Recurring Revenue
USD billion
0
50
100
150
200
250
2025202420232022202120202019
206
197
189
183
193
179
Global Game Revenue
Source: Newzoo
Forecast
144
MARKET TRENDLINE
1)
Source: Newzoo (May 2023)
2)
Source: VG Chartz
A note on the above market estimations from Newzoo: Values and growth levels are slightly lower than their previous
predictions due to 1: A changing methodology of exchange rate calculations to USD values, 2: A slightly softer than
expected performance of the PC market in H2 2022, particularly in Asia, and 3: A slightly more conservative view on the
mobile sector (from 2023 onwards).
25
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
PC / Console Games Market
The PC sector has been one of the most resilient over recent years. It is estimated at USD 39
Billion (2022), accounting for 21% of the global games market. It declined by 3% YoY in 2022
but is expected to see growth of 0.5% in in 2023
1)
. The sector 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)
.
Meanwhile, the Console sector, estimated at USD 52 billion (2022), accounts for 29% of the
global games market and is expected to decline by 3% YoY in 2022 (largely due to console
shortages) but then 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 rev-
enues and a stronger new release line-up. In fact, console will be the fastest growing of the
three main sectors in 2023.
Both the PC and Console markets are expected to be helped (this year and onwards) from
good growth in the ‘in-game revenue’ sector.
Mobile Gaming Market
The mobile gaming market, estimated at USD 92 billion (2022), is the largest game sector,
representing 50% of the global gaming market. It saw a decline of 7% YoY in 2022 but is
expected to return to growth of 2% YoY in 2023
1)
. This sector is expected to bounce back after
a difficult 2022 which saw fewer breakout hits than 2021, ongoing pressures of privacy regu-
lation 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 mass market (EU + US, Strategic Trading Cards, Card & Board Games) where,
Embracer Group’s, Asmodee is a key player ends the Fiscal Year 2022/23 at 2% YoY, thanks
to a good Q4 performance at 10% YoY, putting it equal to the all-time record of Q4 2021. This
represents a CAGR of 10% for the last four full fiscal years
3)
.
Jan-March 2023 Market Snapshot
In a period impacted by inflation and the geopolitical crisis in Europe, consumer demand in
the tabletop market (US + Europe combined) has proved strong and grown well YoY, with a
consistent resilience shown over the first 3 months of 2023 (performing 15% YoY in Jan, 6% in
Feb and 9% in March)
3)
.
Regionally, both the US and EU markets saw similar quarterly (Q1) growth at 9% and 11% YoY
respectively
3)
.
When looking at category trends (at the EU level), both the Strategic Trading Cards and
Boardgames markets grew YoY with STCG at 34% and Boardgames at 5%. In the boardgames
category, growth (of 8% YoY) is driven by adult games such as What do You Meme or Cards
Against Humanity
3)
.
MARKET
OVERVIEW
1)
Source: Newzoo (May 2023)
2)
Source: VG Chartz
3)
Source: NPD / Circana and Asmodee
26
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
MARKET
OVERVIEW
1)
Source: Newzoo (May 2023)
2)
Source: VG Chartz
3)
Source: NPD / Circana and Asmodee
4)
Source: NPD BookScan
6)
Source: Gower Street Analytics
7)
Source: Warner Media
8)
Source: Box Office Mojo
ENTERTAINMENT & SERVICES MARKET
Comics and Books
Overall book sales in 2022 reached USD 13 billion in the US
4)
. In unit terms, 2022 sales were
down 6% YoY, compared to the record 2021 year, but up 11% compared to pre-covid levels in
2019. Embracer Group’s company Dark Horse predominantly operates in the market segment
for comics, graphic novels and manga, and this market segment was one of the best perform-
ing during 2022, up by 3% YoY
4)
.
TV and Film
Global cinema box office revenue increased 27% YoY to USD 26 billion in 2022, which
remains 35% below the 2017-2019 pre-pandemic average. Revenues are expected to con-
tinue growing in 2023; 12% YoY to a total of USD 29 billion. Box office revenue saw especially
high growth in the US during 2022, up by 65% YoY
5)
.
Video games IPs continue to fair well for transmedia ambitions. Highlights include the film
Sonic the Hedgehog 2 which generated USD 403 million in global box office revenues in
2022
7)
and the new TV series The Last of Us, with 4.7 million viewers, that became HBO’s sec-
ond-highest watched debut series since 2010
6)
. The trend continued in 2023 with The Super
Mario Bros. movie grossing over USD 1.1 billion in global box office revenues in its first month
7)
,
already the highest-grossing video game adaptation of all time.
Blanc
27
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
SUSTAINABILITY AND GOVERNANCE
The Group’s third annual employee survey was completed during the quarter. The Global
Employee Survey is based on a six scale self-assessment format from “completely disagree” to
“completely agree” that is recalculated in index points from 0 to 100, where 100 reflects the best
result. With an 85% (80%) response rate in the group, the results provide important data for
analysis and conclusions on satisfaction and engagement among the employees. Enjoyment of
work, work-life balance and workplace conditions such as respect and leadership are among our
top strengths in the view of our employees.
During the year, the Group grew significantly but the survey shows that we managed to keep the
average satisfaction rate on a high level, 80, compared to 81 last year.
