Embracer Group FY2025 Annual Report

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ANNUAL REPORT25
26

/ CONTENTS
2 EMBRACER GROUP IN BRIEF
4 HIGHLIGHTS OF THE YEAR
6 COMMENTS FROM THE CEO
10 LETTER FROM THE CHAIR OF THE BOARD
12 BUSINESS MODEL & STRATEGY
14 GAMES & ENTERTAINMENT MARKET OVERVIEW
18 OPERATING SEGMENT PC/CONSOLE GAMES
20 OPERATING SEGMENT MOBILE GAMES
22 OPERATING SEGMENT ENTERTAINMENT & SERVICES
24 SUSTAINABILITY
BOARD OF DIRECTORS’ REPORT
28 THE GROUP
32 THE SHARE
38 ENTERPRISE RISK MANAGEMENT
46 CORPORATE GOVERNANCE REPORT
64 SUSTAINABILITY S TATEMENT
128 FINANCIALS
198 AUDITOR’S REPORT
203 AUDITOR’S LIMITED ASSURANCE REPORT
The official annual report consists of pages 27-197
/ FINANCIAL CALENDAR
Interim Report Q1, 2026/27 Aug. 13, 2026
Annual General Meeting Sep. 24, 2026
Interim Report Q2, 2026/27 Nov. 12, 2026
Interim Report Q3, 2026/27 Feb. 11, 2027
Interim Report Q4, 2026/27 May 20, 2027
All figures in this report are as per year-end 2025/26 unless otherwise stated

Embracer Group is a global group of creative and entrepreneurial
businesses in PC, console and mobile games, as well as other related
media. The Group has an extensive catalog of over 400 owned or
controlled franchises.
With its head office based in Karlstad, Sweden, Embracer Group has a
global presence through its operative groups: THQ Nordic, PLAION,
DECA Games, Dark Horse, Freemode and Crystal Dynamics – Eidos.
The Group includes 53 internal game development studios and
engages over 6,000 talents across nearly 30 countries.
REANIMAL
THQ Nordic | Tarsier Studios

E M B R A C E R G R O U P
IN BRIEF
2 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL)PC/CONSOLE GAMES
MOBILE GAMES
ENTERTAINMENT & SERVICES/ SEGMENT SPLIT PERFORMANCE SEK
15,906 m
SEK 6,631 m
SEK 387 m
SEK 2,303 m
SEK 292 m
SEK 6,972 m
SEK 451 mThe figures below are excluding discontinued operations (Coffee Stain Group)
SEK
905 m
536,090 / INTERNAL STUDIOS/ ENGAGED TALENTS/ NET SALES / ADJUSTED EBIT
EBIT amounted to SEK -7.1 billion, significantly affected by non-cash impairment expenses.

EMBRACER GROUP AB (PUBL) | ANNUAL REPORT 2025/26 3/ SOME OF OUR STUDIOS AND COMPANIES
/ SOME OF OUR MOST ICONIC BRANDS
The Lord of the Rings: Trick-Taking Game, © & TM Mee under lic. to Office Dog/Asmodee

