H1 FY17 EARNINGS November 3, 2016
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 22, 2016 with
the French Financial Markets Authority (l’Autorité des marchés financiers)).
D I S C L A I M E R
Yves Guillemot, President and Chief Executive Officer
Alain Martinez, Chief Financial Officer
Jean-Benoît Roquette, SVP Investor Relations
3
KEY TAKEAWAYS
BETTER PROFITABILITY PROFILE
BUILDING AN INCREASINGLY RECURRING DEPENDABLE BUSINESS
Expanding & strengthening portfolio of owned franchises
Growing digital revenues that boost profitability
STRONG ENGAGEMENT & PLAYER RECURRING INVESTMENT METRICS
AGENDA
4
A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S
A N N U A L G E N E R A L M E E T I N G
H 1 F Y 1 7 P E R F O R M A N C E
P E R S P E C T I V E S O N Q 3 A N D F Y 1 7
F Y 1 9
5
INTERNALLY CREATED OWNED BRANDS
STRONG VISIBILITY ON THE FUTURE OF OUR FRANCHISES
*co-created or externally created
*
*
*
*
6
MULTI-STUDIOS ORGANIZATION
6
UNRIVALLED CAPACITY TO RELEASE OPEN-WORLD GAMES ON A REGULAR BASIS
*FY15 for ATVI & Warner
LIVE EXPERIENCES
ENGAGING THE PLAYER OVER THE LONGTERM
7 7
8
LIVE EXPERIENCES
>10 MILLION UNIQUE REGISTERED
USERS EACH
UBISOFT TOTAL MAUs UP 44% YOY
9
LIVE EXPERIENCES
PRO LEAGUE SEASON 3 RAINBOW SIX SIEGE:
UNIQUE VIEWERS UP 130% VS PRIOR SEASON
10
DISCIPLINED & WELL TARGETED ACQUISITIONS
ADDING TO THE GROUP BRICKS OF
RECURRING REVENUES EXPERTISE
11
H1 REFLECTS THIS STRATEGY’S BENEFITS
100%
80%
60%
40%
20%
0%
UPDATES DRIVE ENGAGEMENT HIGHER
12
H1 REFLECTS THIS STRATEGY’S BENEFITS
TOM CLANCY’S RAINBOW SIX SIEGE PRAISED BY ITS FANS AND BY THE PRESS
13
H1 REFLECTS THIS STRATEGY’S BENEFITS
ENGAGEMENT UP 51% WITH 1.4 UPDATE
AGENDA
14
A N N U A L G E N E R A L M E E T I N G
A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S
H 1 F Y 1 7 P E R F O R M A N C E
P E R S P E C T I V E S O N Q 3 A N D F Y 1 7
F Y 1 9
H 1 F Y 1 7 P E R F O R M A N C E
15
ANNUAL GENERAL MEETING - SEPTEMBER 29, 2016
MASSIVE SUPPORT FROM OUR SHAREHOLDERS
AGENDA
16
H 1 F Y 1 7 P E R F O R M A N C E
A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S
A N N U A L G E N E R A L M E E T I N G
P E R S P E C T I V E S O N Q 3 A N D F Y 1 7
F Y 1 9
H1 FY17 PERFORMANCE
17
H1 FY17
H 1 S A L E S :
281 M€, up 36% yoy
Q2 Sales : 142 M€, beating target of 100 M€
D I G I TA L M O M E N T U M C O N T I N U E S :
202 M€, + 102%, 72% of total revenues
Recurring Player Investment up 132%, at 95 M€
V E R Y S O L I D B A C K - C ATA L O G :
256 M€, + 46%
A MORE RECURRING PROFILE
H1 FY17 PERFORMANCE
18
H1 FY17
74 M€ increase in Topline :
4 6 M € N O N - I F R S O P E R A T I N G I N C O M E I N C R E A S E
6 points gross margin improvement
Solid costs control
N E T C A S H : 38 M€ vs (156) M€ in H1 FY16
A MORE PROFITABLE PROFILE
Gross margin up 72 M€, up 6 percentage point to 80%
Positive Digital impact
R&D up 24 M€ : releases of The Division & Far Cry Primal end of FY16 and development of Live operations
SG&A slightly up 2 M€ despite 74 M€ topline growth : good costs control
variable marketing expenses stable at 72 M€ (72 M€ in H1 FY16)
fixed structure costs slightly up to 93 M€ (90 M€ in H1 FY16)
H1 FY17: NON-IFRS P&L
19
€ million, except for per share data H1 2016-17 H1 2015-16
% %
Sales 281,4 207,3
Gross profit 226,4 80,5 154,3 74,4
Non-IFRS R&D expenses (123,8) (44,0) (99,5) (48,0)