> The survey shows that our employees think that we resolutely act against any form of discrim-
ination or harassment, including sexual harassment 87 (88). The question is rated the same
among female and male employees.
> We treat each other with respect and appreciation 86 (87).
> Our employees rate that they have a very positive experience collaborating with all the differ-
ent cultures within the company 86 (87).
The result from the employee survey is distributed and discussed in senior management teams
on both global and local levels and form priorities for coming activities.
The following internal Sustainability Webinars were arranged during the quarter and are
available to all employees across the Group:
> Protecting yourself and the brand from online toxicity.
> Games & compassion, empathy, care.
Examples of events that the Embracer Group Sustainability team attended and presented on
during the quarter:
> Virtual worlds: How video games are helping share Europe’s digital future, at the European
Parliament in Brussels.
> Climate & Games Awareness Day at Game Habitat’s DevHub in Malmö.
Examples from the Operative Groups sustainability events during the quarter:
> During the quarter, Gearbox Gives was launched. It is an initiative that strategically organizes
and directs the Gearbox philanthropic work with a mission to harness the power of entertain-
ment to educate, inspire, and create. Gearbox Gives’ work encompasses Gearbox’s educa-
tional and philanthropic programs, and its community partnerships and initiatives. Recently,
Gearbox Gives partnered with the Longview Independent School District in Texas to host a
Game Fest, which encouraged STEM education and careers in video game development.
Governance
During the quarter, the new role Head of Governance & Compliance Legal was created to
strengthen the company’s work in these areas. The new role is responsible for advising and sup-
porting businesses on issues relating to governance and compliance. The role will also contribute to
the sustainability framework by advising on for example human rights due diligence. One important
step in this area has been the enrollment and participation of certain Embracer employees in the UN
Global Compact Business & Human Rights Accelerator six-month Program that activates participat-
ing companies of the UN Global Compact across industries and regions to move from commitment
to action on human rights and labor rights. Through identifying salient human rights impacts, estab-
lishing an ongoing due diligence process and developing an action plan, the Business & Human
Rights Accelerator will empower Embracer to advance its human rights processes.
AI is a key issue for Embracer Group where we see several opportunities to increase product
quality, efficiency and possibilities for interaction between players. In order to efficiently use the
latest AI systems while considering our players, we have made our Head of Privacy responsible
for the Group’s AI Governance in addition to the responsibilities in the privacy area. As responsi-
ble for AI Governance, our Head of Privacy & AI Governance will develop the Group’s governing
framework for use of AI.
After the reporting quarter we have launched a new annual training on privacy for all 16,000+
employees.
OTHER
INFORMATION
OTHER INFORMATION
28
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
OTHER
INFORMATION
SIGNIFICANT EVENTS AFTER 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.
M&A ACTIVITY STATUS AS OF MARCH 31
Company Country Operating Segment Operative Group Type Status
Q4 2022/23 • Jan-Mar 2023
Captured Dimensions USA PC/Console Games Gearbox Studio Closed
GAMES ARCHIVE
The Embracer Games Archive preserves and tributes the games culture with an archive of
physical games. By building an extensive archive of physically released games for the consumer
market, we aim 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.
March 10 was a historic day for the archive as the framework for the database was completed.
This event marks the beginning for the archive’s next phase; to increase understanding of what
the archive includes and what games and equipment should be added.
Currently the archive comprises more than 60,000 games, consoles, and accessories stored in
Karlstad, Sweden.
The archive is receiving increasing numbers of visitors. Notably, Parisa Liljestrand, Swedish Min-
ister of Culture, visited the archive during the quarter which gave the archive team an opportu-
nity to explain the importance of the archive and the significance of preserving gaming culture.
Embracer Games Archive
29
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
ANALYSTS FOLLOWING EMBRACER GROUP
AS OF MAY 24, 2023
Company Name Phone Mail
Exane BNP Paribas Nicholas Langlet - nicholas.langlet@exanebnpparibas.com
Note: The commissioned research analyst, Redeye does not have any buy, hold, or sell recommendation.
At www.embracer.com consensus estimates are provided as an IR-service.
The estimates are collected by Infront and based on predictions made by analysts who cover Embracer Group.
TOP 10 OWNERS AS OF MARCH 31, 2023
Change from
Dec 31, 2022
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 ,, . % . % ,,
Swedbank Robur Fonder ,, . % . % –,,
Didner & Gerge Fonder ,, . % . % –,
Handelsbanken Fonder ,, . % . % ,,
,, ,, . % . %
,, ,, . % . %
,, ,,, . % . %
Source: Monitor by Modular Finance.
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
1 030
882
793
631
1 133
629
857
644
466
493
396
1 154
728
939
1 002
973
742
930
1611
1 834
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 Re venue
Swedish
institutions
52.1 %
International
institutions
47.9 %
Top 20
Management
/Co-Founders
37.8 %
Top 50
institutions
46.2 %
Other shareholders
16.0 %
INTERNATIONAL OWNERSHIP
TOP 50 INSTITUTIONAL
AS OF MARCH 31, 2023
BY CAPITAL
INSTITUTIONAL OWNERSHIP
VS MANAGEMENT
AS OF MARCH 31, 2023
BY CAPITAL
30
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
PLAION Austria
TOP 20 MANAGEMENT & COFOUNDER OWNERS AS OF MARCH 31, 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 Easybrain ,, . % . %
Ken Go Deca Games ,, . % . %
Randy Pitchford Gearbox ,, . % . %
Founders/Management 4a ,, . % . %
Erik Stenberg Embracer Group ,, . % . %
Management Crazy Labs ,, . % . %
Founders
1)
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 ,, . % . %
Vincent Van Brummen Vertigo Games ,, . % . %
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)
Ghostship Games founders sold 59,098 B-shares during quarter.