HIGHLIGHTS OF THE YEAR
Em]o[^`o Golrm ^lkqekr`_ ql m[g` m`[kekcarh molco`ss _roekc qd` v`[o ek eqs qo[ksalom[qelk
qlt[o_ ]reh_ekc [ mlo` al^rs`_ [k_ ^ld`ses` loc[kex[qelk, sqo`kcqd`kekc molaeq[]eheqv [k_
rkhl^gekc hlkc-q`om s[hr` A meh`sqlk` t[s qd` smek-laa la Claa“ Sq[ek Golrm [s [ s`m[o[q`hv
hesq`_ ^lmm[kv [s la D`^`m]`o [q N[s_[n Feosq Nloqd Po`me`o, o`mo`s`kqekc [k emmloq[kq sq`m ek
qd` ^o`[qelk la mlo` _esqek^q `kqeqe`s teqd ^h`[o`o sqo[q`ce^ _eo`^qelk [k_ [^^lrkq[]eheqv
Aq qd` s[m` qem`, qd` Golrm’s sqo`kcqd`k`_ al^rs lk ^lo` IP [k_ ao[k^des` moeloeqex[qelk t[s
o`ah`^q`_ ek slhe_ m`oalom[k^` [^olss g`v qeqh`s Teqh`s sr^d [s Kekc_lm Clm` D`hes`o[k^` II,
[hlkcse_` qd` ^lkqekr`_ sqo`kcqd la `sq[]hesd`_ ]o[k_s ek^hr_ekc D`[_ Ish[k_ [k_ Tlm] R[e_`o,
rk_`os^lo` qd` s[hr` la ^lk^`kqo[qekc o`slro^`s lk decd-nr[heqv, `k_roekc ao[k^des`s
Td` v`[o [hsl m[og`_ [ h`[_`osdem qo[kseqelk Flrk_`o L[os Wekc`alos [ssrm`_ qd` olh` la
Eu`^rqes` Cd[eo la qd` Bl[o_, tdeh` Pdeh Rlc`os t[s [mmlekq`_ CEO Tdes qo[kseqelk o`ah`^qs [
k[qro[h k`uq md[s` ek Em]o[^`o’s `slhrqelk, ^lm]ekekc hlkc-q`om `kqo`mo`k`roe[h seselk teqd
sqo`kcqd`k`_ lm`o[qelk[h h`[_`osdem
/ A YEAR OF EXECUTION AND PROGRESS PAGE 6
FY 2025/26 m[og`_ qd` k`uq md[s` la qd` Golrm’s qo[ksalom[qelk Iq t[s [ qo[kseqelk v`[o, teqd
[ nre`q`o sh[q` la m[flo PC/^lkslh` o`h`[s`s [k_ ^lkqekr`_ tlog ql emmols` `u`^rqelk, ^lsq
_es^emhek`, ^[meq[h [hhl^[qelk [k_ ^[sd c`k`o[qelk Flo qd` arhh v`[o, k`q s[h`s [mlrkq`_ ql SEK
159 ]ehhelk, A_frsq`_ EBIT ql SEK 905 mehhelk [k_ ao“ ^[sd ahlt ql SEK 50 mehhelk Td` v`[o t[s
[hsl ^d[o[^q`oex`_ ]v seckeae^[kq klk-^[sd emm[eom`kqs qd[q [aa`^q`_ EBIT Golrm CEO Pdeh
Rlc`os sd[o`s des o`ah`^qelks lk qd` v`[o’s m`oalom[k^` [k_ qd` Golrm’s arqro` moeloeqe`s
/ CORE IP AT THE HEART OF VALUE CREATION PAGE 6
Em]o[^`o’s mloqalhel la ekq`hh`^qr[h molm`oqv o`m[eks ^`kqo[h ql qd` Golrm’s hlkc-q`om sqo[q`cv
Droekc qd` v`[o, qd` loc[kex[qelk ^lkqekr`_ ql moeloeqex` ^lo` ao[k^des`s [k_ eqs _`s`hlmm`kq
mem`hek`, o`ekalo^ekc eqs mlseqelk [s lk` la qd` ek_rsqov’s h`[_ekc ltk`os la e^lke^ IP
Flhhltekc eqs sr^^`ssarh o`h`[s` ek F`]or[ov 2025, Kekc_lm Clm` D`hes`o[k^` II ^lkqekr`_ eqs
sqolkc `[ohv o`^`mqelk [k_ ^lmm`o^e[h mlm`kqrm, _`mlksqo[qekc qd` Golrm’s []eheqv ql ]reh_ [k_
s^[h` decd-nr[heqv ao[k^des`s teqd chl][h [mm`[h D`[_ Ish[k_ [k_ Tlm] R[e_`o ^lkqekr` ql
o`mo`s`kq seckeae^[kq hlkc-q`om s[hr`, tdeh` REANIMAL sqll_ lrq [s [ sr^^`ssarh k`t IP teqd
sqolkc o`smlks` aolm mh[v`os [k_ ^oeqe^s
Bv al^rsekc lk decd-nr[heqv o`h`[s`s, hlkc-q`om ao[k^des` sq`t[o_sdem [k_ s`h`^qes` qo[ksm`_e[
lmmloqrkeqe`s, Em]o[^`o [ems ql m[uemex` qd` s[hr` la eqs IP mloqalhel ls`o qem`
4 ANNUAL REPORT 2025/26 EMBRACER GROUP AB (PUBL)

/ OPERATIONAL DISCIPLINE & STRATEGIC PRIORITIZATION PAGE 6
During the year, Embracer sharpened its focus on operational discipline and strategic
prioritization.
Three priorities guided the organization: a stronger focus on core IP and franchise
development continued efforts to build a more efficient PC/Console platform through
collaboration, streamlined processes and shared services, with AI playing an even
more supportive role and targeted cost initiatives to improve returns, cash conversion
and long-term profitability. These initiatives included actions in underperforming
businesses, studio closures, divestments and reduced investment in non-core IP,
underscoring the importance of disciplined capital allocation and performance
accountability.
This more focused and disciplined approach is designed to build a resilient
organization that combines creative excellence with financial sustainability and
supports long-term profitable growth.
/ SUSTAINABILITY REMAINS PRIORITY PAGE 66
During the year, Embracer increased collaboration across the Group on data management, climate targets, emissions
reduction and digital safety for players. This report also marks Embracer’s first sustainability report under the EU’s CSRD, an
important step in meeting new requirements. Sustainability issues are now more clearly integrated into processes, and the
double materiality assessment has strengthened the link between sustainability work and long-term value creation. A new
sustainability policy was implemented to set clearer frameworks for environmental, social and governance matters.
This first CSRD-aligned effort is only the beginning, demonstrating Embracer’s commitment to transparency and resilience
as regulations and the market continue to evolve.
/ NEXT STEPS IN THE STRATEGIC DIRECTION PAGE 176
On 20 May 2026, the Board of Directors for Embracer Group announced the intention
to separate the Group into two publicly listed companies through the spin-off of
Fellowship Entertainment, with a listing on Nasdaq Stockholm planned during
calendar year 2027. At the same time, Müge Bouillon was appointed Deputy CEO of
Embracer Group alongside her role as Group CFO, further supporting stronger
governance and management focus.
EMBRACER GROUP AB (PUBL) | ANNUAL REPORT 2025/26 5

