Mobile games saw a challenging Q4 for Embracer Group financials, with -36% of growth QoQ in what they called a “seasonally slow,” quarter.
The drop in mobile growth to SEK 1,317bn ($12.2m) was blamed primarily on “very tough” year-on-year comparisons, lower ad prices and platform privacy changes. Net sales grew by 79% to SEK 94bn ($877m) driven by strong console sales that grew by 17%. Organic Q4 growth was at -4% and although other sections of the business took hits, major console releases like Dead Island 2 saw the best sales for a Deep Silver release in the studio’s history.
Full-year financials were also included which saw a 121% growth in sales, to SEK 37.7bn ($3.5bn) year-over-year. However, mobile still only saw slim growth of 19% to SEK 5,819m ($54.2m).
In prepared statements, CEO Lars Wingefor was optimistic about mobile’s recovery going forward. “There are positive signals with regard to ad monetization into FY 2023/24, with revenue behaviour and advertising prices exceeding expectations toward the end of the quarter.”
Deals going sour
The grim financials come on the back of news of Embracer Group losing out on a reported $2bn dollar deal, although as Wingefor noted, “The impact of potential deals is not included in the management forecast for the current financial year.” It’s clear that had the deal completed Embracer would have been able to put a positive spin on their future outlook. Without the deal in place the latest financials only make for grim reading.
Embracer’s Q3 financials by comparison saw a huge uptick in sales by 128%, a trend that continued with growth in this quarter. However, a relatively positive outlook seems to have taken a significant knock with the loss of this deal, especially with Embracer ending up approved for the stock exchange last year, furthering their vulnerability to a market shock as a result of the news.
It should be especially noted that this Q4 deal may have been the reason we saw slower M&A activity from Embracer Group recently, a factor that’s usually in their favour. Although with a knock like this it may be a while before we see Embracer return to embracing.