OTHER
INFORMATION
31
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
TOP 50 INSTITUTIONAL OWNERS AS OF MARCH 31, 2023
Change from
Dec 31, 2022
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 ,, . % . % 3,370,000
Swedbank Robur Fonder ,, . % . % –,,
Didner & Gerge Fonder ,, . % . % –,
Handelsbanken Fonder ,, . % . % ,,
AMF Pension & Fonder ,, . % . % ,,
BlackRock ,, . % . % 1,446,185
DNB Asset Management AS ,, . % . % 2,715,523
SEB Fonder ,, . % . % –,
ODIN Fonder ,, . % . % –,,
Andra AP-fonden ,, . % . % ,,
TIN Fonder ,, . % . % -
Första AP-fonden ,, . % . % –1,473,753
Skandia Fonder ,, . % . % ,
Livförsäkringsbolaget Skandia ,, . % . % ,,
Länsförsäkringar Fonder ,, . % . % ,,
Futur Pension ,, . % . % –,
Baillie Giord & Co ,, . % . % –,
Enter Fonder ,, . % . % –,
Öhman Fonder ,, . % . % ,,
DNB Asset Management SA ,, . % . % 632,195
AFA Försäkring ,, . % . % ,
Avanza Pension ,, . % . % –1,653,685
Martin Larsson (Chalex AB) ,, . % . % -
Government of Japan Pension Investment Fund ,, . % . % -
Aktia Asset Management ,, . % . % 192,500
Northern Trust ,, . % . % –,
State Street Global Advisors ,, . % . % –,
Fidelity Investments (FMR) ,, . % . % –,
VanEck ,, . % . % –,
Handelsbanken Liv Försäkring AB ,, . % . % ,
Swedbank Försäkring ,, . % . % 79,739
Naventi Fonder ,, . % . % –137,932
Tredje AP-fonden ,, . % . % 2,000,000
Nordea Liv & Pension ,, . % . % –,
Svenska Handelsbanken AB for PB ,, . % . % –,
1832 Asset Management ,, . % . % -
M&G Investment Management ,, . % . % -
Nordnet Pensionsförsäkring ,, . % . % –,
Lancelot Asset Management AB ,, . % . % -
Prioritet Finans ,, . % . % -
TIAA - Teachers Advisors ,, . % . % 127,126
Global X Management Company LLC ,, . % . % 301,646
Deka Investments ,, . % . % 2,838
Cliens Fonder ,, . % . % ,
Fondita Fund Management ,, . % . % -
DWS Investments ,, . % . % 413,321
RAM Rational Asset Management ,, . % . % –36,564
TOP 50 ,, . % . %
ALL OTHER SHAREHOLDERS ,, ,, . % . %
TOTAL ,, ,,, . % . %
Source: Monitor by Modular Finance.
OTHER
INFORMATION
32
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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, accounting
policies and methods of computation have been applied as in the most recent complete set of
financial statements, with one exception described in note 1. Embracer’s most recent complete
set of financial statements is the Prospectus, appendix Restated Historical Financial Information
published on December 19, 2022, in connection with the listing change to Nasdaq Stockholm
Main Market.
AUDITOR’S REVIEW
This Full Year Report has not been subject to review by the Company’s auditor.
FORTHCOMING REPORTS
Annual Report 2022/23 June 21, 2023
Interim Report Q1, April-June 2023 August 17, 2023
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, Founder & CEO
lars.wingefors@embracer.com, +46 54 53 56 01
Johan Ekström, Group CFO & Deputy CEO
johan.ekstrom@embracer.com, +46 54 53 56 02
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
Goat Simulator 3
33
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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 06:00 CET on May 24, 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, May 24, 2023
SIGNATURES AND ASSURANCE
The Board of Directors and Chief Executive Officer offer their assurance that this full year
report and interim report for the fourth 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 uncertainties 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
Chief Executive Ocer
Kicki Wallje-Lund
Chairman of the Board
Flying Wild Hog
34
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Amounts in SEK m Note
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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
35
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Amounts in SEK m Note
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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
36
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Amounts in SEK m Note
Mar 31,
2023
Mar 31,
2022
ASSETS
Non-current assets
Goodwill , ,
Intangible assets 45,579 ,
Property, plant and equipment 1,148
Right-of-use assets 1,423 ,
Investments in associates
Non-current financial assets
Deferred tax assets , ,
Total non-current assets , ,
Current assets
Inventories 4,081 ,
Trade receivables , ,
Contract assets 177
Other receivables , ,
Prepaid expenses
Current investments 5 18
Cash and cash equivalents 4,662 ,
Total current assets 16,998 ,
TOTAL ASSETS , ,
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
37
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Amounts in SEK m Note
Mar 31,
2023
Mar 31,
2022
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 ,
Current account credit facilities
Advances from customers
Trade payables , ,
Lease liabilities
Contract liabilities , ,
Contingent considerations 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 , ,
CONT. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
38
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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 2021-04-01 , – –, , ,
Net profit - - - –
Other comprehensive income - - -
Total comprehensive income for the period - - , – ,
Transactions with the owners
New share issue 1 16,602 - - 16,603 - 16,603
Issuance costs - – - – - –
Tax eect issuance costs - - -
Share-based payments - - -
Share-based remuneration according to IFRS 2 - , - , - ,
Transactions with non-controlling interests - - - -
Total , - - , ,
Closing balance 2022-03-31 , – , ,
Opening balance 2022-04-01 , – , ,
Net profit - - - , , ,
Other comprehensive income - - , - , ,
Total comprehensive income for the period - - , , , ,
Transactions with the owners
New share issue - , - , - ,
Issuance costs -
)
- -
Tax eect issuance costs - – - – - –
Share-based remuneration according to IFRS 2 - , - , - ,
Transactions with non-controlling interests - - - – – –
Total - , - – , – ,
Closing balance 2023-03-31 , , , , ,
1)
Includes currency translation dierence and cash flow hedge reserve.
