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Embracer laments polarising Saints Row launch, teases "transformative" licensing deal

Embracer says it has struck a "transformative partnership and licensing deal" with several industry partners.

As has become par for the course, Embracer's latest fiscal report is littered with fresh details about the Swedish conglomerate's perpetually expanding game business.

For starters, the company said it has struck a "transformative partnership and licensing deal" with several industry partners that covers a range of large-budget upcoming games over the next six years.

The holding company, which owns the likes of Gearbox and THQ Nordic, expects the deal to close during the current fiscal year and says it will "improve predictability, lower business risk and provide a positive impact on our cash flow and profits."

Notably, Embracer believes the deal will also enable further investments that allow it to make more games based on both established and new franchises.

Embracer was also candid about the performance of the Saints Row reboot, which launched on August 23, 2022, and according to the company has "performed in line with management expectations in the quarter."

Despite that, Embracer said the title didn't meet its full expectations and "left the fanbase partially polarised." Seemingly as a result of those growing pains, Saints Row developer Volition will now transition away from current parent company Deep Silver to become part of Gearbox, which Embracer says "has all the tools, including an experienced management team in the US, to create future success at Volition."

"This is the first internal group transfer where we transfer a major studio between operative groups, but it is not necessarily the last," added the company.

Speaking more broadly about its business, Embracer said the board of directors has decided to launch a special review of its business to navigate "new market conditions" caused by ongoing geopolitical and social issues. The outcome of that review could result in Embracer sanctioning the creation of spin-offs as separate publicly listed companies to "create higher shareholder value and improve our strategic flexibility."

As for how Embracer is performing where the numbers are concerned, the company saw net sales increase by 190 percent to SEK 9.56 billion ($899 million) during Q2 FY22.

You can see how those sales break down per operating segment below:

  • PC/Console Games: increased by 107 percent to SEK 4,097 million (1,976).
  • Mobile Games: increased by 67 percent to SEK 1,441 million (864).
  • Tabletop Games: amounted to SEK 3,247 million (-).
  • Entertainment & Services: increased by 69 percent to SEK 784 million (465).

Those figures represent the company's strongest quarter so far in terms of net sales, with Embracer highlighting "solid organic growth" of 35 percent.

Despite delivering "strong growth in a more challenging environment," Embracer noted that it has downwardly revised its EBIT (earnings before tax and interest) forecast for the current fiscal year because of the "mixed reception" to some key second quarter PC and console releases, which it believes could impact catalog sales further down the line, and shifts in its console and PC pipeline including another Dead Island 2 delay, which is now planned for release on April 28, 2023.

Those factors means Embracer is now expects to deliver an adjusted EBIT of SEK 8.0-10.0 billion by the end of the current fiscal year.

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