(AOF) – In the first half of 2022-2023, Ubisoft’s net bookings were down 2.6% to 699.4 million compared to the first half of 2021-2022. The company’s operating profit shows a loss of 215.3 million euros (139 million euros in non-IFRS). Ubisoft has confirmed its 2022-23 objectives, which are based on significant growth in net bookings and non-IFRS operating income of 400 million euros. The company has also implemented its cost optimization plan.
Ubisoft underlines in its publication the acceleration of revenue recognition from the mobile licensing partnership and the fact that the number of unique active players and Monthly Active Users was stable in the first half.
Frédérick Duguet, Chief Financial Officer, said “The first half results notably reflect the accelerated amortization of R&D, including for the canceled projects already announced, as we focus on our biggest opportunities. (…) In Besides this launch and other game releases and additional content, an important contributor this semester will be our mobile licensing partnership.”
Yves Guillemot, co-founder and CEO, added: “As part of our objective to reach 2 billion euros in combined net bookings per year for our three biggest brands over the next five years, we have unveiled our ambitious roadmap for the Assassin’s Creed brand, which received a particularly enthusiastic response from fans (…) In September, the objective being to grow our business collaboration with Tencent and bring stability at the Company, we have expanded the gig. This is essential to realize our full value creation potential with significant growth in net bookings and operating income over the next few years.”
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Key points
– World’s third independent video game publisher created in 1986, owning the flagship franchises Assassin’s Creed, Just Dance, Watch Dogs, Far Cry and the Tom Clancy series (The Division, Splinter Cell, Ghost Recon, Rainbow 6, etc.);
– Turnover of €2.1 billion split between North America for 50%, Europe for 37% and Asia-Pacific for 11%;
– 5 strengths for the business model: ownership of all the brands, integration of technological innovations in the R&D policy, control of internal production at 96%, increase in the power of recurring revenues (64% contributed by the back catalogue”) and profitability via digitization;
– Capital held by 2 reference shareholders – 15.9% of the capital and 23.3% of the voting rights by the founding brothers and the Guillemot family and 4% by the employees, Yves Guillemot being Chairman and CEO of the Board of Directors 11 members;
– Solid balance sheet, with €1.8 billion in equity, €283 million in net debt.
Challenges
– Strategic priorities:
– build major franchises like Assassin’s Creed, Far Cry and Tom Clancy’s Rainbow Six (more than 300 M€ of net booking each),
– increase the recurrence of the activity (back-catalog representing 50% of net-booking at the end of March 2022),
– transform the organization: allocation of capital, new framework for the management of brands, productions and technologies;
– Innovation strategy led by the Knowledge Management and Technology Group departments on the one hand, the Innovation Lab on the other hand: opening up to animation and cinema via Motion Pictures (Raving Rabbids series) / development of streaming and cloud gaming / support for start-ups (6 to 10 incubated each year);
– Environmental strategy driven by the BEGES report:
– use of renewable energies for French and Canadian data centers,
– sequestration of GHG emissions and reduction of emissions per employee of 8.8% in March 2024 vs 2019;
– Spin-offs from the integration of Ketchapp, some games of which will be integrated into the Weixin laptop -980 million users- from Chinese Tencent and development of a new Starwars game with Lucasfilm Game;
– Visibility of the activity with an order book equal to the annual directory figure;
– Production power via the “Lead associate” organization of 45 creation studios, and cutting-edge technologies (Anvil and Snowdrop for engines, Ubisoft connect and I3D.net for distribution, Web3, Voxel and cloud computing with Scalar, etc.) .
Challenges
– Strong seasonal nature of the activity: sales concentrated between September and January, hence the closure of the accounts at the end of March;
– Ambitions in the production of films and series with the new Film&Television division;
– Ambitious ongoing exercise with a mix of Free-to-Play releases (with the new episode of The Division on mobile) and premium games – Frontiers of Pandora from Avatar, the new episode of Mario + Rabbids, the new Skull & Bones license;
– 2022-2023 objective of significantly growing net booking and operating profit almost doubled to around €400m after net booking of €280m in the 1st quarter.
Series of acquisitions
At the beginning of 2022, Microsoft acquired the American publisher Activision Blizzard (franchises “Call of Duty”, “World of Warcraft” and “Candy Crush”) for 69 billion dollars. This is the largest M&A transaction ever in tech. Following this operation, Microsoft will become the third largest player in the industry in terms of turnover behind Chinese Tencent and Japanese Sony. The latter recently acquired Bungie, creator of the “Halo” franchise, for $3.6 billion. As for the American publisher Take-Two (behind the flagship titles “Grand Theft Auto” and “Red Dead Redemption”), it has taken over Zynga, one of the biggest players in mobile video games with franchises such as “Farmville”, “Empires & Puzzles” and “Words With Friends”. The operation was made on the basis of a valuation of 12.7 billion dollars.