STOCKHOLM, May 20, 2021 /PRNewswire/ --
FOURTH QUARTER, JANUARY-MARCH
2021 (Compared to JANUARY-MARCH
2020)
- Net sales increased by 80% to SEK
2,404.2 million (1,339.1).
- Net sales of the Games business area increased by 119% to
SEK 1,975.2 million (903.5). THQ
Nordic SEK 354.6 million (306.7),
Deep Silver SEK 464.9 million
(514.7), Coffee Stain SEK 780.9
million (82.1), Saber Interactive SEK
270.7 million (-) and DECA Games SEK
104.2 million (-).
- Net sales of Partner Publishing/Film business area amounted to
SEK 429.0 million (435.6).
- EBITDA increased by 137% to SEK 1,172.5
million (495.2), corresponding to an EBITDA margin of 49%
(37%).
- Operational EBIT increased by 216% to SEK 903.2 million (286.0) corresponding to an
Operational EBIT margin of 38% (21%).
- Cash flow from operating activities amounted to SEK 1,521.8 million (765.7). Investments in
intangible assets amounted to SEK 598.9
million (464.4). Free Cash Flow amounted to SEK 860.5 million (275.7).
- Adjusted earnings per share was SEK
2.07 (0.97).
- Organic growth in constant currency for the Games Business Area
amounted to 85% in the quarter.
- Total game development projects increased 55% to 160 (103).
Total headcount increased 103% to 6,325 (3,109) where total game
developers increased 116% to 5,115 (2,365).
FULL YEAR, APRIL 2020-MARCH
2021 (Compared to APRIL 2019-MARCH
2020)
- Net sales increased by 72% to SEK
9,024.2 million (5.249.4).
- Net sales of the Games business area increased by 102% to
SEK 6,448.3 million (3,196.5). THQ
Nordic SEK 1,789.1 million (1,154.4),
Deep Silver SEK 2,081.2 million
(1,796.3), Coffee Stain SEK 1,182.5
million (245.8), Saber Interactive SEK 1,185.9 million (-) and DECA Games
SEK 209.7 million (-).
- Net sales of Partner Publishing/Film business area increased by
25% to SEK 2,575.9 million
(2,052.9).
- EBITDA increased by 119% to SEK 3,985.3
million (1,821.3), corresponding to an EBITDA margin of 44%
(35%).
- Operational EBIT increased by 170% to SEK 2,870.8 million (1,033.0) corresponding to an
Operational EBIT margin of 32% (20%).
- Cash flow from operating activities amounted to SEK 3,899.0 million (1,728.3). Investments in
intangible assets amounted to SEK 2,135.2
million (1,653.4). Free Cash Flow amounted to SEK 1,684.8 million (-0.1).
- Adjusted earnings per share was SEK
6.44 (2.81).
- Organic growth in constant currency for the Games Business Area
amounted to 70%.
- Total game development projects increased 55% to 160 (103).
Total headcount increased 103% to 6,325 (3,109) where total game
developers increased 116% to 5,115 (2,365).
Key performance
indicators, Group
|
Jan-Mar
2021
|
Jan-Mar
2020
|
Apr 2020-
Mar 2021
|
Apr 2019-
Mar 2020
|
Net sales, SEK
m
|
2,404.2
|
1,339.1
|
9,024.2
|
5,249.4
|
EBITDA, SEK
m
|
1,172.5
|
495.2
|
3,985.3
|
1,821.3
|
Operational EBIT, SEK
m
|
903.2
|
286.0
|
2,870.8
|
1,033.0
|
Cash flow from
operating activities, SEK m
|
1,521.8
|
765.7
|
3,899.0
|
1,728.3
|
Free cash flow, SEK
m
|
860.5
|
275.7
|
1,684.8
|
-0.1
|
Total investments in
intangible assets, SEK m
|
598.9
|
464.4
|
2,135.2
|
1,653.4
|
Total game
development projects
|
160
|
103
|
160
|
103
|
Total internal and
external game developers
|
5,115
|
2,365
|
5,115
|
2,365
|
Total
headcount
|
6,325
|
3,109
|
6,325
|
3,109
|
Sales growth,
%
|
80
|
-18
|
72
|
3
|
EBITDA margin,
%
|
49
|
37
|
44
|
35
|
Operational EBIT
margin, %
|
38
|
21
|
32
|
20
|
In this report, all figures in brackets refer to the
corresponding period of the previous year, unless otherwise
stated.
