The Embracer Group (formerly THQ Nordic) recently posted record Q2'20 net sales games earnings of $174 million, up a strong 153% year-over-year, setting a new all-time quarterly high.
Like most games companies, Embracer rode the coronavirus wave to record quarterly games revenues. Embracer notes a sharp 71% uptick in profits to $9.76 million on the back of $222.03 million in net sales revenues, This surge was thanks to over-performance in the games segment across Deep Silver, THQ Nordic, and the newly-acquired Saber Interactive.
Embracer attributes stronger sales revenues due to COVID-19 lockdowns, and favorable adoption of new games like SnowRunner, Spongebob Battle of Bikini Bottom Rehydrated, and Deep Rock Galactic, as well as digital sales of back catalog games in the Metro franchise.
Embracer Group (THQ Nordic) Q2'20 earnings:
- Net Sales -2.069 billion SEK ($222.03 million), up 81% YoY
- Game Sales - 1.662 billion SEK ($174.07 million), up 153% YoY
- Operating Profit -712 million SEK ($76.04 million), up 249% YoY
- Profit -91 million SEK ($9.76 million), up 71% YoY
Best quarter ever in terms of group net sales, group operating EBIT and net sales in the Games business area. Record numbers mainly driven by:
• Saber acquisition
• Multiple successful releases
• Strong back catalog
• "Lockdown gaming" during Covid-19 pandemic
The video games segment made $174.07 million (1.662 billion SEK)in Q2, up 153% from the year prior, and was the highest quarterly net sales in gaming the company has ever seen. Q2's earnings are close to 2018's full net sales revenues.
Deep Silver took the lion's share of total earnings, raking in 38% of revenues or $65.78 million thanks to heavy-hitters like Saints Row: The Third and Metro game back-catalog sales.
Moto GP20 also out-performed management expectations.
THQ Nordic reported its best quarter ever with 488 million SEK, representing 30% of Q2 earnings. This was driven by Spongebob, which massively outperformed the company's forecasts, as well as older back catalog games like Wreckfest, Darksiders Genesis, Monster Jam and MX vs ATV.
Saber has already contributed $37.45 million or 22% of total quarterly revenues, driven by World War Z and its new game SnowRunner.
Coffee Stain Studios contributed 10% of sales, or 172 million SEK, with its new Deep Rock Galactic game and Satisfactory port on Steam.
Digital split was at an all-time high in Q2, and made up 74% of sales revenues, or $129.09 million. This is the highest digital split THQ Nordic has ever reported, and even beats full yearly percentages.
This is to be expected given COVID-19 lockdown measures and consumers being more reticent to purchase in-store games.
The bulk of sales were from back catalog titles. 55% of net sales revenue came from already-existing games, whereas 45% was from new games. This fluctuation is represented by THQ Nordic's colossal always-growing pipeline of games.
Back catalog games made 889 million SEK in Q2, and new releases made 733 million SEK, totaling to 1.622 billion SEK for the period.
Speaking of THQ's massive pipeline of games, the company currently has 133 titles in development. 79 of them are unannounced projects, and 54 of them have been revealed.
This large spike was driven by the company's recent eight-studio acquisition, which includes Metro developer 4A Games, who now serves under Saber Interactive.
4A Games is also working with Saber on a new multiplayer-focused Metro game.
After the acquisitions, Embracer now owns 190 IPs across a huge fleet of franchises and series.
THQ is careful to say that not all of these franchises will get sequels or new releases, though. Only the relevant ones, including Destroy All Humans, Spongebob, and Kingdoms of Amalur.
This brings us to our last and final point: Embracer's massive arsenal of developers and dev teams.
Embracer now has 3,349 developers working across 98 development teams worldwide. Embracer employs 2,330 employees across 43 internal studios, and 1,109 employees out of 55 external work-for-hire studios, which are essential to helping maintain the flow of that massive 133-game pipeline.