Embracer cuts forecast as game sales and profits plunge

Swedish video game company Embracer Group cut its full-year profit forecast after reporting a sharp drop in first-quarter sales and adjusted operating profit, driven by weak performance in its PC, console, and mobile gaming divisions.

The company said on Thursday it now expects adjusted earnings before interest and taxes of at least 1.0 billion Swedish kronor for the 2025/26 financial year.

For the first quarter ended June 30, net sales fell 31% to 3.4 billion Swedish kronor, while adjusted EBIT plunged 87% to 75 million Swedish kronor from 579 million a year earlier, according to the company.

Sales from its PC and console games segment dropped 38%, which the company attributed to a quiet release schedule and softness in its back catalog of older games.

"This year is a transition period as we lay the foundations of Fellowship Entertainment and focus on building a business led by key IP and empowered teams, in a structure enabling focus and operational discipline," Group CEO Phil Rogers said in a statement.

Rogers added that it is "paramount that we concentrate on the quality and long-term value of our releases rather than chasing short-term gains."

The lowered outlook reflects potential delays for major game releases, a slower growth trajectory for mobile games, and continued weakness in catalog sales, the company said.

The results come as Embracer undergoes a major transformation, having recently divested its Saber Interactive and Gearbox Entertainment units and announced plans to split into three separate publicly listed companies.