CEO Comments
STABLE QUARTER WITH 85% ORGANIC GROWTH
The Group had another stable quarter. We are humbled to report
record financial performance, both for the quarter and the
financial year 2020/21. Our strategy to build a diverse business
that stands on many revenue streams driven by a diverse portfolio
of development is increasingly paying off.
The quarter was driven by the release of Valheim, selling more
than 6.8 million copies during the period. This truly amazing game
continues to find new players globally and we expect another
1.0-1.2 million copies to be sold before the close of the current
quarter ending June. Group net sales increased by 80% to
SEK 2,404 million (1,339) with the
Games business area contributing SEK 1,975
million (904) driven by 85% organic constant currency (CCY)
growth. The proforma CCY growth in the quarter is estimated to 61%.
Operational EBIT grew by 216% to SEK 903
million. Free cash flow grew 212% to SEK 861 million. The adjusted earnings per share
were up 129% to SEK 6.44 for the
financial year 2020/21.
Organic growth
Since the financial year 2016, when we completed the IPO, our
adjusted earnings per share have increased 14x. THQ Nordic, our
first operating group, has quintupled (5x) its revenues in that
time and the lion's share of the growth has been organically
generated. Complementary studio acquisitions have supported the
profitability by improving the gross margin. THQ Nordic is still
well positioned for organic growth with a wide pipeline of new
projects. In five days from now, their highly anticipated game
Biomutant will be released. Preorders for Biomutant are strong and
ahead of management's expectations.
Organic growth is the first priority for all operating groups.
Since the IPO, the Group has reinvested most of its underlying free
cash flow into organic growth. We are pleased with the 70% strong
organic growth delivered in the past financial year ending in
March, primarily driven by numerous successful launches of
high-quality games, but also thanks to a solid back-catalog.
Notable sales performances of new releases during the year, other
than Valheim, include close to 2 million copies of SnowRunner, more
than 2 million of Spongebob Squarepants: Battle for Bikini Bottom
Re-Hydrated and more than 1 million copies of Destroy All
Humans!.
We are increasingly excited about the potential for organic
growth in the coming years. In 2020/21, the Group invested
SEK 2 billion on game development, in
comparison with the accumulated development value of games
completed in the year, SEK 837
million. The number of ongoing game development projects hit
a record high of 160 at the end of our financial year. More than
two-thirds of these projects are new IP's or games based on on IP's
we plan to revitalize.These revitalized IPs have not seen any new
content created for at least the past 5 year. Bringing these highly
incremental projects to market is expected to drive organic growth,
while further strengthening our underlying operating free cash
flow.
In the current financial year ending March 2022, we are committed to fulfilling our
ambition to complete more than 90 game development projects with a
total completion value in the range of SEK
2,800 to 3,300 million. This includes projects from Gearbox
and Aspyr. The value of completion is expected to be significantly
higher in the fourth quarter, SEK
1,650 to 2,000 million, driven by significant releases
scheduled for release in the quarter ending March 2022. In the first quarter the value of
completed and released games is estimated to be in the range of
SEK 300 to 350 million.
During the past financial year, the actual fees paid to
platform-holders (console and Steam) for digital sales alone are
estimated to be a least 2x the actual costs spent on game
development during the past fiscal year. We will continue to
challenge these paradigms and pursue opportunities to reduce costs
and increase the relative investment into content creation.
Reformation of Free Radical Design
We have more market-demand driven opportunity via innovative
concepts, dormant IP's, licenses and other business opportunities
than we have the development capability to execute. Thus, the
ambition is to further expand our creative engine through increased
headcount, both organically through scaling up existing studios and
also by adding new talented studios to the Group. In this context,
we are happy to announce the formation of a new studio, Free
Radical Design, based in Nottingham,
UK. This Deep Silver studio will bring the much-loved
TimeSplitters IP back to life. Key original members include
founders Steve Ellis and
David Doak. This highly respected
team has a 22-year heritage of making AAA-products.
We recently announced the addition of five development companies
to the group; Appeal Studios, KAIKO, Massive Miniteam, FRAME BREAK
and Gate21. Combined these entities are currently employing around
90 development experts, with an ambition to grow further over the
coming years. Overall, the group organically grew close to 20% in
headcounts over the past financial year.
We raised SEK 7.6 billion for
further acquisitions
In March, we completed the Nordics' largest ever direct share
issue by an accelerated book building, raising SEK 7.6 billion from institutional investors.
