FOURTH QUARTER, JANUARY-MARCH 2026 (COMPARED TO JANUARY-MARCH 2025)
FULL YEAR, APRIL 2025-MARCH 2026 (COMPARED TO APRIL 2024-MARCH 2025)
| Key performance indicators, Group | Jan-Mar 2026 | Jan-Mar 2025 | Apr 2025-Mar 2026 | Apr 2024-Mar 2025 |
| Net sales, SEK m | 3,931 | 5,177 | 15,906 | 21,314 |
| EBIT1), SEK m | -7,304 | 4,431 | -7,053 | 3,324 |
| EBIT margin | -186% | 86% | -44% | 16% |
| Adjusted EBIT, SEK m | 360 | 997 | 905 | 2,793 |
| Adjusted EBIT margin | 9% | 19% | 6% | 13% |
| Cash flow from operating activities, SEK m | 1,454 | 1,482 | 2,465 | 2,660 |
| Net investments in intangible assets, SEK m | 651 | 786 | 2,913 | 3,389 |
| Net sales growth | -24% | -6% | -25% | -19% |
| Total game development projects | 79 | 94 | 79 | 94 |
| Total game developers | 4,485 | 5,140 | 4,485 | 5,140 |
| Total headcount | 6,090 | 6,875 | 6,090 | 6,875 |
1) EBIT equals Operating profit in the Consolidated statement of profit or loss.
In this report, all figures in brackets refer to the corresponding period of the previous year, unless otherwise stated.
CEO COMMENTS:
STRONG ENDING TO THE YEAR, WITH A CLEAR PATH FORWARD
In the fourth quarter, we delivered net sales of SEK 3.9 billion, with adjusted EBIT of SEK 360 million, continuing the strong trend for our core IPs and allowing us to exceed our full-year Adjusted EBIT forecast. The quarter also saw a stronger-than-expected free cash flow of SEK 860 million, with net cash in total increasing to SEK 3.8 billion. Over the past year, we have made important progress on portfolio actions and cost discipline, laying the groundwork for what comes next. Today, we announce the spin-off of Fellowship Entertainment, planned for calendar year 2027. We are now building two focused businesses, guided by the same priorities: consistent delivery, disciplined capital allocation, and stronger conversion of earnings into cash flow.
KINGDOM COME: DELIVERANCE II – A CONTINUED KEY DRIVER
PC/Console saw many of the positive trends from the previous quarter continuing. The momentum remained strong for our core IPs, driven primarily by a strong performance for Kingdom Come: Deliverance II. The quarter also saw the release of REANIMAL to a strong reception from fans and critics alike. As a new IP, the game performed well, with over one million copies sold since release. The incredible team at Tarsier Studios have captured the hearts and minds of players with this new IP and have something to really build on for the long-term.
Adjusted EBIT amounted to SEK 360 million in the quarter, and it was encouraging to see a stronger-than-expected earnings contribution from all segments in the quarter. Mobile saw a much-improved growth and margin trend, supported by the launch of Sled Surfers. Entertainment & Services continued its growth trajectory, supported by strong momentum for PLAION Partners. Our underlying operating results in PC/ Console in the quarter are stronger than they look. In the quarter, we had a negative effect of over SEK -200 million from non-cash adjustments and reductions in active co-publishing and work-for-hire projects, as well as impairments of SEK -40 million on non-core IP hitting Adjusted EBIT.
CASH EBIT – A STEP TO BETTER REFLECT TRUE PERFORMANCE
For the full FY 2025/26, Embracer Group generated sales of SEK 15.9 billion and adjusted EBIT of SEK 905 million. Positively, after a strong Q4, we ended the full year with a positive free cash flow of SEK 50 million. FY 2025/26 was a transition year for us. With a quieter slate of major PC/console releases and some key titles shifting, we stayed focused on what matters most: raising our execution standards, investing wisely and continuing to strengthen the group. At the same time, we significantly advanced our structural roadmap, including the spin-off and listing of Coffee Stain Group in December 2025.
Beginning in the first quarter of FY 2026/27, Cash EBIT will be introduced alongside Adjusted EBIT as our primary measure of profitability. The key distinction is that Cash EBIT puts higher emphasis on cash investments as part of our business and hence does not include capitalization or amortization of development costs. In this way, it closely resembles EBITDAC, but Cash EBIT goes further, also deducting lease expenses. Game development represents our largest expenditure across the group and by adopting a profitability metric that more accurately reflects underlying cash flow we will provide clearer insights for both internal and external stakeholders. For the full FY 2025/26, Cash EBIT amounted to SEK 511 million.
METRO 2039 THE KEY HIGHLIGHT IN FY 2026/27, AS WE AIM FOR CASH EBIT OF AT LEAST SEK 1 BILLION
We were excited to announce METRO 2039 last month, together with our friends at 4A Games in Ukraine and Malta, and our partners at Xbox. It was great to see gamer reaction across the world. METRO 2039 is the fastest growing PLAION title by outstanding wishlists post-announce, with well over one million wishlists already. The game promises to be the most shocking METRO adventure yet, with a powerful single-player story that weaves exploration, survival, combat and stealth across a hauntingly beautiful but deadly world with unparalleled immersion. The game is planned for a release this winter and we can’t wait to get the game into players’ hands.
