Technology

Gaming group Embracer expands despite market downturn


Prolific gaming dealmaker Embracer Group defied a wider downturn in the sector as it announced six new acquisitions and posted a rise in first-quarter sales and profits despite a scarcity of new game releases.

The Swedish group, which has become the biggest gaming company in Europe after a four-year buying spree, has entered into agreements to purchase US group Limited Run Games, karaoke group Singtrix, PC game studio Tuxedo Labs, the intellectual property rights to The Lord of the Rings and The Hobbit literary works, and one company whose identity was kept confidential.

The upfront price for these items is SKr6bn, but the total consideration would be SKr8.1bn, the company said.

Embracer on Thursday reported a year-on-year doubling of sales in the three months to June 30 to SKr7.1bn ($681mn), though it was below consensus expectations of SKr7.3bn. It also reported a 3 per cent increase in operating profit to SKr1.32bn, though again this was below consensus estimates.

The group reiterated its forecast for the full year, announcing it would be aiming for 25 to 30 per cent organic growth. Embracer’s share price dipped by 2 per cent in early morning trading, to SKr74.

Its results come as gaming companies have faced weakening sales and lower engagement in recent months, as players returned to real-world pursuits post-pandemic and cut back on their spending. Analysts had been forecasting a tougher period ahead for smaller studios that specialise in independent games, such as the majority of those owned by Embracer.

Embracer did report a particularly light performance in console gaming and entertainment and services, which was offset by strength in tabletop and mobile games. The highest contributor to Embracer’s revenue was the tabletop gaming group Asmodee, which experienced strong demand for trading cards.

“The first quarter was relatively quiet, albeit a record quarter for the group in financial terms,” said chief executive Lars Wingefors. “We believe we are well-placed to outpace the market growth in all of our business segments.”

“We are eagerly scouting for strong IP’s as well as talent and capabilities that make our ecosystem stronger,” Wingefors said about possible future acquisitions. “We are prudent and increasingly selective in order to ensure that we allocate our shareholders’ investments wisely.”

The only new release that made a notable financial contribution to the group’s performance was Evil Dead, but the group expects a strong roster of games releases throughout the year, including the popular action-adventure game Saints Row this month and the newest iteration of Goat Simulator in September.

Analysts at Citi wrote that “the balance will be between comfort on the FY outlook” and the “slight disappointment” in the company’s first-quarter performance. They added that the company’s results “do enough to reassure and should be well received”.

In June, Saudi Arabia’s sovereign wealth fund spent $1bn on a stake in Embracer in a move that the group said would help it set up a regional hub in the country so it could expand into the Middle East and north Africa.

Embracer has 120 game development studios, up from 10 four years ago, and more than 12,750 employees.



READ NEWS SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.