C O M M E N T S F R O M T H E C E O
A NEW DAWN IS RISING
In the past year, we have made important progress on portfolio actions and operational focus,
including the spin-off and listing of Coffee Stain Group. Following a start to the financial year
with the outlook in focus, we recovered and ultimately delivered meaningful momentum across
our core IPs, supported by strong execution by our teams. Looking ahead, we are building two
focused business segments, Fellowship Entertainment and Embracer, guided by the same
priorities: consistent delivery, disciplined capital allocation, and stronger conversion of earnings
into cash flow. We now have the clear direction we’ve been building towards. I can’t wait to
continue the exciting path that we are on.
STRONG CORE FRANCHISE EXECUTION DURING A
TRANSITION YEAR FOR PC/CONSOLE
For the full FY 2025/26, Embracer Group generated sales of
SEK 15.9 billion, with organic growth of -3% and adjusted EBIT
of SEK 905 million, constituting a margin of 6%. Positively, after
a strong Q4, we ended the full year with a positive free cash
flow. EBIT amounted to SEK -7.1 billion, significantly impacted by
SEK -7.4 billion of non-cash impairments of goodwill and other
intangible assets. The adjusted results exclude these items to
better reflect the underlying business performance. The year
was one of transition for our PC/Console Games segment,
which had a quieter slate of major game releases. With certain
key titles shifting, we stayed focused on what matters most:
raising our execution standards, investing wisely and continuing
to strengthen the group.
The year reinforced the importance of consistent delivery in
our core franchises within our PC/Console Games segment. We
supported Kingdom Come: Deliverance II with a steady cadence of post-launch content, driving engagement and
reaching several sales milestones. Kingdom Come: Deliverance
II earned PC Gamer’s Game of the Year and just recently a
highly coveted BAFTA Games Award for Best Narrative. The
game surpassed five million copies sold within its first year. At
the same time, some new releases underperformed
expectations, including Killing Floor 3 , which showed, once
again, how important execution and listening to community
feedback is. With a more focused, IP-led pipeline, combined
with a more disciplined greenlight and key decision gate
process, I am confident we are now better positioned to
execute on our pipeline. Toward the end of the year, REANIMAL
launched and got off to a strong start for this exciting new IP.
The incredible team at Tarsier Studios have captured the hearts
and minds of players with this new IP and have something to
really build on for the long-term. In total, organic growth
amounted to -17% for the PC/Console Games segment, with
lower earnings year-over-year.
6 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL) PHIL ROGERS
Group CEO, Embracer Group

Our Mobile Games segment gained momentum throughout
the year, although we saw a modest organic decline of -3%
and lower earnings year-over-year on a pro forma basis. We
saw sequential growth in all quarters and the year ended on a
bright note, with positive organic growth and strong
underlying earnings development in Q4, driven by the strong
early performance of the new title Sled Surfers .
In our Entertainment & Services segment, we saw great
progress with 15% organic growth year-over-year and a solid
earnings growth. PLAION Partners signed several new
partners on both the hardware and software side. We also
executed several initiatives to modernize several of our key
businesses and improve long-term profitability.
WINNING TODAY – AND TOMORROW
The games industry generated strong headline revenue growth
in 2025, but competition is intensifying globally and cost
inflation is impacting hardware affordability. That raises the bar
for execution but it also makes it more rewarding when we get
it right. Our performance this past year with Kingdom Come:
Deliverance II and REANIMAL reflects that. The player base is
larger than ever at over 3.6 billion expected players in 2026,
Asian consumers are increasingly engaging with Western
games, and there remains a significant long-term opportunity
through cloud gaming, which is still in its infancy.
To me, it is clear that we must structure ourselves to win
today, and also invest to win tomorrow. We believe long-term
success is less about volume and more about focus: building
franchises that earn sustained engagement, allocating capital
with discipline, and running our portfolio to translate creativity
into resilient cash flows. This does not mean a sole focus on
major games and large budgets, but a sharper focus on our
highest-conviction IPs, projects and teams.
The year has demanded hard choices – that have affected
many colleagues. We are taking structural steps to make
Embracer Group more focused and resilient for the years
ahead. To this end, the future will involve more smart collaboration and cost synergies. Advances in technology,
especially AI, are creating new opportunities to go further,
provided we use technology responsibly and thoughtfully.
An important part in winning is defining how we measure
it. Beginning in the first quarter of FY 2026/27, Cash EBIT will
be introduced alongside Adjusted EBIT as our primary
measure of profitability. The key distinction is that Cash EBIT
puts higher emphasis on cash investments. Game
development represents our largest expenditure across the
group and by adopting a profitability metric that more
accurately reflects underlying cash flow we will provide clearer
insights for both internal and external stakeholders.
TWO FUTURE COMPANIES, ONE GOAL
Over the past year, we have made strong progress in our
strategic direction. We have divested several non-strategic and
unprofitable businesses to improve focus and capital efficiency.
We have reduced our capex run-rate by lowering investment in
non-core IP, and reduced our opex run-rate through
consolidation initiatives. Our publishing businesses have
become sharper and more cost efficient. Simplifying the group
around a more focused portfolio will help us make better
decisions faster and further improve profitability.
Following our announcements after the year end in May
2026, our direction is clear: to build a more disciplined, IP-first
group with two distinct business segments, Fellowship
Entertainment and Embracer. Both with a focused mandate
and a structure that supports transparency and execution.
Starting in Q1 FY 2026/27, we will report on two segments so
we can show progress and the key performance metrics. We
are progressing toward a planned spin-out of Fellowship
Entertainment on the main market in Stockholm during
calendar 2027, splitting the group into two clearly defined
listed companies with compelling, differentiated investment
cases, while increasing management focus to drive
shareholder value.
EMBRACER GROUP AB (PUBL) | ANNUAL REPORT 2025/26 7Magic The Gathering: Tales of Middle-earth, © & TM Mee under lic. to Wizards of the Coast

