THIRD QUARTER, OCTOBER-DECEMBER 2024 (COMPARED TO OCTOBER-DECEMBER 2023)

• During Q3 FY 2024/25 Embracer Group has reclassed Asmodee Group (Tabletop Games segment) as non-current assets held for distribution and discontinued operations as a consequence of the spin-off and listing that took place on February 7th 2025. More information is presented in note 6 of this report.
• Net sales decreased by -3% (7% organic growth) to SEK 7,364 million (7,625). The sales split per operating segment:
  • PC/Console Games: decreased by -23% to SEK 2,603 million (3,379).
  • Mobile Games: increased by 2% to SEK 1,669 million (1,642).
  • Entertainment & Services: increased by 19% to SEK 3,093 million (2,604).
• EBIT1) amounted to SEK 638 million (-305), an EBIT margin of 9% (-4%). Adjusted EBIT decreased by -11% to SEK 1,175 million (1,318), corresponding to an Adjusted EBIT margin of 16% (17%).
• Cash flow from operating activities amounted to SEK 1,712 million (1,719). Net investments in intangible assets amounted to SEK -891 million (-1,625). Free cash flow after changes in working capital amounted to SEK 907 million (260).
• Basic earnings per share was SEK 0.77 (-1.48) and diluted earnings per share SEK 0.77 (-1.48). Adjusted earnings per share was SEK 0.99 (-0.18). Adjusted earnings per share after full dilution was SEK 0.97 (-0.18).
• Net sales from discontinued operations amounted to SEK 4,930 million, Adjusted EBIT amounted to SEK 948 million and Free cash flow amounted to SEK 786 million.

NINE MONTHS, APRIL-DECEMBER 2024 (COMPARED TO APRIL-DECEMBER 2023)

• Net sales decreased by -22% (-15% organic growth) to SEK 16,984 million (21,651). The sales split per operating segment:
  • PC/Console Games: decreased by -35% to SEK 7,381 million (11,284).
  • Mobile Games: decreased by -3% to SEK 4,415 million (4,550).
  • Entertainment & Services: decreased by -11% to SEK 5,188 million (5,818).
• EBIT1) amounted to SEK -787 million (-1,056), an EBIT margin of -5% (-5%). Adjusted EBIT decreased by -42% to SEK 2,267 million (3,938), an Adjusted EBIT margin of 13% (18%).
• Cash flow from operating activities amounted to SEK 1,821 million (4,615). Net investments in intangible assets amounted to SEK -2,784 million (-5,350). Free cash flow after changes in working capital amounted to SEK 395 million (-547).
• Basic earnings per share was SEK -1.10 (-1.08) and diluted earnings per share SEK -1.10 (-1.08). Adjusted earnings per share was SEK 1.02 (1.28). Adjusted earnings per share after full dilution was SEK 1.00 (1.19).

Key performance indicators, Group	Oct-Dec 2024	Oct-Dec 2023	Apr-Dec 2024	Apr-Dec 2023	Apr 2023-Mar 2024
Net sales, SEK m	7,364	7,625	16,984	21,651	27,409
EBIT1), SEK m	638	-305	-787	-1,056	-14,400
EBIT margin	9%	-4%	-5%	-5%	-53%
Adjusted EBIT, SEK m	1,175	1,318	2,267	3,938	4,984
Adjusted EBIT margin	16%	17%	13%	18%	18%
Cash flow from operating activities, SEK m	1,712	1,719	1,821	4,615	5,694
Net investments in intangible assets, SEK m	891	1,625	2,784	5,350	6,811
Net sales growth	-3%	4%	-22%	21%	-27%
Total game development projects	118	179	118	179	141
Total game developers	5,757	9,896	5,757	9,896	7,383
Total headcount	7,873	12,695	7,873	12,695	9,692

1) EBIT equals Operating profit in the Consolidated statement of profit or loss.
In this report, all figures in brackets refer to the corresponding period of the previous year, unless otherwise stated.

CEO COMMENTS:
REASSURING Q3 PERFORMANCE AND A STRONG FOUNDATION FOR FUTURE VALUE CREATION
In Q3, net sales amounted to SEK 7.4 billion, with Adjusted EBIT of SEK 1.2 billion and a free cash flow of SEK 0.9 billion. The spin-off of Asmodee has been successfully completed and the separately listed company is now trading on Nasdaq Stockholm. With a pro forma net cash position of around SEK 5 billion as of Q3, we will accelerate our efforts to find the best allocation of companies and assets as part of our next spin-off. This process aims to maximize operational efficiency and unlock value. We are immensely proud of the teams involved in the successful release of Kingdom Come: Deliverance II, which has significantly outperformed our expectations so far.

In the quarter, Embracer's organic growth for continued operations (i.e., excluding Asmodee) amounted to 7%, with net sales of SEK 7.4 billion. Adjusted EBIT was relatively stable YoY at SEK 1.2 billion with a notably improved free cash flow of SEK 0.9 billion from continued operations. The profitability was supported by a resilient performance in PC/Console Games despite limited new releases in the quarter, while the organic growth was driven by Entertainment & Services and an improved organic growth trend for Mobile.

KINGDOM COME DELIVERANCE II SUCCESSFULLY RELEASED
We are excited to share that Kingdom Come: Deliverance II, the medieval role playing game released just over a week ago, has been initially successful, not only in terms of player and critic reception, but also in terms of performance. This reflects the dedication and hard work of our development studio, Warhorse Studios, and our publisher, Deep Silver. The game sold over 1 million copies in the first 24 hours, and is fast approaching 2 million, with an especially strong performance on Steam with over 250,000 peak concurrent players. It is our strong belief that the game will continue to generate substantial revenues over the coming years, highlighting the exceptional quality, immersion and appeal of Kingdom Come: Deliverance II. Warhorse Studios has a robust roadmap, including updates and new content over the next 12 months, ensuring an engaging and continuously evolving experience for the community.