Looking into FY 2026/27, we currently expect to generate Cash EBIT of at least SEK 1.0 billion. This compares to a Cash EBIT of SEK 0.5 billion in FY 2025/26, or Adjusted EBIT of SEK 0.9 billion. We expect a similar difference in absolute terms between Adjusted EBIT and Cash EBIT as seen in FY 2025/26. We expect a strong year of cash generation, driven by the underlying business and new releases. The year is anchored by METRO 2039 and Tomb Raider: Legacy of Atlantis, both expected in the second half of the year. The main releases in the first half of the year include Gothic 1 Remake and Warhammer 40,000: Dawn of War IV. In Q1, we expect a negative Cash EBIT, similar to Q1 last year, with the potential that the catalog, which is delivering strongly, can offset this. As always, we will work hard to realize upside potential to the forecast throughout the year.
TWO COMPANIES, ONE GOAL
Over the past year, we have made strong progress in our strategic direction. We have divested several non-strategic and unprofitable businesses to improve focus and capital efficiency. We have reduced our capex run-rate by lowering investment in non-core IP, and reduced our opex run-rate through consolidation initiatives. Our publishing organization has become sharper and more cost efficient. Simplifying the group around a more focused portfolio will help us make better decisions faster and further improve profitability.
Following our announcements today, our direction is clear: to build a more disciplined, IP-first group with two distinct businesses, Fellowship Entertainment and Embracer, each with a focused mandate and a structure that supports transparency and execution. Starting in Q1 FY 2026/27, we will report on two segments so we can show progress and the key performance metrics. We are progressing toward a planned spin-out of Fellowship Entertainment at Nasdaq Stockholm during calendar year 2027, creating two clearly defined listed companies with compelling, differentiated investment cases, while increasing management focus to drive shareholder value.
Fellowship Entertainment is built around a clear strategic focus: worlds that players return to – again and again. This does not imply live service games, but rather game worlds that generate fans, not just customers. The Lord of the Rings alone represents one of the world’s most enduring and valuable IPs.
Fellowship will concentrate on active stewardship of premium franchises, including Tomb Raider, Metro, Kingdom Come: Deliverance, Dead Island, Darksiders and Remnant. We will ship standout games and build an IP management and licensing engine that expands those worlds across partnerships and adjacent categories to drive more recurring, higher-margin revenue. We have a multi-year pipeline of exciting new games and we currently see that Fellowship Entertainment will have at least two major game releases with full economics per year starting in FY 2027/28, driving growth and profitability.
Embracer will be a leaner home for proven entrepreneurs, supported by a more efficient structure, tighter cost control, and disciplined capital allocation. This will be combined with optionality from structural initiatives, including a continued profitability focus and M&A, to drive shareholder value. We are happy to announce that, in addition to Müge Bouillon’s role as Group CFO she is appointed as Deputy CEO of Embracer Group, effective today. In this expanded role, she will be focusing on setting up an enhanced governance structure for Embracer. Across both companies, our priorities are consistent delivery, capital efficiency, and stronger conversion of earnings into cash flow.
NON-CASH IMPAIRMENTS
This quarter rendered a range of impairments totaling SEK 7.2 billion, of which SEK 6.0 billion related to goodwill and other M&A related intangibles as part of the annual impairment test. We have also taken a SEK 1.2 billion impairment of especially one larger unannounced ongoing game development project. This impairment is defined as an item affecting comparability, as it relates to projects where the studio or team has been discontinued. Our future will come with a sharper focus on our highest-conviction IPs, projects and studios. The past year has demanded hard choices, as we take the right steps to make Embracer Group more focused and resilient for the years ahead. For avoidance of doubt, all impairment are non-cash. Our equity ratio at the end of the year remains on a solid level, at 73%, or SEK 19.5 billion of total equity post-impairment.
As of the end of Q4 FY 2025/26, we had a net cash position of SEK 3.8 billion. We remain committed to distributing excess cash to shareholders. Leading up to the spin-off we will continue to evaluate the cash needs for both companies. Ultimately, each company’s board will decide on the return of capital to shareholders.
THE RIGHT PATH FORWARD
To conclude, we now have the clear direction we’ve been building towards. An approach to deliver long-term value for our fans, our businesses and IPs, our people, and our shareholders. Our focus now is consistent delivery. I can’t wait to continue the exciting path that we are on. Thank you all for your support.
Phil Rogers
Group CEO
Embracer Group is a global group of creative and entrepreneurial businesses in PC, console and mobile games, as well as other related media. The Group has an extensive catalog of over 400 owned or controlled franchises.
With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its operative groups: THQ Nordic, PLAION, DECA Games, Dark Horse, Freemode and Crystal Dynamics – Eidos. The Group includes 53 internal game development studios and engages over 6,000 talents across nearly 30 countries.
Home