FELLOWSHIP ENTERTAINMENT: GAME WORLDS
THAT GENERATE FANS
Fellowship Entertainment is built around a clear strategic
focus: worlds that players return to – again and again. This
does not imply live service games, but rather game worlds that
generate fans, not just customers. Fellowship Entertainment
will be a tight group of world-class game studios, consisting of
more than 1,600 developers internally. This is large enough to
deliver at scale, and it is located internationally to take
advantage of global economics and talent. It will be agile
enough to co-ordinate, enhance and share capabilities and
technologies. The Lord of the Rings alone represents one of
the world’s most enduring and valuable IPs. Fellowship will
concentrate on active stewardship of premium franchises,
including Tomb Raider , Metro , Kingdom Come , Dead Island ,
Darksiders and Remnant .
FY 2026/27 is anchored by METRO 2039 and Tomb
Raider: Legacy of Atlantis. We are heading into summer with
great activity set around both. We were excited to announce
METRO 2039 last month, together with our friends at 4A
Games in Ukraine and Malta, and our partners at Xbox. We
were pleased to also be able to provide some further clarity
on our strong, multi-year pipeline of major PC/Console games
in conjunction with our year-end report in late May. From FY
2027/28, we expect Fellowship Entertainment’s strength to
become increasingly visible through a higher cadence of
major releases. This includes titles already announced, such
as Darksiders 4 and Tomb Raider: Catalyst, as well as the next
mainline Dead Island game, building on the enduring
engagement of a franchise that has already reached more
than 20 million lifetime players. We are also encouraged by
what is taking shape within the Kingdom Come franchise,
where Warhorse Studios is working on a new release in the
franchise.
We also announced something that illustrates, better than
anything else, what Fellowship Entertainment is for: the team
behind Kingdom Come: Deliverance II is also making a new
game, set in Middle-earth. Warhorse Studios, which is
celebrated for its extraordinary depth, historical authenticity
and storytelling is bringing that craft to the greatest fantasy
world ever created. An expansive, deep open-world
experience. Warhorse demonstrated with Kingdom Come that
they are one of the premier open-world RPG studios on the
planet. Middle-earth deserves a game of that ambition and
that craft. This is what Fellowship Entertainment is. Not just a
holder of valuable IP, but an active steward of it. Putting the
right creators in the right worlds and building the experiences
that can define a generation of players. EMBRACER: A LEANER ECOSYSTEM OF DURABLE
BUSINESSES
As we have evolved the Group, the business segment
Embracer has become a leaner, more focused collection of
durable businesses that is tighter, more predictable and more
disciplined than at any point in recent history. I view Embracer
as an ecosystem of independent entrepreneurial companies,
each with its own identity, audience and craft, rather than a set
of subsidiaries managed from the center. What unites them is
not uniformity, but shared ownership, structured support and
the benefit of belonging to something larger, without losing
what makes each business distinctive. Some of the companies
within Embracer have been making or working with games for
30 years. That is not luck. It is culture, craft, and community
built over decades. These businesses have navigated platform
transitions, technology shifts, and changing player tastes. I am
confident that they will navigate and prosper through the next
ones too.
That strength is visible across a portfolio of niche leaders
and long-standing specialists. Businesses such as THQ Nordic,
DECA Games, Milestone, Aspyr and Tripwire Interactive bring
proven franchises, loyal communities and expertise built over
decades, while Entertainment & Services adds meaningful
recurring and less cyclical revenue through operations such as
PLAION Partners and PLAION Pictures. Alongside our deep
passion for retro and preservation, reflected in businesses
such as Limited Run Games, this gives Embracer a broader
foundation than a traditional games segment alone. It is a
group shaped by culture, craft and community, and one we
believe is well positioned to navigate future platform shifts,
technology change and evolving player preferences.
THE RIGHT PATH FORWARD
To conclude, we now have the clear direction we’ve been
building towards. An approach to deliver long-term value for
our fans, our businesses and IPs, our people, and our
shareholders. Our focus now is consistent delivery.
As I write these words, I am almost one year into my role.
At times, it has been challenging, but it has also been highly
rewarding to see the progress and engagement. I can’t wait to
continue the exciting path that we are on. Thank you all for
your support.
June 18, 2026, Karlstad, V>rmland, Sweden
Phil Rogers
Group CEO, Embracer Group
8 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL)

EMBRACER GROUP AB (PUBL) | ANNUAL REPORT 2025/26 9GOTHIC 1 REMAKE
THQ Nordic | Alkimia Interactive

