Embracer Group (EMBRAC) Q1 26/27 earnings summary

Executive summary

• Net sales reached SEK 3,943 million in Q1 FY 2026/27, up 24% year-over-year and 33% organically, driven by strong performance in the Embracer segment and new reporting structure ahead of the planned Fellowship Entertainment spin-off in 2027.

• Cash EBIT improved to SEK 47 million from SEK -99 million, and free cash flow turned positive at SEK 3 million, exceeding internal expectations despite a quiet quarter for major game releases.

• The company is transitioning to new reporting segments: Fellowship Entertainment and Embracer Group, with Cash EBIT as the key earnings measure.

• The spin-off of Fellowship Entertainment is planned for 2027, with ongoing organizational changes and the appointment of Müge Boullion as Deputy CEO.

• The group remains on track to double Cash EBIT for FY 2026/27, reiterating a forecast of at least SEK 1.0 billion.

Financial highlights

• Net sales for the quarter were SEK 3,943 million, up 24% year-on-year and 33% organic growth when excluding divestments and FX effects.

• Gross margin for the quarter was 56%, down 12 points year-on-year due to revenue mix.

• Cash EBIT for the quarter was SEK 47 million, up SEK 146 million year-on-year.

• Free cash flow was positive at SEK 3 million, a significant improvement from -SEK 383 million in Q1 last year; trailing 12-month free cash flow reached SEK 192 million.

• Net cash position at quarter end was SEK 3.5 billion, with total available funds of SEK 6.4 billion.

Outlook and guidance

• Full-year Cash EBIT guidance of at least SEK 1 billion is reiterated with increased confidence.

• Q2 is expected to show year-on-year Cash EBIT improvement, with free cash flow weighted towards H2 due to seasonal working capital build-up.

• Major releases such as Metro 2039 and Tomb Raider: Legacy of Atlantis are scheduled for February 2027, expected to drive significant growth.

• The release pipeline for FY 2027 includes new Kingdom Come and Darksiders titles, aiming for at least two major games per year.