This article first appeared on GuruFocus .
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Total Net Sales:3.9 billion SEK for the quarter, a 10% organic drop year-over-year.
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Full Year Net Sales:15.9 billion SEK, down 25% on a reported basis.
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Adjusted EBIT:360 million SEK for the quarter; 905 million SEK for the full year.
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Free Cash Flow:883 million SEK for the quarter; 50 million SEK for the full year.
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Gross Profit Percentage:61% for the quarter, down 14 points year-on-year.
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PC Console Net Sales:1.6 billion SEK for Q4, a 37% organic decline.
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Mobile Net Sales:680 million SEK, 2% organic growth year-on-year.
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Entertainment Services Revenue:1.7 billion SEK, 36% organic growth year-over-year.
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Operating Expenses (Excluding Marketing):876 million SEK, down 363 million SEK year-on-year.
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Net Cash Position:3.8 billion SEK at year-end.
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Cash EBIT:511 million SEK for FY 25/26.
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Marketing Spend:476 million SEK, 12% of net sales, down 4 points year-on-year.
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Adjusted EBIT Margin:9% for the quarter.
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Net Cash Evolution:5.4 billion SEK at the beginning of the year to 3.8 billion SEK at year-end.
Release Date: May 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Embracer Group AB ( THQQF ) reported net sales of 3.9 billion SEC for the quarter, exceeding management expectations.
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The company achieved a strong free cash flow of 883 million SEC in Q4, driven by positive net working capital movements.
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The entertainment services segment delivered a 36% organic growth year-over-year, contributing significantly to the company's performance.
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Embracer Group AB ( THQQF ) plans to separate into two distinct business segments, Fellowship Entertainment and Embracer, to enhance focus and long-term value creation.
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The company maintains a strong financial position with a net cash position of 3.8 billion SEC and announced a new share buyback program of 750 million SEC.
Negative Points
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PC Console segment experienced a 37% organic decline in net sales due to tough comparisons with the previous year's releases.
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The gross profit percentage for the quarter decreased by 14 points year-on-year, primarily due to a lower proportion of PC console sales.
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Adjusted EBIT margin for the quarter was 9%, impacted by non-cash adjustments and impairments on non-core IP.
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The company reported a significant non-cash impairment of 7.2 billion SEC, affecting goodwill and intangible assets.
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Embracer Group AB ( THQQF ) faces challenges in achieving its ambition of a 30% cash margin for Fellowship Entertainment, with no specific timeline provided.
Q & A Highlights
Q: Can you help us understand the key building blocks for the full year '27 guidance and the main sources of potential upside? A: The upside potential is driven by business momentum, continued engagement with the catalog, and key releases like Metro and Tomb Raider in the second half of the year. Additionally, the release of Gothic and Dawn of War, along with savings and efficiencies, contribute to the potential upside. The Neo Geo console release in November is also expected to delight fans and add momentum.
Q: How does the final reception of Metro 2039 compare with initial expectations, and what is the potential for return on investment? A: The team at 4A Games is excited about the positive fan reaction and the fast wish list growth. Metro 2039 is expected to scale into the desired ROI multiple, with confidence in the team's ability to deliver games of that scale and depth, including DLC.
Q: What is the expected cash EBIT contribution from Fellowship within the $1 billion cash EBIT guidance for full year '27, and what is the long-term cash margin objective? A: While specific guidance for Fellowship's cash EBIT contribution is not provided, both segments are expected to contribute solidly. The ambition is to reach industry best-in-class levels, with a potential cash margin objective around 30%.
Q: Is there a third Kingdom Come in development alongside a Lord of the Rings RPG at Warhorse, and how are resources allocated between them? A: Yes, a new installment in the Kingdom Come series is in development. Game development is increasingly parallelized, with teams reusing code and systems. Kingdom Come is expected to release before the Lord of the Rings RPG, with both projects being managed smartly by Warhorse.
Q: What is the headroom for cost optimization in RemainCo, and what type of margin is expected in the medium term? A: Significant cost optimization has already been implemented, with benefits expected in the next year. The second half of the last year showed stronger performance, and the full-year effects of divestments and closures will contribute to better margins and profits.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