L A R S W I N G E F O R S / C H A I R O F T H E B O A R D
IMPORTANT STEPS FOR
VALUE CREATION
Over the past two years, we have taken important steps to improve Embracer. We have
reduced complexity, lowered our cost base, strengthened the balance sheet and become more
disciplined in how we prioritize across the group. That work has happened in a market that has
remained tough and, in many parts, unforgiving. It has also made us clearer on what matters
most: focus, execution and capital allocation. The planned spin-off of Fellowship Entertainment
is an important step, but it is only one part of a broader effort to build stronger businesses,
improve accountability and create better conditions for long-term value creation.
A SPIN-OFF FOR THE RIGHT REASONS
Two years ago, on April 22, 2024, we announced plans to
separate into three publicly listed companies, which we have
executed on through the spin-offs of Asmodee and Coffee
Stain during 2025. Over the past year, the Board and
management have worked towards a clearer strategic
direction for Embracer. During that process, it became clear
that the group remains heterogenous, with different needs,
ambitions and necessary structures and processes. Thus, the
aim of the separation into Fellowship Entertainment and
Embracer remains the same as the previous spin-offs: to
enable each business to sharpen its strategic focus and
highlight its unique value for shareholders. The spin-off will
increase management focus to capture the full joint potential
of the IPs, the respective communities and some of the best
game developers in the world.
I want to be clear that our spin-off initiative is about
running towards something – not away. This is not
fragmentation for its own sake. It is about focus,
accountability, and giving each company the structure,
leadership and flexibility needed to deliver, all while we keep
a disciplined approach to capital allocation. Our ambition is to
build two strong, creatively-led businesses with sustainable
economics, prudent balance sheets, and a model that
supports consistent execution year after year. That clarity
supports better decisions, faster execution, and, over time,
better returns for shareholders. Just as importantly, this clarity
creates better conditions for our people: clearer priorities,
stronger leadership support, and a structure that helps teams
stay focused on creating great experiences for players while
continuing to grow and develop over the long term.
LEARNINGS FROM ASMODEE AND COFFEE STAIN
As a board member and a shareholder, I would like to think
that I take a very long-term view of things. Therefore, I only put
so much weight on quarterly and even annual results. That
said, it has been encouraging to see both Asmodee and
Coffee Stain Group continue to deliver strong results as
separately listed companies. Their progress reinforces our
conviction that the decision to spin them off was right, and that
a long-term time horizon is essential when shaping companies
built to last. At the same time, we have learned that structure and market
mechanics’ matter. Listing venues, investor mix, and index and
passive-fund dynamics influence liquidity and understanding,
factors we must plan for and communicate clearly from day
one. In particular, our experience from Coffee Stain Group has
strengthened our approach to adapting to the realities of
passive ownership as well as restrictions for our long-term
active shareholders. Therefore, the board has proposed to
spin off Fellowship Entertainment to Nasdaq Stockholm. It
means a longer and more diligent process, but one that will
benefit the company and all shareholders long-term.
EMPOWERING MANAGEMENT TO DELIVER AGAINST
A GREAT OPPORTUNITY
I have been part of building Embracer from the beginning, and
while my role has changed from Group CEO to Chairman
during the year, my perspective remains long-term: create
great games, protect our culture, and allocate capital with
care. We have learned along the way, and I am committed to
demonstrate that through stronger execution and results in
the years ahead.
In Fellowship, leadership and a clear mandate matter. Phil
Rogers has made a real difference over the past two years,
and especially as group CEO since 1 August, 2025, bringing
focus, pace, and a long-term mindset. The objective is to build
one strong developer and publisher group with a clear
structure: great teams, meaningful IP, and a licensing platform
that we can scale over time. We believe this structure can
increase focus, strengthen execution, and improve the way we
prioritize and commercialize our portfolio while preserving the
creative autonomy that is essential in our industry.
Talking as a shareholder, I am convinced that Fellowship
Entertainment can reach a profitability and long-term organic
growth above the industry average. The business model is
geared to have a high incremental Cash EBIT margin, with
strong cash conversion as the company grows. This can be
achieved through a stronger cadence of AAA product
launches, a greater focus on licensing via a dedicated
business unit, adoption of new technologies and AI, an
increased management focus on executing this opportunity.
The good news is that we already have all the assets to
succeed with this transformative journey within Fellowship
Entertainment. Now, we need patience and great execution.
10 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL)

