€207.3 million in sales, coming in above target
- An excellent showing from major franchises with a 53.1% jump in back-catalog sales to €184.3 million.
Ever-growing proportion of revenues from the digital segment
- Revenues from the digital segment came to €100.1 million, representing 48.3% of total sales (versus 27.8% in first-half 2014-15).
Confirmation of targets for full-year 2015-16
- Sharp increase in sales expected in the second half thanks to the launch of five major titles – Assassin’s Creed® Syndicate, Far Cry® Primal, Just Dance® 2016, Rainbow Six® Siege and The Division™ – compared with four last year
- Stable year-on-year sales
- Growing Non-IFRS operating income to at least 200 M€
Paris, November 4, 2015 – Today, Ubisoft released its sales and earnings figures for the six months ended September 30, 2015.
Yves Guillemot, Co-Founder and Chief Executive Officer, stated “The quality of our back-catalog and the growing digitization of our business enabled us to deliver a solid performance in the first half of the year, even though – as planned – we did not release any major titles during the period. The fact that more than 80% of our annual sales are expected to be generated in the second half of the year mechanically weighed on our earnings for the first six months.”
Yves Guillemot continued by saying “The outlook for our industry continues to be very promising, with a return to growth, a healthier competitive environment, and the favorable impact of digital. Against this backdrop, Ubisoft has unique value-creating potential. We are ideally positioned in open-world games, whose market share is increasing. We also own our brands and have the in-house skills and expertise to create them. These two significant characteristics offer our shareholders an unrivaled level of long-term visibility and security. In addition, the release of numerous multi-player games such as For Honor, Ghost Recon Wildlands, Rainbow Six Siege, and The Division represent a major opportunity to develop players’ engagement and grow our highly-profitable digital segment. And lastly, we are pioneers in leveraging our brands in areas beyond video games, as demonstrated by the agreements we have signed with the most powerful international partners such as Columbia, Fox, New Regency, Nickelodeon and Warner.”
Guillemot concluded by saying “We continue developing Ubisoft’s business with the aim of becoming one of the highest-performing groups in the video game industry and a leader in the overall entertainment sector. In doing so, we are offering our shareholders significant valuecreation potential for the coming years.”
Non-IFRS income statement and key financial data
In € millions H1 2015-16 % H1 2014-15* %
Sales 207.3 484.2
Gross margin 154.3 74.4% 378.1 78.1%
R&D expenses (99.5) -48.0% (181.2) -37.4%
Selling expenses (111.1) -53.6% (127.2) -26.3%
General and administrative expenses (51.5) -24.9% (44.9) -9.3%
Total SG&A expenses (162.6) -78.4% (172.1) -35.5%
Non-IFRS operating income/(loss) (107.8) -52.0% 24.9 5.1%
Non-IFRS net income/(loss) (65.7) 17.5
Non-IFRS diluted earnings/(loss) per share (in €) (0.57) 0.15
Cash flows from operating activities** (334.7) (19.5)
R&D investment expenditure*** (270.6) (250.0)
Net cash/(debt) position (155.5) (40.3)
- Restated to reflect the impact of IFRIC 21
** Based on the consolidated cash flow statement for comparison with other industry players (unreviewed)
*** Including royalties but excluding future commitments
Sales
Sales for the first half of 2015-16 came to €207.3 million, down 57.2% (or 60.3% at constant exchange rates) compared with the €484.2 million recorded for first-half 2014-15, which saw the release of Watch Dogs®.
Sales in the second quarter of 2015-16 totaled €110.7 million versus €124.1 million in the corresponding prior-year period, representing a decrease of 10.8% (or 16.8% at constant exchange rates). This second-quarter showing was higher than the target of approximately €90.0 million issued when Ubisoft released its sales figures for the first quarter 2015-16.
Ubisoft’s sales performance in first-half 2015-16 reflects:
The excellent staying power of major franchises (Assassin’s Creed, Far Cry, Just Dance,
The Crew® and Watch Dogs), which drove up back-catalog sales by 53.1% to
€184.3 million.
The ever-growing importance of the digital segment, whose revenues amounted to €100.1 million, representing 48.3% of Ubisoft’s total sales for the period versus 27.8% in first-half 2014-15.
Main income statement items
Gross margin represented 74.4% of sales (€154.3 million) in the first half of 2015-16, versus 78.1% (€378.1 million) for the first six months of 2014-15. This decrease was due to the strong proportion of sales generated by the back-catalog, which has a lower gross margin. However, compared with the first six months of 2012-13 and 2013-14, gross margin grew by 5 points.
Ubisoft reported a non-IFRS operating loss of €107.8 million for first-half 2015-16, versus nonIFRS operating income of €24.9 million in the first six months of 2014-15 (when sales reached €484.2 million thanks to the release of Watch Dogs) and a non-IFRS operating loss of €98.0 million in first-half 2013-14 (when sales came to €293.3 million).
The non-IFRS operating income gap reflects the combined impact of the following factors:
A €223.8 million contraction in gross margin, partially offset by
a €81.7 million decrease in R&D expenses to €99.5 million (48.0% of sales) from €181.2 million (37.4% of sales) in first-half 2014-15,
.
a €9.5 million reduction in SG&A expenses to €162.6 million (78.4% of sales) from €172.1 million (35.5% of sales) in the first six months of 2014-15:
− Variable marketing expenses amounted to €72.4 million (34.9% of sales) compared with €91.9 million (19.0%) in first-half 2014-15.
− Structure costs amounted to €90.2 million (43.5% of sales) versus €80.8 million (16.7%). Half of this year-on-year increase was due to the currency effect.
Ubisoft ended the first half of 2015-16 with a non-IFRS net loss of €65.7 million, representing a non-IFRS diluted loss per share of €0.57, compared with non-IFRS net income of €17.5 million for the first half of 2014-15, representing non-IFRS diluted earnings per share of €0.15, and a non-IFRS net loss of €62.1 million and a non-IFRS diluted loss per share of €0.59 in first-half 2013-14.
The IFRS net loss for the first half of 2015-16 came to €75.2 million, representing an IFRS diluted loss per share of €0.65, compared with IFRS net income of €12.1 million and IFRS diluted earnings per share of €0.11 in first-half 2014-15, and an IFRS net loss of €62.3 million and an IFRS diluted loss per share of €0.60 in the first six months of 2013-14.
Main cash flow statement and balance sheet items
Cash flows from operating activities represented a net outflow of €334.7 million compared with a €19.5 million net outflow in first-half 2014-15 and a €260.7 million net outflow in the first six months of 2013-14. This reflects a negative €208.8 million in cash flow from operations (versus a negative €37.1 million in the same period of 2014-15 and a negative €144.8 million in the first six months of 2013-14) and a €125.9 million increase in working capital requirement (against a €17.5 million decrease in first-half 2014-15 and a €115.9 million increase in the first six months of 2013-14).
At September 30, 2015 Ubisoft had net debt of €155.5 million versus €40.3 million at September 30, 2014 and €141.8 million on September 30, 2013.
Outlook
Sales for the third quarter of 2015-16
- The third quarter of 2015-16 will see the following main releases:
- Assassin’s Creed Syndicate for PC, PLAYSTATION®4 and Xbox One™
- Just Dance 2016 for PLAYSTATION®3, PLAYSTATION®4, Xbox 360™, Xbox One™, Wii™ and Wii U™
- Rayman® Adventures for iOS, Apple TV, Google Play, and Amazon
- The Crew Wild Run (expansion) for PC, PLAYSTATION®4 and Xbox One™
- Tom Clancy’s Rainbow Six® Siege for PC, PLAYSTATION®4 and Xbox One™
Ubisoft expects third-quarter 2015-16 sales to amount to around €600 million, down 26% on the third quarter of 2014-15.
Full-year 2015-16
Ubisoft confirms its previously-announced targets for full-year 2015-16, with sales expected to be stable compared with full-year 2014-15 and non-IFRS operating income projected to amount to at least €200 million.
Recent significant events
Share buyback program: On October 30, 2015, the Company bought back 1 248 214 Ubisoft shares for €20 million, representing 20% of the overall share buyback program.
Announcement of Far Cry Primal: Developed by Ubisoft Montreal, Far Cry Primal will be available on February 23, 2016 on PLAYSTATION®4 and Xbox One™ and in March on PC.
Acquisition of the Ivory Tower studio: Ivory Tower led the development of The Crew, a game with a strong online component.
Project for a Ubisoft theme park in Malaysia in partnership with RSG: Ubisoft is developing a next-generation theme park project in Kuala Lumpur for 2020. The production and financing for the project will be provided by Malaysian theme-park developer, RSG.
Acquisition of Longtail Halifax assets: This studio, which is known for its collaboration on games like Rocksmith®, will focus on the development of mobile titles.
Contact
Investor relations
Jean-Benoît Roquette
SVP Investor Relations
- 33 1 48 18 52 39
Jean-benoit.roquette@ubisoft.com
Non-IFRS financial information
Ubisoft considers that “Non-IFRS operating income/(loss)” and “Non-IFRS net income/(loss)” – which are measures that are not prepared strictly in accordance with IFRS – are relevant indicators of the Group’s operating and financial performance. Management uses them to run the Group’s business as they are the best reflection of its recurring performance and exclude the majority of non-operating and non-recurring items. A reconciliation between the IFRS and non-IFRS measures is provided in the appendices to this press release.
Disclaimer
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 2, 2015 with the French Financial Markets Authority (l’Autorité des Marchés Financiers)).
About Ubisoft
Ubisoft is a leading creator, publisher, and distributor of interactive entertainment and services, with a rich portfolio of world-renowned brands, including Assassin’s Creed, Just Dance, Watch_Dogs, Tom Clancy’s video game series, Rayman and Far Cry. The teams throughout Ubisoft’s worldwide network of studios and business offices are committed to delivering original and memorable gaming experiences across all popular platforms, including consoles, mobile phones, tablets, and PCs. For the 2014-15 fiscal year Ubisoft generated sales of €1,464 million. To learn more, please visit www.ubisoftgroup.com.
© 2015 Ubisoft Entertainment. All rights Reserved. Just Dance, Watch Dogs, Assassin’s Creed, Far Cry, For Honor, The Crew logo, Rayman, the character of Rayman, Rocksmith logo, Tom Clancy’s, Rainbow Six, The Division logo, Ubisoft, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other countries. Far Cry Primal is based on Crytek’s original Far Cry directed by Cevat Yerli