Q1 2025 Embracer Group AB Earnings Call Transcript
Key Points
- Embracer Group AB (THQQF) reported net sales of close to SEK8 billion and an adjusted EBIT of SEK828 million for Q1 2024/25.
- The company achieved a significant year-over-year improvement in free cash flow, amounting to SEK47 million, with a trailing 12-month free cash flow exceeding SEK2 billion.
- The mobile segment delivered a strong quarter with sales of SEK1.4 billion and an adjusted EBIT margin increase to 37% from 29% year-over-year.
- The company confirmed the global release date for Kingdom Come Deliverance 2 on February 11, 2025, generating excitement among gamers.
- Embracer Group AB (THQQF) is making progress on its plan to separate into three standalone publicly listed entities, which is expected to sharpen strategic focus and offer distinct equity stories to shareholders.
- Overall Q1 net sales were down 24% year-over-year, indicating a challenging period for the company.
- The PC console segment saw a 34% decrease in net sales compared to the same period last year, primarily due to fewer notable new releases.
- The entertainment and services business reported a weak quarter with SEK848 million in sales and a negative EBIT of SEK29 million.
- The company continues to face challenges in improving profitability within the PC console segment, with a focus on better capital allocation and process improvements.
- There is a significant debt burden, with net debt amounting to SEK14.3 billion at the end of June, which could restrict future acquisitions and growth opportunities.
Good morning. Good morning, everyone, and welcome to Embracer as Q1 2024, '25 results conference. My name is Rasmus Engberg, gaming analyst with Kepler Cheuvreux. And I will be your host for today and lead the Q&A. Today, we have Lars as usual, and you're one and also a special guest from France. And so I'll leave it at that, and thank you.
Thank you, Rasmus, and welcome, everyone, to Embracer Group's Q1 presentation from here in Stockholm. I'm pleased to share our performance of our first quarter fiscal '24, '25 and provide an update to our strategic progress.
We began this year in line with our management expectation, generating close to SEK8 billion in net sales and our adjusted EBIT stood at SEK828 million, and our free cash flow amounted to SEK47 million. Our Q1 performance was driven by a strong quarter from our tabletop and mobile segments. As anticipated, our PC console and entertainment and services segments faced a
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