Currently, Embracer Group has more than SEK
17 billion (USD 2 billion) in
cash and available credit facilities.
Interest among gaming entrepreneurs and creators to join the
Embracer family is ever-growing and we have seen the most active
quarter in this respect thus far. Our strategy to empower great
people to make their own operative decisions has proven very
attractive. We offer them access to a growing eco-system of
independent resources while supporting them with a long-term
mindset. The determination not to become a "corporate machine" is
as strong as ever. Our philosophy is and will continue to be one
that encourages founder creativity. During the quarter, we have
engaged with more than 150 companies about joining the Group,
including larger companies that could form additional operating
groups and have a significant impact on the Group as a whole.
Currently, across the Group, we are in more than 20 late-stage
talks. These include several signed exclusive LOI's that would, if
concluded, strengthen the operating groups and further improve the
outlook of the Group. Acquisitions will be announced in due course
when they occur. It is important that we stay prudent in our
M&A strategy and not rush into closing a transaction before it
is ready. In M&A as in game development, quality comes
first.
Acquisition of Aspyr, Easybrain and Gearbox
In early April we had the pleasure to finally onboard Aspyr,
Easybrain and Gearbox Entertainment. The integration is progressing
according to plan. These transformational transactions increase the
number of operating groups from 6 to 8. Easybrain's performance is
exceeding management's expectations at the time of the merger, with
stronger KPI's despite the fact that implementation of Apple IDFA
changes had already started.
Upcoming - our first Statutory Sustainability Report
During this year, we have invested resources in gathering valid,
qualitative and quantitative ESG-data from across Embracer Group.
This is in many ways a challenging but necessary step in the right
direction. It enables us to have better knowledge of how we are
affected and affect various sustainability aspects within Embracer,
in our industry and in society at large. Our group managers'
involvement is essential for us to evaluate and progress our ESG
agenda. Our sustainability framework is a vital group-wide
initiative, embraced with great energy and commitment across the
group. We are currently in the process of finalizing our first
statutory Sustainability Report, to be published as part of the
upcoming Annual Report.
I am impressed and proud to see the dedicated work being
performed on a daily basis across our global group, despite the
on-going covid-19 pandemic. As countries and communities are slowly
starting to look ahead towards normalization, many of our
co-workers continued working from home during the past quarter. I
want to sincerely thank each and every one for all the efforts that
keep our business going. Let's hope that we can all meet again
soon. To conclude, I would like to send my thanks to all of our
shareholders, customers, colleagues and business partners for
contributing to the prosperity and success of our growing family.
We are all looking forward to our strongest and most busy year
ever!
I wish you all a safe and relaxing upcoming holiday period.
May 20, 2021, Karlstad, Värmland,
Sweden
Lars Wingefors
Co-founder & CEO
For more information
For any questions on this report, please contact:
Lars Wingefors, Co-founder & CEO,
lars.wingefors@embracer.com , +46 708 47 19 78
Johan Ekström, Group CFO, johan.ekstrom@embracer.com , +46 761
33 82 76
Embracer Group is the parent company of businesses developing
and publishing PC, console and mobile games for the global games
market. The Group has an extensive catalogue of over 240 owned
franchises, such as Saints Row, Goat Simulator, Dead Island,
Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters,
Satisfactory, Wreckfest, Insurgency, World War Z and Borderlands,
amongst many others. With its head office based in Karlstad,
Sweden, Embracer Group has a
global presence through its eight operative groups: THQ Nordic
GmbH, Koch Media GmbH/Deep Silver, Coffee Stain AB, Amplifier Game
Invest, Saber Interactive, DECA Games, Gearbox Entertainment and
Easybrain. Embracer Group has 68 internal game development studios
and is engaging more than 7,000 employees and contracted employees
in more than 40 countries.
Embracer Group's shares are publicly listed on Nasdaq First
North Growth Market Stockholm under the ticker EMBRAC B with FNCA
Sweden AB as its Certified Adviser; info@fnca.se +46-8-528
00 399.
Subscribe to press releases and financial information:
https://embracer.com/investors/subscription/
For more information, please
visit: http://www.embracer.com
This Full Year Report is information that is mandatory for
Embracer Group to make public pursuant to the EU Market Abuse
Regulation. The information was submitted for publication, through
the agency of the contact person set out above, at 06:00 CET on May 20,
2021
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|
Embracer Group Full
Year Report and Q4
|