Embracer Group-Q4 beat, guidance below cons. and another spin off announced-05/20/2026

Research evidence excerpt

Embracer Group-Q4 beat, guidance below cons. and another spin off announced-05/20/2026

Embracer Group

NEWSFLASH | 20 MAY 2026

Q4 beat, guidance below cons. and another spin off announced

Embracer reported Q4 sales of SEK 3.931m, +2%/+3% vs. PAS/cons. PC/Console came in below while Mobile Games and

E&S came in above expectations. EBIT adj. was SEK 360m, +34%/+45% vs. PASe/cons, PC/Console largely in line with

expectations while Mobile Games and E&S drove the beat. Mgmt guides for at least SEK 1bn in cash EBIT and 1.4bn in EBIT

adj. FY’26/27e, below cons at 1.8bn. Net cash position stands at 3.8bn (23.9% of MCAP) and the announced BBs of 750m

(4.7% MCAP) More importantly, the company announced another spin-off of Fellowship Entertainment, expected in CY27.

The two companies will have a revenue split of 4.4bn/11.5bn, with Fellowship targeting cash EBIT margins "well in excess

of 50% long term”. Based on FY'25/26 figures, this would imply SEK 2.2bn in cash EBIT, vs cons at 1.8bn/2.1bn in EBIT adj.

over the next two years. There is a lot to digest, but the strategic rationale behind the decision is easy to understand. The

company trades at 8.6x EV/EBIT adj. on FY'26/27 guidance, which in our view does not reflect the potential of the targeted

pipeline in the coming years. We remain positive long term and believe the current valuation falls well short of accurately

representing the SOTP.

Highlights from the report

• The company will spin-off Fellowship Entertainment into a separate company CY’27 through dividend (1:1 ratio)

• Sales at SEK 3.931m, +2%/+3% vs. PAS/Cons – PC & Console below, Mobile Games and E&S above

• EBITDAC at SEK 377m, +24% vs. PASe

• CAPEX at SEK 674m, -16.7% y/y, -6.1% vs. PASe

• EBIT adj. at SEK 360m, +45%/+34% vs. PAS/Cons