News business Acquisitions of Gearbox and Asmodee put Embracer in the negative in their financial result
Published on 05/19/2022 at 13:06
Embracer Group has released its financial results for the fiscal year. If the group goes into another dimension in terms of turnover, it must especially deplore large losses related to the redemptions it has made.
Le Embrace group talk a lot about him multiplying publisher takeovers more or less important and studios in recent years. The band just released its financial results over the year, and the impact of these takeovers is widely felt.
Record losses for Embracer Group
The financial results for the fiscal year from April 2021 to March 2022 are mixed for Embracer Group. A few weeks ago, Embracer acquired Square-Enix Montreal, Eidos Montreal and Crystal Dynamics from Square Enix, for around $300 million. These last years, the group had already acquired Asmodee (December 2021, for 3 billion euros), Gearbox Software (February 2021, for 1.3 billion euros) or even Cook Media (in 2018, for €121 million). Publishers of video games, board games, films, etc., Embracer diversifies its media to diversify its sources of income. But with all these redemptions, the group is no longer positive !
Indeed, the group’s balance sheet shows us that during this fiscal year, the operating expenses skyrocketed for Embracer. With 2.27 billion euros in expenditure, the group has a annual loss of 408.66 million euros. Embracer is therefore “in the red”, with an overall negative result, but does not worry too much since it is for them a transitional year first of all. Above all, the group does not intend to stop in such a good way since Lars Wingefors, CEO of the group, explains:
It goes without saying that we don’t need to make any further acquisitions to grow. Nonetheless, we continue to pursue selected additional M&A opportunities to support our long-term growth ambitions.
Lars Wingefors, PDG d’Embracer Group
All results of Embracer Group’s financial balance sheet are expressed in Swedish Krona (1 SEK = 0.09558 EUR).
The increase in net operating expenses compared to last year is mainly explained by the addition of Gearbox Entertainment and Easybrain in April 2021, CrazyLabs in September 2021 and Asmodee in March 2022. The sequential increase in net operating expenses is mainly attributable to the addition of the acquired companies Asmodee, Dark Horse and Perfect World. Net operating expenses were further impacted by SEK 50 million of humanitarian aid and employee support due to the war in Ukraine. Organically, net operating expenses are influenced by the increase in headcount to support the growth of the games portfolio and further strengthen the group’s capabilities.
Financial statement of Embracer Group between April 2021 and March 2022
Square Enix’s studio takeovers are not yet felt
As explained in the balance sheet, the takeovers of Square’s studios have not actually impacted the financial balance sheet yet of Embracer Group. Indeed, the takeover was announced only a few weeks ago, well after the end of the fiscal year on March 31. In addition, this kind of redemption takes time and does not happen exactly when it is announced. This is why the acquisition of Gearbox, which had been announced in February 2021is counted in this year’s fiscal year, between April 2021 and March 2022. In the preface to Embracer Group’s financial statement, Lars Wingefors welcomes these acquisitions and plans for the future:
In the second quarter of 20221, we further strengthened our development capabilities and our licensing portfolio by entering into an agreement to acquire Crystal Dynamics, Eidos Montreal and Square Enix Montreal, including Tomb Raider, Deus Ex, Thief, Legacy of Kain and other licenses. The announcement received an enthusiastic and positive reception. We see great potential, not only in sequels, but also in remakes, remasters, spin-offs and cross-media projects across the group. We believe that the transaction will be concluded in the period July – September.
We will therefore have to wait for the review of next year to get an idea of the impact of the most recent acquisitions.
A turnover exceeding one billion, a first for Embracer
Embrace still has a smile. In effect, despite record losses who will undoubtedly count in the future, the group has reason to rejoice. First, he entered the big leagues by recording for the first time in its history a turnover exceeding the symbolic bar of one billion : 1.6 billion euros (17 billion Swedish crowns) for the April 2021 – March 2022 financial year. 89% increase compared to the turnover of the previous year.
| Fiscal year | Turnover in euros | Operating expenses in euros | Operating profit in euros | Net income in euros |
| April 2021 – March 2022 | 1.6 billion | 2.27 billion | – 353,8 millions | – 408,6 millions |
| April 2020 – March 2021 | 859,5 millions | 983,5 millions | + 45,4 millions | + 27,3 millions |
Of all the publishers that are part of the Embracer group, and all the licenses they own, some have done better than others this year. After the phenomenal (and somewhat unexpected) success of Valheim over the previous fiscal year, we should not have expected to do better or even as well this year. But some titles like Hot Wheels Unleashed have found their place in the market this year, and other games from the older catalog such as Wreckfest or Metro Exodus continue to do well. Above all, the Release Tiny Tina’s Wonderlands was a hit, beyond expectations. It should however be noted that for the moment, it is Take-Two which affects the profits of this title, before Gearbox recovers the rights in some time.
But, and you may not have expected it, it is Neither Gearbox nor Koch Media earns the most for Embracer. The publisher that brings in the most money is a free game publisher! He it is indeed Easybrain, publisher of simple puzzle games on mobiles like sudokus, find the difference games, pixel-art games… This publisher already counts one billion downloads for its applications on iOS and Android. And in this fiscal year alone, he recorded 304 million euros in turnover.
| Publisher, subsidiary of Embracer Group | Turnover in euros April 2021 – March 2022 | Turnover in euros April 2020 – March 2021 | Evolution between 2021 and 2022 | Number of studios within the publisher (currently) | Number of employees within the publisher (currently) |
| Easybrain | 304 millions | – | – | 1 | 271 |
| Koch Media Publishing | 237 millions | 198 millions | + 20 % | 13 | 2 274 |
| Gearbox Entertainment | 184 millions | – | – | 4 | 961 |
| THQ Nordic | 164 millions | 170 millions | – 4 % | 21 | 988 |
| Saber Interactive | 161 millions | 113 millions | + 43 % | 24 | 2 671 |
| DECA Games | 159 millions | 20 millions | + 697 % | 10 | 814 |
| Coffee Stain | 62 millions | 112 millions | – 44 % | 7 | 123 |
| Asmodee | 54 millions | – | – | 22 | 2 346 |
Source : Embracer Group – Q4 & Full Year report : April 2021 – March 2022
After the recent releases of Evil Dead : The Game et Songs of Conquestthe next big title in the Embracer Group catalog is obviously Saints Rowthe highly anticipated reboot of the famous saga, scheduled for August 23 on PC, PS5, PS4, Xbox Series and Xbox One.