Non-IFRS Selling expenses (113,4) (40,3) (111,1) (53,6)
Non-IFRS G & A expenses (51,0) (18,1) (51,5) (24,9)
Non-IFRS SG & A expenses (164,4) (58,4) (162,6) (78,4)
Non IFRS Current operating income (61,8) (22,0) (107,8) (52,0)
Net Financial Income (1,6) (5,9)
Income Tax 27,4 48,1
Non IFRS Net Income (35,9) (65,6)
Non IFRS Diluted earnings per share (0,30) (0,57)
Nbr of shares fully diluted 118 724 115 898
15 M€ total depreciation increase : releases of The Division & Far Cry Primal end of FY16
13 M€ increase in Non Capitalized R&D & others : development of Live operations
7 M€ Capitalized R&D increase
20
H1 FY17: R&D
€ million H1 2016-17 H1 2015-16
Depreciation of in-house software-related production 72,1 55,3
Depreciation of external software-related production and licenses 7,2 8,9
Royalties 2,8 6,4
Non Capitalized R&D & others 41,7 29,0
Total R&D depreciation and royalties 123,8 99,5
Capitalized in-house software-related production 231,0 222,2
Capitalized external software-related production and licenses 11,2 13,1
(excluding future commitments)
Royalties 2,8 6,4
Non Capitalized R&D & others 41,7 29,0
Total development investment 286,7 270,6
21
H1 FY17: IFRS / NON-IFRS RECONCILIATION
Stock-based compensation : increase mostly related to recent employee plan
Non-current operating expenses : 3.5 M€ related to brand depreciation
Net Financial income : 2.3 M€ related to earn-out payments
€ million,
except for per share data
H1 2016-17 H1 2015-16
IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS
Sales 281,4 281,4 207,3 207,3
Total Operating expenses (371,7) 28,5 (343,2) (324,7) 9,5 (315,2)
Stock-based compensation (24,9) 24,9 0,0 (6,0) 6,0 0,0
Non-current operating income
and expenses (3,6) 3,6 0,0 (3,5) 3,5 0,0
Operating Income (90,3) 28,5 (61,8) (117,4) 9,5 (107,8)
Net Financial income (3,9) 2,3 (1,6) (5,9) 0,0 (5,9)
Income tax 28,1 ( 0,7) 27,4 48,1 0,0 48,1
Net Income (66,1) 30,2 (35,9) (75,2) 9,5 (65,6)
Diluted earnings per share (0,56) 0,25 (0,30) (0,65) 0,08 (0,57)
22
29 M€ increase in CF from Operation
315 M€ improvement in WCR : Releases of FarCry Primal and The Division in FY16 Q4
54 M€ net proceeds from employee shares plan
40 M€ OCEANE : the IFRS equity element that will be expensed over 5 years as financial charge
H1 FY17: CASH FLOWS & CLOSING CASH POSITION
€ million H1 2016-17 H1 2015-16
Opening cash position (41,7) 211,3
Non-IFRS Cash flows from operations (180,2) (208,8)
Non-IFRS Change in WCR 189,4 (125,9)
Cash flows from Non-IFRS operating activities 9,2 (334,7)
Net investment in capital assets (27,0) ( 24,2)
Net free cash flow (17,7) (358,9)
Net acquisitions/disposals 0,0 (0,0)
Proceeds from issue of capital and other financial flows 5,2 16,8
Net acquisitions/disposals of own shares 54,1 (18,5)
Equity component 39,6 -
Effect of exchange rate fluctuations (1,8) (6,1)
Decrease/(increase) in net debt 79,4 (366,8)
Closing cash position 37,7 (155,5)
AGENDA
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P E R S P E C T I V E S O N Q 3 A N D F Y 1 7
A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S
A N N U A L G E N E R A L M E E T I N G
H 1 F Y 1 7 P E R F O R M A N C E
F Y 1 9
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S A L E S :
between 1 610 and 1 670 M€ versus 1700 M€ prev.