2)
Positive amount due to reversal of accrued costs that are not paid.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
39
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
CONSOLIDATED CASH FLOW STATEMENT
Amounts in SEK m
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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 – –, –, –,
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 , , , ,
40
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
This full year 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,
development and publishing of PC games, console games,
mobile games, board games and VR games and has partner pub-
lishing and niche positions in film and comic book publishing.
The Parent Company is a limited liability company with its regis-
tered 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 most recent complete
set of financial statements, with one exception described below.
Embracer’s most recent complete set of financial statements is
the Prospectus, appendix Restated Historical Financial Informa-
tion published on December 19, 2022, in connection with the
listing change to Nasdaq Stockholm Main Market. A complete
description of the Group’s applied accounting policies can be
found in the Prospectus, appendix Restated Historical Financial
Information. For new accounting principles, please see Account-
ing policy - Asset acquisition and Accounting policy - Revenue
from sales of interactive entertainment content and services
for console and PC platforms below. 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 full year infor-
mation on page 40-49 that form an integral part of this financial
report.
All amounts are presented in million Swedish kronor (“SEKm”),
unless otherwise indicated. Rounding dierences may occur.
Accounting policy – Asset acquisition
In an acquisition Embracer determines whether the transaction is
a business combination or an asset acquisition. The term “asset
acquisition” represents an acquisition of an asset, or a group of
assets, that does not meet the definition of a business. A busi-
ness consists of inputs and processes applied to those inputs
that have the ability to contribute to the creation of outputs. To
assess if the acquired set of activities and assets is a business or
not Embracer may apply the concentration test or directly do the
analysis based on the definition of a business. The concentration
test is met if substantially all of the fair value of the gross assets
acquired is concentrated in a single identifiable asset or group of
similar identifiable assets. If the concentration test is not met, the
set of activities and assets is determined to be a business. If the
concentration test is not used Embracer evaluates the acquisition
based on the definition of a business.
If an acquisition is an asset acquisition it means, in comparison
to a business combination, that the transaction cost will be cap-
italized, no goodwill will be recognized because the transaction
price will be allocated to the asset or group of assets and no
deferred taxes will be accounted for at acquisition date. The fair
value initially includes the conditional purchase price. Changes in
the assessed value of contingent consideration after the acquisi-
tion are added to the cost of acquiredassets.
Accounting policy – Revenue from sales of interactive enter-
tainment content and services for console and PC platforms
There are also agreements where Embracer, in addition to pro-
viding the license to the publisher, also provide the license to
a specific game to the publisher and where the publisher take
control of the game over time. These agreements are deemed
to constitute two performance commitments and the income
from game development is reported in the same way as “work-
for-hire” with fixed compensation, meaning control is transferred
over time because the publisher controls the game during the
time the development assignment is carried out. In cases when
Embracer has developed game development at the time of sign-
ing the agreement and the customer takes over this developed
game development at one point, when the agreement is signed,
a one-time income is reported at the time that the accumulated
game development is transferred. Remaining revenue from game
development is reported over time in line with development.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
NOTES
When preparing the financial statements, management and the
Board of Directors must make certain assessments and assump-
tions that impact the carrying amount of asset and liability items
and revenue and expense items, as well as other provided infor-
mation. Actual outcome may dier from the estimates if the esti-
mates are wrong or circumstances change. The key estimates
and assumptions made when preparing the full year report
correspond to the ones described in the Prospectus, appendix
Restated Historical Financial Information published on Decem-
ber 19, 2022.