THE FUTURE EMBRACER WILL LEVERAGE
LEARNINGS TO DRIVE VALUE
The strategy for Embracer Group will be stronger without
Fellowship Entertainment. I am a firm believer that the need
for a strong holding company supporting industry leading
entrepreneurs and management teams is greater than ever. At
the same time, I want to be frank. While our execution and
prioritization have not always met our own expectations, we
have learned important lessons over the past several years. In
hindsight, we could have moved faster to adapt our cost base
and refine our project portfolio following the financial
performance of new releases in the past 2-3 years. Since then,
we have taken decisive actions to strengthen the business,
and I am proud of the progress made. We now move forward
with a strong foundation of IPs, franchises, and talented
people around which we are building the future of Embracer.
This is a unique chance to create the future Embracer. The
journey over the past decade has given some hard and
invaluable learnings, which I, as Chairman, will make sure that
we will use as we lay the foundation for the coming decade
across both future companies. A new stronger governance
structure led by CFO and Deputy CEO Müge Bouillon is now
being put in place for the future Embracer. Even where
average project sizes are smaller, our standards will not be.
We will stay strict on greenlights, costs, and returns, project by
project and studio by studio. We still believe in
decentralization, but with clearer standards. In this future
Embracer, we see significant levers for value creation:
continued cost discipline, more strategic and cost-efficient use
of our core IPs, improvements in selected physical businesses,
and the flexibility to act on opportunities when pricing and
timing are right.
Lastly, as you know, Embracer consists of many
companies, IPs and products that are dear to me, and close to
my heart. In particular, our retro and collectibles businesses
has some great current momentum, which reminds us of the
long-term value that can exist in a unique catalog when it is
thoughtfully curated and handled with respect.
READY TO RETURN CAPITAL ON A REGULAR BASIS
Many shareholders have reached out over the year, and I want
to thank you for that engagement. I always appreciate hearing
from fellow shareholders, especially when perspectives differ,
as it helps keep us focused, challenged and aligned around
what matters most. At Board level, we have remained constructive, while also
recognizing that the path forward required decisive actions on
structure, costs, and capital needs. Capital allocation is
fundamentally a sequencing question. Spin-offs, the right cost
structure, and the capital needs of each business must be
aligned with a sustainable long-term strategy. Acting too early
can create unnecessary risk waiting too long can delay value
creation.
Alongside the structural changes, I’m pleased that we
announced a SEK 750 million share buyback program in
conjunction with our year-end report. With a net cash position
at the end of March of SEK 3.8 billion, we are well capitalized
to start returning capital to shareholders on regular basis. The
objective is straightforward: to allocate capital where it creates
the most sustainable long-term value per share. We will be
disciplined in our priorities and consistent in our execution.
That is how we build credibility, and how we avoid
overcommitting.
A STRENGTHENED FOUNDATION
We are building a more focused Embracer Group, with sharper
mandates, more distinct financial profiles, and stronger
accountability. This will strengthen execution and support
long-term value creation.
Thank you to our teams across the group for the work you
put in every day, and to our partners for your trust. And to you,
my fellow shareholders, thank you for your patience, your
feedback, and your long-term support.
Lars Wingefors
Chair of the Board & Co-Founder

B U S I N E S S M O D E L A N D S T R A T E G Y
A STRENGTHENED STRATEGIC
FOCUS
Embracer Group is a global group of creative and entrepreneurial businesses, built around
talented teams, strong owned and controlled IPs, and specialist capabilities across games and
entertainment. As of 31 March 2026, the group had over 6,000 engaged people and a portfolio
of more than 400 owned and controlled IPs. This breadth provides a strong foundation for
disciplined capital allocation, operational resilience and long-term value creation, while
supporting the group’s continued strategic evolution. Embracer Group now intends to separate
the group into two publicly listed companies, through the spin-off of Fellowship Entertainment in
2027, to further increase management focus to capture the full potential of the valuable or
strategic assets and IPs within the group.
Today and up until the release of Embracer Group’s Q1 FY
2026/2027, Embracer Group is organized in three operating
segments: PC/Console Games, Mobile Games and
Entertainment & Services. Through these operating segments,
Embracer Group has strong market positions in PC, console,
VR and mobile games, as well as specialist operations in game
distribution, film distribution and comic book publishing.
Embracer Group has gone through a transformation over
the past three years, while also divesting selected studios and
companies and spinning off two companies: Asmodee and
Coffee Stain Group. On 20 May, 2026, Embracer Group
announced the intention to further separate the group into two
publicly listed companies, through the spin-off of Fellowship
Entertainment.
EMPOWERING WORLD-CLASS TEAMS
Embracer Group’s core mission is to bring great products to
market, ensuring that high-quality teams have the resources
and time to execute their creative visions. This trust benefits
everyone, including gamers, employees, and shareholders. It
enables studios to be creatively bold in their mindset when
developing games that players love. Embracer Group
encourages individual game development studios to put
quality first and create games that really stand out. Studios
stay close to their gaming communities, as building strong
connections with a game’s community drives the creation of
games that can not only meet, but exceed player
expectations.
FOCUSING CAPITAL ALLOCATION TOWARDS KEY IPS
Embracer Group has leading intellectual properties, iconic
titles, talented teams, studios and great assets, making the
group exceptionally well-positioned for the long-term. The
group is increasingly strategically channeling resources
towards its own and controlled key IPs. The Lord of the Rings
IP and universe are well-positioned to become a key long-term
growth driver for the group over the coming decades, with the
aim to delight fans across the globe. New stories in streaming
and film, and working with partners for our key IPs, supports
taking the IPs to new heights. With a more stringent capital allocation process and improved investment standards, an
enhanced return on investment is anticipated over time from
new game releases, reflecting higher quality production.
ENHANCED RESILIENCE AND FINANCIAL POSITION
ENABLES RETURN OF CAPITAL
The past three years have been transformative for Embracer
Group, with efficiency measures, selective divestments and
two spin-offs, creating a stronger foundation for profitability,
cash flows, and long-term value creation. Through decisive
action, Embracer Group has reached a net cash position at the
end of March, 2026, of SEK 3.8 billion, allowing for the return
of capital to shareholders on regular basis. A SEK 750 million
share buyback program was announced in May 2026, in
conjunction with the year-end report, following up from the
previous program during the FY of SEK 500 million.
SEPARATION INTO FELLOWSHIP ENTERTAINMENT
AND EMBRACER
The main rationale of the separation is to further increase
management focus to capture the full potential of the valuable
or strategic assets and IPs within the group. The separation is
also expected to enable Fellowship Entertainment to
accelerate the formation of a group of world-class studios with
leading publishing and licensing capabilities. It would also
allow Embracer more flexibility to pursue accretive but
opportunistic bolt-on M&A, especially to strengthen its already
successful and sizable niches in for example, mobile,
distribution, retro, films, remakes and remasters.
Starting from Embracer Group’s Q1 FY 2026/27, the
company will report through two distinct business segments:
Fellowship Entertainment and Embracer. This new structure is
designed to enhance transparency and highlight the unique
strengths and strategies of each segment, in advance of the
spin-off.
Fellowship Entertainment business segment
Fellowship Entertainment aims to become an IP-led
entertainment company built for growth and enduring
momentum, with some of the world’s most beloved franchises
at its center as the stewards of The Lord of the Rings and
12 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL)

