Embracer confirms 900 layoffs following net sales upswing

16.11.2023 - 14:13 / gamedeveloper.com / Rain Returns / Lars Wingefors

Swedish conglomerate Embracer Group laid off 900 people during the last three months after actioning a restructuring program designed to turn the company into a "highly cash flow generative business."

Those layoffs represent around 5 percent of Embracer's total workforce, and were made despite net sales increasing by 13 percent year-on-year to SEK 1.8 billion ($170.5 million) during Q2.

As noted in the company's latest fiscal report, Embracer CEO Lars Wingefors described that second-quarter performance as "stable."

"We expect to reach the forecasted range for this year. The free cash flow of SEK 0.4 billion shows a clear improvement compared to Q1," he added. "Our restructuring program is making good progress, with opex (operating expenses) savings ahead of plan and capex (capital expenditures) savings expected to contribute notably in the second half of the year.

"We continue to take important steps for the future and I am confident that we will emerge as a stronger company."

Although net sales were up overall, Embracer noted that sales within its PC/Console Games segment declined by 5 percent year-on-year. Revenue from new releases, however, totalled SEK 1.4 billion–representing one of Embracer's "strongest quarters for new releases ever."

"Remnant II, internally developed by Gunfire Games and published by Gearbox Publishing, was successfully released on July 25 and has now sold more than 2 million units and generated more than SEK 700 million in net sales in Q2," continues the report. "That said, we have seen a mixed reception and performance for the externally developed game Payday 3 and a few smaller releases in the quarter."

Despite its rocky start, Embracer noted Payday 3  made a "positive" earnings contribution "with the investment recouped in Q2" The Swedish firm now expects the shooter to contribute "positively [...] but below management expectations" due to the matchmaking issues encountered at launch.

On the whole, Embracer said its litany of internal studios made a "positive start" to the fiscal year and described the launches of Dead Island 2, Risk of Rain Returns, Teardown (for consoles), and Remnant II as "successful."

The company reported a 10 percent organic decline within its Mobile Games segment but said that market trends and monetization were "largely stable."

"The negative organic growth is partly driven by Crazy Labs shifting its genre focus towards hybrid casual games with an increased focus on profitability and cash flows," it added. "User acquisition investment grew compared to Q1, but were contained compared to our expectations, supporting a strong Adjusted EBIT margin of around 25 percent in the quarter, with a solid cash flow contribution."

Discussing the company's restructuring