NOTE 2 KEY ESTIMATES AND ASSUMPTIONS
41
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Jan-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 13 - - 6 –19 - -
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 - - - - - - - -
Remeasurement of contingent
consideration - - - - -
Items aecting comparability – - - - – – –
EBIT – – – – – –
Net financial items
Profit before tax
Jan-Mar 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 participation in
associated companies – - - - – - - –
Remeasurement of contingent
consideration – - - – - – –
EBIT – – – – - – –
Net financial items ,
Profit before tax
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
42
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
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
–, –, – – –, - - –,
Remeasurement of participation in
associated companies
- - - - - - - -
Remeasurement of contingent
considerations
- - - - - -
Items aecting comparability – - - - – - – –
EBIT – – - –
Net financial items ,
Profit before tax ,
Apr 2021-Mar 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 participation in
associated companies - - - - -
Remeasurement of contingent
considerations – - - – - – –
EBIT –, – – - – –,
Net financial items ,
Profit before tax ,
43
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NOTE 4 REVENUE FROM CONTRACTS WITH CUSTOMERS
Jan-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 , , , , ,
Jan-Mar 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 , , , , ,
Apr 2021-Mar 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 , , , ,
1)
See Operating segment, page 8-18
IP-rights
PC/Console Games Owned titles Publishing titles Total
Jan-Mar 2023 , , ,
Jan-Mar 2022 , ,
PC/Console Games New releases Back-catalog Other Total
Jan-Mar 2023 , , ,
Jan-Mar 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 , , ,
Apr 2021-Mar 2022 , , ,
PC/Console Games New releases Back-catalog Other Total
Apr 2022-Mar 2023 , , , ,
Apr 2021-Mar 2022 , , , ,
44
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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 Mar 31, 2023 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, 2022 Level 1 Level 2 Level 3 Total
Ownership interests in other
entities - -
Derivatives - -
Financial liabilities measured at fair value
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 - -
Financial liabilities measured
at fair value as of Mar 31, 2022 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. The Group holds foreign
currency derivatives and interest rate derivatives that are mea-
sured 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 2022–
Mar 2023
Apr 2021–
Mar 2022
Opening balance , ,
Acquisitions , ,
Payment - shares to be issued – -
Payment - clawback shares –450 –421
Payment - cash – –
FX eects 47 –119
Reclassifications –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 3,213 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 percentage points
will have an impact on the fair value of the contingent considerations
of SEK –454 million and a lower discount factor of 1,5 percentage
points will have an impact with SEK 469 million respectively.
The Group’s contingent considerations will be settled in cash or with
issued shares. As of March 31, 2023, the contingent considerations
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
considerationContingent consideration
Cash
settlement
Newly
issued shares
Newly
issued shares
Total 2,441 , , , ,
As of Mar 31, 2023
Classified as
financial liability
Of which
already issued
Classified
as equity
Of which
already issued
Maximum number of shares related to contingent considerations ,, ,, ,, ,,
45
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Put/call options on non-controlling interest
Total, classified
as financial liabilityPut/call options on non-controlling interest Cash settlement Newly issued shares
Total 1,071 , ,
As of Mar 31, 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 1,185 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 2022–
Mar 2023
Apr 2021–
Mar 2022
Opening balance , -
Acquisitions - ,
FX-eects – -
Change in fair value recognized in
consolidated statement of profit or loss –1,185 446
Closing balance , ,
As at March 31, 2023, the Group’s put/call option on non-con-
trolling interests will be settled in cash or with shares according to
the distribution below:
Deferred Consideration
Total, classified
as financial liabilityDeferred Consideration Cash settlement Newly issued shares
Total 2,019 - 2,019
As of Mar 31, 2023 Classified as deferred consideration Of which already issued
Maximum number of shares related to deferred considerations - -
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-Dec
2022
Apr 2021–
Mar 2022
Opening balance -
Acquisitions , -
Payment - shares to be issued - -
Payment - clawback shares - -
Payment - cash – -
FX-eects -
Reclassifications -
Discount eect recognized in consolidated
statement of profit or loss 36 -
Closing balance , -
As at March 31, 2023, the Group’s deferred consideration will be
settled in cash or with shares according to the distribution below:
46
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NOTE 6 BUSINESS COMBINATIONS
THE GROUP’S ACQUISITIONS DURING APR 2022MAR 2023
Acquired entity Operation Operating segment Purpose of acquisition Acquisition date
Capital and
voting rights
DIGIC Studio PC/Console Games "Onboarding a talented team to Saber Interactive, with a
strong track record within commercial trailers and cinematics
within best selling game- titles. "
%
Lost Boys inc Studio PC/Console Games Trusted game development studio with a track record
working on AAA games that can satisfy a significant need for
headcount to fulfil and potentially expand Gearbox’s games
pipeline.
%
Tuxedo Labs Studio PC/Console Games "Addition of talented team focused on physics-based game
technology and design"
%
CSGBG Studio PC/Console Games Addition of talented studio to the Coee Stain Vertical. %
Crystal Dynamics
- Eidos
Studio PC/Console Games The collection of studios represents a world-class creative
team of ~, employees across three studios and eight
global locations, including two of the most reputable AAA
studios across the industry in Crystal Dynamics and Eidos
Montréal. The acquisition builds on Embracer’s mission of
creating a leading independent global gaming and entertain-
ment ecosystem.
%
Singtrix Studio Entertainment &
Service
Strengthen Freemode’s position within music and audio
gaming products.
%
Limited Run
Games
Publisher Entertainment &
Service
Global leading brand within premium publishing of physical
games.
%
Beamdog Studio PC/Console Games A founder-led game development studio with long experi-
ence and ~ highly skilled developers in business-friendly
Canada.