Tomb Raider intellectual properties. As a standalone
company, Fellowship Entertainment will have a better
structure to maximize the potential of its highly strategic
franchises , with a higher degree of collaboration, resource
sharing and operational synergies.
Fellowship Entertainment will be the home of critically
acclaimed studios and companies: 4A Games, Crystal
Dynamics, Dambuster Studios, Dark Horse Media, Eidos-
Montréal, Fishlabs, Flying Wild Hog Studios, Gunfire Games,
Middle-earth Enterprises, Redoctane Games and Warhorse
Studios. Fellowship Entertainment aims to create a new
publishing group, operationally consolidating the talents from
PLAION and other parts of the group. IPs include Darksiders ,
Dead Island , Kingdom Come , Metro , Remnant , The Hobbit ,
The Lord of the Rings , Tomb Raider , and many more.
Fellowship Entertainment will report through two business
areas:
$ Development & Publishing
$ Licensing
Licensing will focus on dedicated IP management, aiming to
transform franchise ownership into recurring revenue streams
across games, film, consumer products, and additional areas. Embracer business segment
Embracer will retain a mainly decentralized structure and will
be a natural home for proven entrepreneurs and creative
talents. It will be supported by a more efficient structure, with
enhanced governance, tighter cost control, and disciplined
capital allocation. This will be combined with optionality from
structural initiatives, including a continued focus on
profitability and M&A, to drive shareholder value.
Entrepreneurially managed companies with deep heritage
include Aspyr, Beamdog, CrazyLabs, DECA, Demiurge, DPI
Merchandising, Limited Run Games, Milestone, PLAION
Partners, PLAION Pictures, THQ Nordic (including 35 studios
and subsidiaries), Tripwire and Vertigo Games. Intellectual
properties include owned IPs such as Arizona Sunshine ,
Biomutant , Destroy All Humans! , Desperados , Gothic , Killing
Floor , Kingdom of Amalur , MX vs. ATV , REANIMAL , Ride ,
Screamer , Titan Quest , Wreckfest , and many more IPs, as well
as licenses such as Hot Wheels Unleashed and SpongeBob
SquarePants .
Embracer operations will report through four business
areas:
$ PC/Console Games
$ Mobile Games
$ Entertainment & Services
$ Other
EMBRACER GROUP AB (PUBL) | ANNUAL REPORT 2025/26 13Magic The Gathering: Tales of Middle-earth, © & TM Mee under lic. to Wizards of the Coast

