Embracer sells 6.8M copies of Valheim, has 160 games in development

Embracer sells 6.8M copies of Valheim, has 160 games in development

The Viking sandbox world game Valheim gave a big boost to Embracer Group by selling 6.8 million copies since February. And Embracer announced with its fourth fiscal quarter (first calendar quarter) results that it now has 160 games in development.

Today, Embracer Group reported its revenues for the fourth fiscal quarter (first calendar quarter) for the three months ended March 31 grew 80% to $289.5 million while operating profits (or operating EBIT, earnings before interest and taxes) grew 216% to $108.7 million.

For a change, Embracer didn’t announce any acquisitions. But it’s been so busy with acquisitions that its games under development has now increased from 103 a year ago to 160 now. Total headcount has increased 103% to 6,325, and its total number of game developers has increased 116% to 5,115. By contrast, Electronic Arts has more than 6,000 developers.

Embracer saw a huge bump in sales for its Coffee Stain Studios division, which published Valheim, with division sales rising to $94 million from $9.9 million a year ago. In early April, Embracer acquired Aspyr, Easybrain, and Gearbox Entertainment. Easybrain is exceeding management’s expectations for its mobile games.

Studio division sales

THQ Nordic sales grew slightly to $42.6 million, Deep Silver dipped 9% to $55.8 million, Saber Interactive came in at $32.5 million, and Deca Games came in at $12.5 million. The sales of partner publishing and the film business came in at $51.6 million.

The EBITDA (earnings before interest, taxes, depreciation, and amortization) was $141.2 million, corresponding to a 49% EBITDA margin.

For the full year, sales were $1.08 billion, up 72% from the previous year. Net sales for the game business was $776.8 million, up 102%. EBITDa for the year was $480.1 million, up 119%.

CEO Lars Wingefors said in a shareholder note that the strategy has been to build a diverse business that stands on many revenue streams from a diverse portfolio, and that strategy is increasingly paying off. (See Wingefors in a fireside chat with Nick Tuosto of Liontree/Griffin Gaming Partners at GamesBeat Summit here).

He said Valheim could sell another 1 million to 1.2 million copies before the close of the current quarter on June 30. While much of the growth came from acquisitions, organic growth has been strong as well.

Since 2016, when Embracer went public in Sweden, the company’s adjusted earnings per share have increased 14 times.

In five days, THQ Nordic has another big game launching in Biomutant, an open-world martial arts RPG. Preorders are ahead of expectations.

Wingefors said SnowRunner has now sold more than 2 million copies, as has Spongebob Squarepants: Battle for Bikini Bottom Re-Hydrated, while Destroy All Humans has sold 1 million copies.

Big investments

In the past two years, Embracer has invested $240.9 million in game development. More than two-thirds of the works in progress are new intellectual properties or IPs that the company is revitalizing because they haven’t had new titles in the past five years.

In the year ending March 31, 2022, Embracer expects to complete more than 90 games. This includes projects from the newly acquired Gearbox and Aspyr studios.

Wingefors pointed out that in the past year, the fees paid to platform owners (console makers and Steam) are estimated to be two times the actual costs spent on game development in the past fiscal year.

“We will continue to challenge these paradigms and pursue opportunities to reduce costs and increase the relative investment into content creation,” Wingefors said.

TimeSpliters is back

Embracer recently acquired five more studios: Appeal Studios, Kaiko Massive Miniteam, Frame Break, and Gate21. Combined, these entities are currently employing around 90 developers.

And Embracer raised another $915 million for further acquisitions. The company has more than $2.04 billion in cash and credit facilities.

“The determination not to become a ‘corporate machine’ is as strong as ever,” Wingefors said. “Our philosophy is and will continue to be one that encourages founder creativity.”

During the quarter, Wingefors said his team talked to more than 150 companies about acquisitions, including larger companies that could form additional operating groups. About 20 deals are in late-stage talks.

Source: Embracer sells 6.8M copies of Valheim, has 160 games in development