%
Tripwire
Interactive LLC
Publisher/
Studio
PC/Console Games Addition of talented development team and strong brands. 2022-10-05 %
Animee Ltd. Studio Entertainment &
Service
Acquirement to strengthening marketing and distribution in
the Japanese pop art market.
2022-10-10 %
VR Group Distribution Tabletop Acquire a strong distributor of tabletop games in Australia,
New Zealand and the UK.
%
Captured
Dimensions
Studio PC/Console Games Acquirement of a US-based technology company specializing
in D capture, scanning, and reconstruction services.
%
47
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Purchase price allocations (“PPA”) for acquisitions during Apr 2022-Mar 2023
The business combinations are presented on an aggregated level, as the relative amounts for the individual business combinations are
not deemed to be material. All of the purchase price allocations for acquisitions during the period are preliminary.
Purchase price allocations summary, PPA
Amounts in SEK m, fair value
Acquired net assets at the acquisition date
Q1-Q4
acquisitions
Adj. Prel
PPAs Q1-Q4 Total
Intangible assets , ,
Property, plant and equipment –
Right-of-use assets
Financial assets -
Deferred tax assets
Inventories -
Trade receivables and other receivables
Cash and cash equivalents , – ,
Interest-bearing liabilities – –
Lease liabilities – – –
Deferred tax liabilities – – –
Trade payables and other operating liabilities –, – –,
Identified net assets , ,
Goodwill , – ,
Non-controlling interests - - -
Total purchase consideration , ,
Purchase consideration comprises:
Cash , ,
Contingent consideration , – ,
Deferred consideration , ,
Equity instruments
Other - - -
Total purchase consideration , ,
The fair value of issued equity instruments included in the trans-
ferred purchase consideration is based on the price of Embracer’s
Class B share at each acquisition date. The number of shares
issued with no restrictions/clawback is stated in the table below:
Q1-Q4
acquisitions
Adj. Prel
PPAs Q1-Q4 Total
Number of Class A shares - - -
Number of Class B shares ,, - ,,
Total ,, ,,
Contingent consideration, goodwill and transaction related costs
have been recognized in connection with the Group’s business
combinations during Apr 2022-Mar 2023. Below is information
about the acquisition-related items:
Contingent considerations
Q1-Q4
acquisitions
Adj. Prel
PPAs Q1-Q4 Total
Recognized amount , – ,
Payments are likely to fall within the range
Low
High , – ,
Maximum amount for payment is unlimited No - No
The basis for receiving the contingent consideration is based on
both operational targets, such as releasing a certain number of
games from a game portfolio during a certain period, and finan-
cial targets based on achieving a certain performance measure
over a given period.
Other transactions entered into in connection with
the business combinations
In connection with certain business combinations during the
period, an agreement has been entered into relating to contin-
gent consideration that is not classified as part of the transferred
purchase consideration as there is a requirement for continued
employment to receive the amount. Thus, the amount is classified
as remuneration for future services. The amount may be settled
with shares or cash, whereby the transactions are recognized
either in accordance with IFRS 2 Share-based payment or in
accordance with IAS 19 Employee benefits for cash-settled remu-
neration. As the remuneration is earned, it is recognized as per-
sonnel expense in the consolidated statement of profit or loss.
Goodwill
Goodwill mainly refers to the value of the organizations existing
skills and capabilities to develop and produce future succcesful
assets as well as synergies of collaboration within the Embracer
ecosystem.
48
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
The acquisitions impact on the consolidated statement of profit
or loss and statement of comprehensive income
Revenues and net profit for the acquired companies since the
acquisition date have been included in the Group’s statement
of comprehensive income for the period and is not presented
separately. The revenues and EBIT that the companies would
have contributed if the acquisition had taken place in the begin-
ning of the period have not been calculated due to the fact that
this would be disproportionately burdensome and they are not
deemed to be material on an overall Group level.
Transaction costs
Q1-Q4
acquisitions
Other
transaction
costs
1)
Total
Transaction costs recognized in consolidated statement of profit or loss in other operating expenses
Issuance costs recognized in equity
Total
1)
Other transaction costs relate to costs for historical acquisitions that has impacted the consolidated statement of profit or loss for the period.
The acquisitions impact on the Group's cash flow
Q1-Q4
acquisitions
Adj. Prel
PPAs Q1-Q4 Total
Purchase consideration , ,
Less:
Acquired cash , ,
Net cash outflow
,
,
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.
During the quarter, Embracer Group did not complete any acqui-
sitions that have been classified as asset acquisitions. Previous
acquisitions completed in the financial year 2022/23 and classi-
fied as asset acquisitions have been presented in previous quar-
terly reports.
ASSET DEALS
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 in the financial years
April 2020-March 2021 and April 2021-March 2022 has been
presented in the Prospectus, appendix Restated Historical Finan-
cial Information available at Embracer Group’s website.
