Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ubisoft Entertainment (UBSFF, Financial) achieved significant milestones with its major franchises, including Assassin's Creed, Rainbow Six Siege, and Far Cry, each generating billions in consumer spending over the past decade.
- The company reported a 12% year-over-year increase in back catalog sales, excluding partnerships, highlighting the enduring value of its brand portfolio.
- Ubisoft Entertainment (UBSFF) has made substantial progress in its cost reduction program, achieving over EUR200 million in savings compared to two years ago.
- The company has seen a 4% year-over-year increase in unique active users, with strong engagement metrics across its console and PC platforms.
- Ubisoft Entertainment (UBSFF) is focusing on improving game quality and player experience, as seen with the updates and enhancements for Star Wars Outlaws and the upcoming Assassin's Creed Shadows.
Negative Points
- H1 net bookings were down 22% year-on-year, reflecting a high comparable base from the previous year and underperformance in new releases like Star Wars Outlaws.
- The company experienced a decline in gross margin due to the absence of high-margin partnerships that were present in the previous year.
- Ubisoft Entertainment (UBSFF) reported a negative free cash flow of EUR126 million for the first half of the fiscal year.
- The company is facing challenges in the first-person shooter market, with games like XDefiant not meeting expectations.
- There is ongoing pressure to improve execution and address polarized comments around Ubisoft Entertainment (UBSFF), which could impact its reputation and sales potential.
Q & A Highlights
Q: Can you provide more details on the Q4 guidance and the expected contribution from licensing partnership deals?
A: We expect meaningful partnerships in Q4, in line with our initial guidance, but to a lower extent than last year. We have no further comments on the specifics at this stage. Regarding streaming games from Activision, we started monetizing these rights last year and will continue to leverage them. The Executive Committee review is progressing, focusing on execution and player-centric strategies to drive results.
Q: What is the status of XDefiant, and is there a broader reappraisal of Ubisoft's strategy?
A: XDefiant was behind expectations, and the team is working on improving hit registration and net code. Our game and service strategy remains a core pillar, with plans to expand Rainbow Six Siege and introduce Rainbow Six Mobile. We are reviewing strategic options to improve execution and deliver sustainable cash flows, but no further comments on strategy changes at this time.
Q: Is there a risk of Assassin's Creed Shadows being delayed from its February release date?
A: Assassin's Creed Shadows was feature complete, and we wanted to ensure an impeccable experience on day one. We have good visibility for the game to be delivered on time with great quality.
Q: Can you discuss the potential sale of non-core businesses and visibility on partnership deals?
A: We can't comment specifically on asset sales, but we are focused on selling assets not critical to our strategy. We have regular reviews and good visibility on partnership pipelines, which we can activate as needed.
Q: How is Star Wars Outlaws performing, and what are the plans for AC Shadows?
A: Star Wars Outlaws has seen positive community sentiment improvement with recent updates. A major update is planned for November 21, alongside a Steam launch and story pack. For AC Shadows, we are ensuring an impeccable player experience on day one, with an additional EUR20 million allocated for development and polishing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
