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Embracer's financial report shows growth, with Tomb Raider and Lord of the Rings shining.

TraderKnows
TraderKnows
05-07

Embracer's financial report shows quarterly profits slightly below expectations, but confidence in the annual outlook remains. Restructuring plans continue as royalties and financial targets remain positive despite gaming market challenges.

Swedish game developer Embracer reported in its financial results that its operating profit for April to June was slightly below expectations, but the company stressed that it remains confident in its full-year performance guidance, stating that its restructuring plan is underway. The report mentioned that the stock price initially rose by about 8%, but quickly reversed and flattened out.

The first fiscal quarter's adjusted operating profit was 1.67 billion Swedish kronor (about $152.75 million), failing to meet the 1.78 billion Swedish kronor expected in the company's analyst survey, but an increase from 1.32 billion kronor a year earlier.

CEO Lars Wingefors stated in a declaration that the company has a positive outlook in operational and strategic areas, planning to further enhance its business and financial condition through restructuring.

Wingefors mentioned that last year, operating costs significantly increased due to inflation and recruitment impacts, but the restructuring partly offset the cost increases.

Against the backdrop of surged game demand driven by mask mandates, the company experienced a tough period, including delays in game development progress and some new games receiving poor responses from players. This means the company faced some challenges in development and market aspects.

Embracer blew a $2 billion deal in May, resulting in a 45% drop in the company's stock price and significantly adversely affecting the company's financial condition and market performance.

Last year, the company acquired several game development studios, as well as intellectual properties for new versions of "Tomb Raider" and "The Lord of the Rings." Redeye analyst Viktor Lindstrom stated that licensing income from "The Lord of the Rings" had a positive impact on the company's sales, making it perform stronger than expected.

Analysts also indicated that Embracer has made progress in achieving its financial targets, expecting more free cash flow in the second quarter.

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