49
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
NOTE 7 RELATED PARTY TRANSACTIONS
Related party transaction Related party
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
Consulting services Logvreten AB
1)
(supplier) – – –
Transportation services/Rent Mad Dog Games LLC, Mek Production
2)
(supplier) - – - –
Transportation services Sola Service i Karlstad AB
3)
(supplier) – –
Transportation services Empterwik Special Services Ltd
3)
(supplier) – - – –
Sale of goods/services Bröderna Wingefors AB
3)
(supplier) - -
Acquisition of game collection Lars Wingefors AB
4)
(supplier) - – –
Total – – – –
1)
Kicki Wallje-Lund, chairman of the board, has controlling influence over the company
2)
Matthew Karch, board member, has controlling influence over the company
3)
The company is part of Lars Wingefors AB
4)
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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
Personnel expenses –, –, –, –,
Personnel costs related to acquisitions - Excluding FX gain/loss –, –, –,
Total –, –, –, –,
NOTE 9 OTHER OPERATING EXPENSES
SEK m
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
Other operating expenses – – – –
Transaction costs related to acquisitions –22 –205 –290 –367
FX gain/loss related to Personnel costs related to acquisitions – – –
Total – – – –
NOTE 10 NET FINANCIAL ITEMS
SEK m
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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 consideration
and put/call options on non-controlling interests is related to
adjustments in estimated target fulfilment of earnouts.
50
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
PARENT COMPANY’S INCOME STATEMENT
Amounts in SEK m
Jan-Mar
2023
Jan-Mar
2022
Jan-Mar
2021
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
Apr 2020-
Mar 2021
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
51
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
Amounts in SEK m
Mar 31,
2023
Mar 31,
2022
Mar 31,
2021
Apr 1,
2020
ASSETS
Fixed assets
Intangible assets
Tangible assets
Shares in Group companies , , , ,
Receivables from Group companies , , ,
Other financial assets -
Deferred tax assets - -
Total financial assets , , , ,
Total fixed assets , , , ,
Current assets
Receivables from Group companies , , ,
Other receivables
Current tax assets
Total current receivables , , ,
Current investments
Cash and bank balances , , ,
Total current assets , , , ,
TOTAL ASSETS , , , ,
EQUITY AND LIABILITIES
Restricted equity
Unrestricted equity , , , ,
Total equity , , , ,
Untaxed reserves
Provisions
Non-current liabilities , ,
Overdraft facilities ,
Trade payables
Liabilities to Group companies
Other current liabilities
Total current liabilities ,
TOTAL EQUITY AND LIABILITIES , , , ,
PARENT COMPANY BALANCE SHEET
52
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
The parent company prepares its financial statements in accor-
dance with the Swedish Annual Accounts Act (1995:1554) and the
recommendation issued by the Financial Reporting Board RFR 2
“Accounting for legal entities”. For the parent company’s transi-
tion to RFR 2 see note P2.
The Parent company applies the same accounting principles as
the Group with the exceptions and additions specified in RFR 2.
This means that IFRS is applied with the exceptions listed below.
Unless otherwise indicated, the accounting policies stated below
for the parent company have been applied consistently to all
periods presented in the parent company’s financial statements.
Classification and presentation of financial statements
For the Parent entity, the title balance sheet is used for the finan-
cial statements which in the Group is titled statement of finan-
cial position. The Parent entity’s income statement and balance
sheet are presented in accordance with the format prescribed in
the Swedish Annual Accounts Act, while the statement of other
comprehensive income, the statement of changes in equity and
statement of cash flows are based on IAS 1 Presentation of Finan-
cial Statements and IAS 7 Statement of Cash Flows.
Lease agreements
The guidance on accounting for lease agreements in accordance
with IFRS 16 are not applied in the parent company. This means
that lease payments are expensed linearly over the lease term
and right-of-use assets and lease liabilities are not included in
the parent company’s balance sheet. However, identification of a
lease agreement is made in accordance with IFRS 16, i.e. than an
agreement is, or contains a lease if the agreement conveys the
right to control the use of an identified asset for a period of time
in exchange for consideration.
Revenue from investments in subsidiaries
Dividends are recognized when the right to receive payment is
considered certain. Revenue from divestment of subsidiaries is
recognized when control of the subsidiary has been transferred
to the acquirer.
Taxes
In the Parent company, deferred tax liabilities attributable to
untaxed reserves, are recognized gross in the balance sheet. The
appropriations are recognized gross in the income statement.
Shares in subsidiaries
Shares in subsidiaries are recognized in the parent company in
accordance with the cost method. This means that transaction
costs are included in the carrying amount of the investment.
In cases where the carrying amount exceeds the subsidiaries’
consolidated value, an impairment is made that is recognized in
the income statement. An impairment assessment is performed
annually or more often if there is an indication of a need for
impairment. If a previous impairment loss is no longer justified,
it is reversed.
Assumptions are made about future conditions to calculate
future cash flows that determine the recoverable amount. The
recoverable amount is compared to the carrying amount for
these assets and forms the basis for any impairments or rever-
sals. The assumptions that aect the recoverable amount the
most are future earnings development, discount rate and useful
life. If future external factors and conditions change, assumptions
may be aected so that the carrying amounts of the parent com-
pany’s assets change.
Group contributions and shareholder contributions
The parent company recognize both received and paid group
contributions as appropriations in accordance with the alter-
native method in RFR 2. Shareholder contributions paid by the
parent company are recognized as an increase of shares and
participations in the parent company. Shareholder contributions
received are recognized as an increase of non-restricted equity.