In Q4, for PC/Console, we expect a higher Adjusted EBIT YoY, primarily driven by the releases of Kingdom Come: Deliverance II, as well as Killing Floor 3, to be released late in the quarter. The quarter is expected to be slightly negatively impacted by Hyper Light Breaker, which was released in early access on PC in early Q4. The value of completed games development within PC/ Console is expected to reach around SEK 2.75 billion in FY 2024/25, of which SEK 1.4 billion in the fourth quarter. For Mobile, we expect a limited Adjusted EBIT contribution due to substantial investments into user acquisition. For Entertainment & Services, we expect a limited Adjusted EBIT contribution with no notable product releases expected in a seasonally softer quarter.

We are excited about our future and our current games pipeline which we believe is one of the most well invested in the industry. We currently have more than 5,000 game developers working on our pipeline of upcoming games. Looking into the upcoming three financial years, FY 2025/26, FY 2026/27 and FY 2027/28, we currently have 10 AAA games under development, of which eight are from internal studios and two from external studios. This number does not include the releases in the current quarter, or any projects financed by third parties. However, we want to be clear that there is room to provide more time for development if deemed necessary to optimize both the quality and overall ROI, as we did for both Dead Island 2 and Kingdom Come: Deliverance II.

In FY 2025/26, we currently have two AAA games scheduled to be released towards the end of the financial year. In addition, we have a slate of exciting mid-sized releases including Gothic 1 Remake, REANIMAL, Fellowship, Deep Rock Galactic: Rogue Core, Titan Quest II, Screamer, Echoes of the End (working title), Tides of Tomorrow, Satisfactory (console) and the full release of Wreckfest 2, alongside a similar number of mid-sized games yet to be announced.

IMPROVED PC/CONSOLE PERFORMANCE AND MOBILE GROWTH

In the PC/Console Games segment, organic growth amounted to -1% with limited new releases in the quarter, as well as in the preceding quarters. Adjusted EBIT increased by 17% YoY in Q3. The Adjusted EBIT margin improved to 21%, driven by strong execution across many of the key businesses. The quarterly performance was supported by profitable external development projects, a few subscription deals, primarily related to the Goat Simulator franchise and Dead Island 2, as well as a strong holiday catalog performance for many of our games. The divested companies Saber and Gearbox also had a weak performance in the third quarter FY 2023/24 and this benefits the YoY comparison.

In the Mobile Games segment, organic growth improved significantly to 3% YoY from -7% in the preceding quarter. The Adjusted EBIT margin was clearly lower YoY at around 24%, driven by higher user acquisition costs, and with a tough comparison from last year's record-high profitability. DECA Games, which includes CrazyLabs, returned to a high single-digit organic growth, while divested mobile assets showed slightly negative growth. CrazyLabs saw an improved performance, as it took over the publishing rights for Bus Frenzy - Trafic Jam, which has scaled to become another successful hybrid casual game alongside Alien Invasion. In H1 FY 2025/26, the Mobile Games segment is expected to be in growth mode, implying higher user acquisition-to-sales with a positive ROI expected, driven by investments into Bus Frenzy and a few other titles. We are confident that these investments will provide a solid ROI and growth in the coming financial year.

The Entertainment & Services segment showed 19% organic growth in the quarter, primarily driven by PLAION Partner Publishing with several successful releases from partners in the quarter. The adjusted EBIT margin of 9% is lower YoY mainly explained by product mix effects and by a softer-than-expected box office performance for the theatrical release of the original anime The Lord of the Rings: The War of the Rohirrim.

STRONGER POSITION TO CREATE VALUE AFTER SUCCESSFUL SPIN-OFF OF ASMODEE
It has been exciting to follow the progress of Asmodee since our transformation announcement less than ten months ago. The company is trading as a separately listed public company on Nasdaq Stockholm after a solid process. The spin-off will allow Asmodee an increased strategic focus and will enable it to resume its accretive M&A execution. I will remain a long-term and committed shareholder and look forward to contributing as Chairman of the Board, working closely alongside CEO Thomas Kœgler and CFO Andrea Gasparini.

Over the past 18 months, we have created a stronger foundation for long-term value creation, with lower capex and significant net debt reduction. With a pro forma net cash position of around SEK 5 billion as of Q3, we have a strong financial position and we are further reassured by the performance and free cash flow generation in Q3. Embracer today has an increased focus on IP development within PC/Console and Mobile. However, we recognize that there is still work to be done to further enhance our operational resilience and optimize our business for the future.

We remain dedicated to creating additional publicly listed companies, with the separation of "Coffee Stain & Friends" from "Middle-earth & Friends" during the calendar year 2025. We continue to dedicate time to arrive at the best allocation of companies and assets to maximize operational efficiency and unlock value. We have a strong commitment from all of our management teams to drive strategic execution and continuous operational improvements, and we continue to address our fixed operating costs and improve our profitability. We expect these efforts to accelerate ahead of the next spin-off, and have some effect during the financial year.

The success of Kingdom Come: Deliverance II is a reminder of our core - to bring great products to the market. High-quality teams need to have the resources and the time to execute their visions. When you have right teams, this trust benefits everyone, including gamers, employees and shareholders. I am convinced that we will remain among the industry leaders in our core business verticals in the future.

With the Asmodee spin-off now complete, we have entered into an exciting new chapter for the businesses and people that make up Embracer Group. To conclude, I would like to send my thanks to all our team members, shareholders, customers, and business partners for their contributions to the continued success and growth in this new phase.

February 13, 2025, Karlstad, Värmland, Sweden

Lars Wingefors
Co-founder & CEO