Digital: ~ 40% of total revenues
Back Catalog: ~ 35%
N O N - I F R S O P E R AT I N G I N C O M E :
between 230 and 250 M€ versus 230M€ prev.
N O N - I F R S O P E R AT I N G M A R G I N :
between 14,3% and 15% versus 13,5% prev.
FY17
FY17 TARGETS ADJUSTED: IMPROVED PROFITABILTY
S A L E S : 560 M€, stable yoy
Q3
EXPANSIONS
25
H2 FY17: LINE-UP
•
26
H2 FY17: LINE-UP
Q3
Q4
WATCH DOGS 2
STEEP
JUST DANCE 2017
+ Assassin’s Creed Movie
+ Expansions The Division Survival Rainbow 6 Siege Operation Red Crow The Crew Calling all Units
FOR HONOR
SOUTH PARK THE FRACTURED BUT WHOLE
GHOST RECON WILDLANDS
+ Expansion The Division Last Stand
ASSASSIN’S CREED SYNDICATE
RAINBOW SIX SIEGE
JUST DANCE 2016
+ Expansion The Crew Wild Run
FAR CRY PRIMAL
THE DIVISION
FY16 FY17
AGENDA
27
A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S
A N N U A L G E N E R A L M E E T I N G
H 1 F Y 1 7 P E R F O R M A N C E
F Y 1 9
P E R S P E C T I V E S O N Q 3 A N D F Y 1 7
28
R E V E N U E S : 2.2BN€
FY19 N O N - I F R S O P E R AT I N G I N C O M E : 20%
F R E E C A S H F L O W : ~300M€
3 YEARS PLAN: ON TRACK
APPENDICES
30
20 YEARS OF STRONG VALUE CREATION
Source: FactSet as of May 9, 2016
IPO as of July 1, 1996
TOTAL SHAREHOLDER RETURN SINCE IPO (rebased to 100)
Since IPO 5-year 3-year 2-year 1-year
UBISOFT +1,527% +610% +227% +115% +14%
NASDAQ* +333% * +106% +37% +15% +4%
CAC40 Net Return +246% +58% +13% +12% (5%)
Euro Stoxx Media Supersector Return +87% +86% +19% +12% (9%)
Source: FactSet as of October 31, 2016
IPO as of July 1, 1996
* Excludes dividends
31
AS THE LEADING 3RD PARTY
PUBLISHER ON NINTENDO HOME
CONSOLES FOR THE PAST 10 YEARS,
UBISOFT WILL BENEFIT
DISPROPORTIONATELY
NINTENDO SWITCH
TRUE INNOVATION
A MORE DEPENDABLE AND PROFITABLE INDUSTRY
32
Xbox 360/PS3 transition
Xbox One/PS4
transition
RISING BARRIERS TO ENTRY
DIGITALIZATION IMPACT
X
Solo Centric titles Multi Centric titles
AVERAGE DAUS (AFTER 3 MONTHS)
33
Solo Centric titles Multi Centric titles
AVERAGE PRI* (AFTER 3 MONTHS)
* Player recurring investment
MULTIPLAYER DRIVES ENGAGEMENT WHICH DRIVES MTX
[at scale]
FY19: KEY ASSUMPTIONS – DIGITAL
(REVENUE BREAKDOWN PER FISCAL YEAR)
100
11
100
44
Year 1 Year 2
Solo Centric title
Live title*
LIVE SERVICES BRING MORE PERSISTENT REVENUES
* The Crew
34
FY19: KEY ASSUMPTIONS – DIGITAL