Embracer said its restructuring program is on track and confirmed it’s quietly moving forward with studio closures.
During an investor Q&A, Embracer CEO Lars Wingefors was asked for more information on the reported closure of Campfire Cabal, and while the chief exec wouldn’t comment on that specific case, he said Embracer is currently taking actions that aren’t “public or announced” to close or divest some of its internal studios.
“We try to find new homes for our people, but ultimately we need to make a final call and [make] layoffs in certain instances,” added Wingefors, who reiterated the company is committed to hitting a net debt target of SEK 8 billion by the end of the fiscal year.
Discussing the company’s performance during the first quarter ended June 30, 2023, Wingefors described Dead Island 2 and Remnant II as “successful sequels” and said both contributed to an uptick in net sales. Dead Island 2, for instance, sold-through 2 million units during its first month on sale, while Remnant II delivered 1 million sales in its first four days.
Across the company as a whole, net sales increased by 47 percent to SEK 10.5 billion. Breaking that number down by segment, PC/Console Games sales rose by 74 percent to SEK 4 billion, while Mobile Games sales decreased by 3 percent to SEK 1.4 billion.
Tabletop Games sales increased by 20 percent to SEK 3.2 billion, and Entertainment & Services sales rose by 173 percent to SEK 1.8 billion.
Embracer commits to studio closures and claims “more focused investments” will drive growth
Off the back of that performance, Embracer said it has “increased confidence” regarding its earnings this year and pointed to its upcoming release slate and ongoing investments into future releases as cause for optimism.
“Developing and publishing great games is our core business and I would like to highlight the great achievement from the teams behind the recent successes of Dead Island 2, Jagged Alliance 3, and Remnant II,” reads the company’s quarterly report, which highlights the potential of other “large-budget” titles like Payday 3 and Warhammer 40,000: Space Marine 2.
“We have for several years made strategic investments into accelerated long-term organic growth in PC/Console Games. Ongoing investments into future game releases has outpaced completed development by 2-3x, increasing the value of on-going game development to more than SEK 10 billion by the end of June,” continues the report.
“Although we now reduce capex and prioritize within our portfolio, completed development should continue to increase as our development pipeline matures. After the program is completed, more focused investments into our highest-ROI titles should drive both growth and profitability.”
With that in mind, Embracer reiterated its adjusted EBIT forecast of SEK 7 billion to 9 billion for the end of the current fiscal year.