G A M E S & E N T E R T A I N M E N T M A R K E T O V E R V I E W
THE GAMES MARKET
CONTINUES TO GROW AND
SET NEW RECORDS
Embracer Group develops and publishes games for PC, console, VR and mobile games. The
Group also offers partner publishing services
E NTERTAINMENT INDUSTRY SALES,
ESTIMATES 2025
VIDEO GAMES MARKET
The video games market includes PC, console, mobile and VR
games. It has grown rapidly during the past three decades and
is the largest entertainment sector with revenues of USD 202
billion in 2025 1
. It has surpassed the TV sector and stands well
above the box office, home entertainment, and music
industries.
In 2025, the games market (content only, not including
hardware) broke several records whilst also demonstrating
several positive trends in the process . It had a record year in
terms of value, breaking the 200bn level for the first time ever,
outperforming the previous high set in the one-off Covid peak
of 2021 1
. Furthermore its annual market growth rate of 9% in
2025 was its highest since 2020 1
. In fact market growth has
been extremely consistent over the last 10 years, only once
seeing a decline, a market correction in 2022 following the
pandemic high.
Looking to the future, the industry market analyst,
Newzoo, expect further market growth with 6% expected in
2026 and a CAGR of 6% between 2024 and 2028 1
.
Opportunities for future growth
1. A high percentage of console users are still to upgrade to
current-gen systems such as PS5, Switch 2 and Xbox
Series X|S. T his is important as current-gen users
generally spend more than old-gen users such as PS4 and
Xbox One.
2. Console generations typically see a strong slate of high-
profile releases in the latter half of their lifecycles.
Developers are more proficient with the platform at this
stage and, f urthermore, major titles start ending support
for older consoles. GTA VI is one such example. This inevitably prompts late adopters to transition to current-
gen systems.
3. The PC sector continues its steady performance with 12%
market growth in 2025 and another 5% expected in 2026 1
.
T he sector has been remarkably reliable in recent years,
consistently seeing market growth above that of the total
market since 2021. It is not affected by the format lifecycle
peaks and troughs that the console market experiences
and it is also less reliant on the timing and performance of
the triple A titles, due its large catalogue and Indie sector.
The PC sectors’ longer term performance will, no doubt,
benefit from the high share of new younger users, playing
popular sandbox titles such as Roblox and Minecraft.
4. Gaming’s popularity overall is holding firm, despite the
increased competition for player time from social media. A
recent study by Newzoo showed that global playtime for
PC & Console gaming remained level YoY in 2025, with
the PC sector, in fact, showing growth. And an additional
positive barometer for gaming is noticeable with the fact
that games live streaming (Twitch etc) is as popular as
ever. The number of hours watched in 2025 was up 6%
YoY and equivalent to 2021’s record setting level 5
.
GLOBAL VIDEO GAMES MARKET,
ESTIMATES BY SEGMENT 1
14 ANNUAL REPORT 2025/26 | EMBRACER GROUP AB (PUBL)USD billion
1
Newzoo | 2
Ampere Analysis | 3
IFPI | 4
Gower Street Analytics | 5
IDG

PERFORMANCE AND TRENDS BY SEGMENT
Console games market
The Console games market, estimated at USD 45 billion in
2025, accounts for 22% of the global video games market. It
saw a modest rise in 2025 of 3% YoY 2
helped by a strong
release slate, growth in subscription services, and the launch
of the Switch 2 console. In fact Switch 2 was the fastest ever
selling console in its launch period and it even outperformed
its predecessor over the same timeframe 1
.
The 2026 market outlook for console games is also
positive with expected growth increasing to 5% YoY 2
driven by
a strong release slate, headed by GTA VI, as well as an
expected rise in new release average pricing.
There are some challenges around the volatility of tariffs in
the US as well as an impact from the global increase in RAM
prices driven by AI. Both factors could potentially have a
negative impact on console retail prices, which would, in turn,
hamper market growth. In the longer term, higher RAM costs
could also cause operational delays to the launch of future
consoles. In fact some analysts believe that Sony is now
considering pushing back the debut of its next PlayStation
console from 2027 to 2028 or even 2029.
PC games market
The PC games market is estimated at USD 44 billion in 2025,
accounting for 22% of the global games market. Growth was
an impressive, 12% YoY 2
, the highest rate of the three games
sectors and the highest growth rate for the PC sector for over
10 years.
Premium game revenues were strong in 2025 based on
good performance by a wide range of games from indie to
AAA titles. A t the same time many long-standing live-service
games showed revenue declines, which was not offset by
other popular live-service games such as Fortnite and
Counter-Strike 2.
2026 should also see strong market growth of 5% YoY 2

driven by the premium sector, platform momentum from Steam
player growth, continued cross-platform releases, higher
average selling prices and the launch of Valve’s new Steam
Machine (chip availability permitting). The Steam Machine is
designed as a living room friendly PC which should expand
play and purchase options for existing Steam users and attract
new players.
Mobile games market
The mobile games market, estimated at USD 113 billion in
2025, is the largest games sector, representing over half
(56%) of the global games market value. It achieved strong
growth of 11% YoY in 2025 and is expected to see continued
growth of 7% in 2026 2
driven by success of its top titles. Other
growth factors include the recent changes to the App Store
and Google Play (which allows developers to profit from
increased monetization and D2C initiatives outside of the
traditional app stores), growth for UGC platforms/games, and
strong sales of iPhone 17 (with its high-value user base that
spends more on games than Android users). Generative AI in the games business
Generative AI is moving from experimentation to selective
adoption across the games industry and most recent studies
indicate that a high percentage of developers are using
generative AI tools. It is mostly being used in production
workflows and areas such as coding, asset generation, and
testing. But its main role appears to be as a productivity tool,
where it can offer positive efficiency benefits, rather than as a
standalone driver of new revenue.
ENTERTAINMENT & SERVICES MARKET
Comics and Books
Sales of books in the US, for the full year of 2025, reached
778 million units which was flat compared to 2024. The value
was an estimated USD 15.28 billion showing 1% YoY growth 3
.
After two years of declining sales, graphic novels in the book
channel rose 9.2% YoY to 25.9 million units in 2025. Manga, a
subcategory of graphic novels, grew 8.1% in volume and 4.6%
in value.
Unit sales of graphic novels in the comics specialty stores
sector grew by 28% YoY while manga in comic stores
increased by 33% YoY (2025) 4
. Sales of comic books (distinct
from graphic novels) rose 30% YoY. While comics are growing
fast, graphical novel sales are still over 2.5 times comic sales.
Total sales of comics and graphic novels in the US and
Canadian comics specialty stores amounted to nearly USD 1
billion whilst seeing 30% YoY growth (2025). This
represented stronger growth t