Ubisoft reports first-half 2009-10 results

Ubisoft® reports first-half 2009-10 results 

§ Sales[1]: €166 million § Current operating loss2 of €78 million, in line with guidance   § 2009-10 targets confirmed

Paris, November 30, 2009 – Today, Ubisoft released its results for the six months ended September 30, 2009.  

Key financial data

In € millionsH1 2009-10%H1 2008-09%
Sales166.0 344.5 
Gross profit*69.141.6%199.657.9%
R&D expenses*(48.3)29.1%(62.8)18.2%
Selling expenses(65.4)39.4%(75.9)22.0%
General and administrative expenses(33.1)19.9%(28.0)8.1%
SG&A expenses*(98.5)59.3%(103.9)30.2%
Current operating income/(loss)2(77.7)(46.8)%33.09.6%
Net income/(loss)(52.0)(31.3)%24.07.0%
Diluted earnings/(loss) per share (in €)**(0.54) 0.24 
Diluted earnings/(loss) per share before non-recurring items and stock-based compensation (in €)**(0.48) 0.27 
Cash flows from R&D investments ***169.7 157.3 
Net cash/(debt)(67.3) 72.3 

* Supply chain costs that were previously included in SG&A expenses are now classified in gross profit. Costs related to Hybride that were previously included in SG&A expenses are now classified in R&D expenses.

** After the November 14, 2008 two-for-one stock split

*** Including royalties but excluding future commitments and stock-based compensation.

Yves Guillemot, Chief Executive Officer, stated “First week sales of Assassin’s Creed II, up 32%, with positive initial indications for the second week, combined with an overwhelmingly warm reception from gamers, validates our strategy of developing bigger franchises. Based on this initial data, Assassin’s Creed 2 looks well positioned to outstrip targets while our Wii games have got off to a more contrasted start in a less predictable market. Finally, sales of James Cameron’s Avatar : The Game should benefit from the launch of the movie which is expected to be the biggest blockbuster of this holiday season.”

Main income statement items

Sales for the first six months of 2009-10 came to €166.0 million. 

Due to the sharp drop in sales and the significant sales promotions on back-catalog games, gross profit was down sharply on the first half of 2008-09, both in absolute value terms, at €69.1 million versus €199.6 million, and as a percentage of sales, representing 41.6% compared to 57.9%. Gross profit on games launched during the first six months of 2009-10 was higher than in the equivalent prior-year period whereas back catalog titles – which normally generate a gross profit – turned in a negative gross margin. 

Ubisoft reported a €77.7 million current operating loss before stock-based compensation, in line with the previously announced guidance of €80.0 million, compared with current operating income of €33.0 million in the first half of 2008-09. 

This current operating loss figure reflects the following combined factors: 

  • A €130.5 million decrease in gross profit.
  • A €14.5 million reduction in R&D expenses due to a smaller number of games launches. Total R&D expenses came to €48.3 million, representing 29.1% of sales, versus €62.8 million (18.2% of sales) in the same period of 2008-09. 
  • A €5.4 million contraction in SG&A expenses, which stood at €98.5 million (59.3% of sales) against €103.9 million (30.2% of sales) in first-half 2008-09.

− Variable marketing expenses decreased in absolute value terms to €41.9 million (25.2% of sales) from €51.9 million (15.1%).

− Structure costs rose to €56.6 million (34.1% of sales) from €52.0 million (15.1%), reflecting higher IT expenses and an increase in the number of sales and administrative staff. 

Ubisoft recorded an operating loss of €83.0 million for the first six months of 2009-10 compared with operating income of €24.7 million one year prior. The first-half 2009-10 figure includes stock-based compensation amounting to €5.3 million (versus €8.1 million in the corresponding prior-year prior).

Net financial income came to €6.6 million (versus €11.9 million in first-half 2008-09), breaking down as follows:

  • €0.0 million in financial income compared with €1.6 million in first-half 2008-09. 
  • €6.6 million in foreign exchange gains against €1.7 million.

As a reminder, in first-half 2008-09, Ubisoft recorded an €8.5 million gain resulting from Calyon’s sale of its remaining Ubisoft shares. 

Ubisoft ended the period with a €52.0 million net loss, representing a diluted loss per share[2] of €0.54, compared with net income of €24.0 million (representing diluted earnings per share3 of €0.24) in the first six months of 2008-09.

Excluding non-recurring items (i.e. the Equity Swap) and before stock-based compensation, the net loss figure would have amounted to €46.5 million, representing a diluted loss per share3 of €0.48, versus net income of €26.3 million and earnings per share3 of €0.27 for first-half 2008-09.

Main cash flow statement and balance sheet items

Cash flows from operating activities came to a negative €212.9 million (versus a negative €68.9 million in first-half 2008-09), reflecting cash flow from operations* amounting to a negative €139.4 million (compared with a negative €52.6 million) and a €73.5 million increase in working capital requirement (against a €16.3 million increase in the first six months of 2008-09). As a reminder, in first-half 2008-09, the Group’s working capital requirement was improved by the €59.3 million positive impact of the sale of Ubisoft shares held in connection with the Equity Swap.  

At September 30, 2009, net debt stood at €67.3 million (compared with a net cash position of €72.2 million one year earlier). The change from the net cash position of €154.2 million at March 31, 2009 primarily reflects: 

  • The above-mentioned €212.9 million net cash outflow from operating activities. 
  • €9.5 million in purchases of tangible and intangible assets.
  • Proceeds from the issue of capital amounting to €4.2 million following employee rights issues and the exercise of stock options. 
  • A negative €2.9 million effect from exchange rate fluctuations. 

* Cash flows from operations include future commitments on external development contracts and licenses which have no impact on cash flow generation and which decreased by €14.6 million. In the “Cash flow statement for comparison with other industry players”, “Costs of internal development and license development”, which amounted to €148.4 million, were reduced by this difference of €14.6 million. Before this adjustment, “Costs of internal development and license development” amounted to €163.0 million.

2009-10 targets confirmed

Ubisoft confirms its previously announced targets for 2009-10, namely:

  • Third-quarter sales of around €540 million. 
  • Full-year sales of approximately €1,040 million and current operating income before stock-based compensation representing at least 7% of sales. 


Investor relations                                                               

Jean-Benoît Roquette

Head of Investor Relations

+ 33 1 48 18 52 39



This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such forward-looking data are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly compared with the actual results that will be published. The estimated financial data have been presented to the Board of Directors and have not been audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft Registration

Document filed on July 1, 2009 with the French Financial Markets Authority (l’Autorité des marchés financiers)).

About Ubisoft

Ubisoft is a leading producer, publisher and distributor of interactive entertainment products worldwide and has grown considerably through a strong and diversified line-up of products and partnerships. Ubisoft has offices in 28 countries and sales in 55 countries around the globe. It is committed to delivering high-quality, cutting-edge video game titles to consumers. Ubisoft generated sales of €1 058 million for the 2008-09 fiscal year. To learn more, please visit www.ubisoftgroup.com

[1] Sales figures for first-half 2009-10 were released on November 4, 2009.  2 Before stock-based compensation.

[2] After the November 14, 2008 two-for-one stock split

Leave a Reply

%d bloggers like this: