Yves Guillemot Sees Light at the End of the Tunnel

Although Ubisoft posted a large operating loss in the first half of the fiscal year, CEO Yves Guillemot believes the company is well positioned with its brand portfolio, live services and back catalogue. The French publisher also believes that its cost-cutting programme is on the right track.

In the first half of the current fiscal year, from April to September 2024, Ubisoft recorded net bookings of €642.3 million, down almost 20% year-on-year, but in line with revised guidance. 82% of net bookings were digital. Nearly 49% of net bookings were from purchases by returning customers, known as PRI. 76.9% of net bookings were from the back catalogue. The IFRS operating result shows a loss of €271.8 million.

While Star Wars Outlaws, released at the end of August, fell short of expectations, the brand portfolio, live services and back catalogue (up 12% year-on-year) performed strongly. "Strong activity metrics across Console & PC with Playtime and Session Days up 9% and 6% year-on-year, respectively, driven by Rainbow Six Siege playtime and session days both up double-digit year-on-year," the publisher said. The Crew franchise attracted over eight million active players in Q2. Riders Republic benefited from its inclusion in the Xbox Game Pass, generating a strong increase in session days and profitability, and has now surpassed ten million players.

Monthly active users reached 37 million (+3%) and nearly three million new accounts were created in six months. Ubisoft has attracted 138 million unique players across console and PC in the last twelve months (+4%). The Assassin's Creed franchise and Rainbow Six Siege each had more than 30 million unique active users. "Over the past decade, the Assassin's Creed franchise has generated around €4bn, Rainbow Six Siege has generated over €3.5bn and Far Cry has topped around €2bn. Including The Division, Ghost Recon and Just Dance, Ubisoft has 6 brands that have surpassed €1bn in consumer spending."

Yves Guillemot, Co-Founder and Chief Executive Officer, said: "Even if our first-half performance fell short of our initial expectations, the double-digit growth of our back catalog excluding partnerships reaffirms the quality, uniqueness and value embedded in our brand portfolio and the strength of our Live services. This highlights our potential to deliver more recurring revenue, sustainable growth, and long-term value for our stakeholders."

The CEO also said that the cost-cutting programme was progressing as planned. "Over the past semester, we also further advanced our cost reduction plan thanks to strict control on recruitments, targeted restructurings and lower external spend. (...) Over the first semester, we have already achieved more than €200m savings versus two years ago on an annualized basis." The total number of employees worldwide was 18,666 at the end of September 2024, compared to 19,410 at the end of September 2023. This represents a reduction of more than 2,000 in 24 months. The H1 FY2024-25 fixed cost base was approximately €770 million, down €46 million (6%) year-on-year. This represents a reduction of €106 million compared to H1 FY23.

"The Executive Committee review, aimed at improving our execution focused on a player centric and gameplay-first approach, is progressing. This notably includes actions aimed at tackling the dynamics behind the polarized comments around Ubisoft so as to protect the Group's reputation and maximize our game's sales potential," Yves Guillemot said. Frédérick Duguet, Chief Financial Officer, added: "Our Q2 net bookings are in line with our revised guidance. We are reaffirming our full-year objectives, with net bookings expected to reach approximately €1.95bn as well as around break-even non-IFRS EBIT and free cash flow. (...). In addition, we continue exploring the sale of non-core assets as part of our broader strategy to focus on our two core verticals, Open World Adventures and GAAS-native experiences, as well as enhance financial flexibility."

The Star Wars Outlaws section promises "A New Hope" for the game: "The game achieved solid reviews and user scores across First Party and Epic Stores reflecting one of the most immersive expressions of the Star Wars universe ever created. Teams are fully mobilized on implementing changes to enhance game mechanics and overall polish. Since launch, the team has delivered three Title Updates focused on quality of-life features and bug fixing, notably improvements in stealth mechanics, NPC AI and save features. This has produced initial tangible results, with a meaningful community sentiment improvement. The most significant update yet will be released on November 21 with the fourth Title Update that will include further improvements to combat and stealth, and will launch alongside the release on Steam as well as the first story pack, Wild Card, with fan favorite Lando Calrissian from the original trilogy. This should engage a large audience during the holiday season and position the game as a strong long-term performer."

Last but not least, Guillemot emphasises that following the completion of the acquisition of Activision Blizzard by Microsoft, Ubisoft acquired the perpetual streaming rights for Call of Duty and all other existing Activision Blizzard console and PC titles, as well as those released over the next 15 years. "The cloud gaming market has a strong potential, and Ubisoft can play a leading role in its realization. This deal will enable us to deliver even more experiences to more players across the world than ever before, one of the cornerstones of our strategy."

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