Financial instruments
The parent company applies the exemption to not apply IFRS 9
Financial Instruments in the legal entity. Instead, the parent com-
pany applies, in accordance with the Swedish Annual Accounts
Act, the cost method. In the parent company, non-current finan-
cial assets are thus measured at cost and current financial assets
are measured at the lower of cost or net realizable value. The
parent company does, however, apply the expected credit loss
method (ECL) in accordance with IFRS 9 for financial assets that
are debt instruments. Contingent considerations are measured
at the amount that the parent company deems would need to be
paid if it was settled at the end of the reporting period.
The parent company applies the exemption to not measure finan-
cial guarantee contracts for the benefit of subsidiaries, associ-
ates and joint ventures in accordance with IFRS 9. Instead, the
parent company applies the policies for measurement in IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
Impairment of financial assets
Financial assets, including intra-group receivables, are subject to
impairment for expected credit losses.
For receivables from Group companies and other items subject
of expected credit losses, an impairment method with three
stages is applied in accordance with IFRS 9. The parent company
applies a rating-based method for assessment of expected credit
losses based on the probability of default, expected loss given
default and exposure at default.
The parent company assesses that the subsidiaries currently
have similar risk profiles and assessment is made on a collective
basis. The assessment has been based on the Embracer Group’s
credit risk, which has been adjusted to reflect the subsidiaries’
assessed credit risk. At the end of the reporting period, the
expected credit losses have resulted in a decrease of receivables
from group companies and as an increase in financial costs.
Expected credit losses for cash and cash equivalents have not
been recognized, as the amount has been deemed insignificant.
Development fund
Expenditures for internally developed intangible assets is capital-
ized as intangible assets in the parent company in line with the
Group’s accounting policies. In the parent company, an amount
corresponding to the development expenditures capitalized is
transferred from non-restricted equity to a reserve for develop-
ment expenditures within restricted equity.
NOTE P1 THE PARENT COMPANY’S ACCOUNTING POLICIES
53
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
The Parent Company has previously applied the Swedish Annual
Accounts Act and BFNAR 2012:1 Annual Accounts and Consoli-
dated Accounts (K3) in the preparation of financial statements. As
of this financial year, as a result of the Group’s transition to IFRS,
the Parent Company applies the Swedish Annual Accounts Act
and RFR 2 Accounting for Legal Entities. The date of the parent
company’s transition to RFR 2 is April 1, 2020.
The accounting policies included in note P1 have been applied
when the full year report is prepared as of March 31, 2023 and for
the historical periods presented for the comparative periods.
The eect of the transition to RFR 2 is reported directly against
the opening equity April 2020. Previously published financial
information for the periods 2020-04-01 - 2021-03-31 and 2021-
04-01 - 2022-03-31, prepared in accordance with the Swedish
Annual Accounts Act and BFNAR 2012:1 (K3), has been converted
to RFR 2. The eect of the parent company’s transition to RFR 2
on the parent company’s income statement and on the parent
company’s balance sheet are mainly related to the eects of IFRS
9 Financial Instruments and expected credit losses. The eect on
income statement and the balance sheet is for year 2021/2022 is
SEK –17 million and for the year 2020/2021 SEK –6 million. The
income statement item aected is Profit/loss from financial items
and in the balance sheet the items aected are Receivables from
Group companies and Unrestricted Equity. The transition to RFR
2 has had no eect on the parent company’s cash flow.
For the fourth quarter 2021/2022 the income statement impact is
SEK –10 million (–1).
NOTE P2 PARENT COMPANY’S TRANSITION TO RFR 2
54
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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.
55
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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 in the last five quarters have been excluded. The com-
parison 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 in the last five quarters have been added historically.
The comparison period is adjusted for dierences 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
56
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
ALTERNATIVE PERFORMANCE MEASURES
ADJUSTED EBIT AND ADJUSTED EBITDA DERIVATION
Amounts in SEK m
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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
Jan-Mar
2023
Jan-Mar
2022
Apr 2022-
Mar 2023
Apr 2021-
Mar 2022
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 . . . .
57
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
ORGANIC GROWTH DERIVATION
Amounts in SEK m
Jan-Mar
2023
Jan-Mar
2022 Change
Net sales , , %
Net sales from acquired companies
1)
–, –
Dierence in exchange rate -
Organic growth output , , – %
PRO FORMA GROWTH DERIVATION
Amounts in SEK m
Jan-Mar
2023
Jan-Mar
2022 Change
Net sales , , %
Net sales from acquired companies
2)
- ,
Dierence in exchange rate - ,
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
Jan-Mar
2023
Jan-Mar
2022
Cash flow for the period –, –,
Cash flow from financing activities –,
Acquisition of subsidiaries, net of cash acquired ,
Transaction costs
Payment personnel cost related to acquisitions -
Free cash flow after working capital –
58
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 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 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.
59
EMBRACER GROUP AB (PUBL) | APRIL 2022–MARCH 2023
INFORMATION BY FINANCIAL YEAR AND QUARTER
2016 2017 2018 2019 2020
1)
2020/21 2021/22 2022/23
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
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 850
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 138 internal game
development studios and is engaging more than 16,600 employees
in more than 40 countries.
