H1 FY19 EARNINGSOctober 30, 2018
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 and approved by the Board of Directors on 10/30/18 and have not been
audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft
Registration Document filed on June 6th, 2018 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
DISCLAIMER
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AGENDA
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F Y 1 9 TA R G E T S
H 1 F Y 1 9 P E R F O R M A N C E
I N T R O D U C TO RY R E M A R K S
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OVERPERFORMING IN A THRIVING & COMPETITIVE INDUSTRY
CONFIRMING UBISOFT’S MANY ONGOING GROWTH OPPORTUNITIES
VERY SOLID TOPLINE PERFORMANCE
DIGITAL TRANSFORMATION
STRONG RECURRING REVENUES & PROFITABILITY
CONFIDENCE FOR THE REMAINDER OF THE YEAR AND THE LONG TERM
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ASSASSIN’S CREED ODYSSEY’S AMAZING RECEPTION
No one’s made an open-world RPG with this much depthand brilliance since The Witcher 3
Ubisoft’s newest Assassin’s Creed is the stuff of legends
For me, it’s easily the best AC game to date, and I can’twait to keep playing it long after the credits roll
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PROMISING FIRST STEPS IN CLOUD GAMING
Google’s project stream has been impressive so far[…] Playing a game as beautiful as Assassin’s CreedOdyssey without a console or high-end PC is like glipsing into the platform-agnostic future that many of
us have been dreaming about for a long time
A few years ago if you were to tell me that the future of gaming will be tied to streaming games from the cloud, I would have called you crazy. The technology that we saw back then just wasn’t there. Now,
seeing Assassin’s Creed Odyssey running on the Switch via the cloud here in Japan, I’m a believer
AGENDA
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F Y 1 9 TA R G E T S
I N T R O D U C TO RY R E M A R K S
H 1 F Y 1 9 P E R F O R M A N C E
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H1 FY19 PERFORMANCE
NET BOOKINGS
519 M€, + 52% yoy
565 M€, + 49% yoy
H1
746 M€, + 60% yoy(Q2 Net Bookings : 365 M €, target of 345 M€)
BACK-CATALOG
DIGITAL REVENUES
PLAYER RECURRING INVESTMENT
262 M€, + 49% yoy
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H1 FY19 DRIVEN BY STRONG BACK CATALOG & LIVE SERVICES
40 million players & strong PRI yoy growth
Far Cry 5 continues to outperform Far Cry 4 six month after its record launch,
incl. higher playtime
Esports Six Major Paris : 8 million unique views
& strong momentum in Asia
October MAUs up yoy
Release of “Special Operation 2”, huge update with a thematic cross-over
with R6
15 million players
Release of “Marching Fire” most ambitious update ever with 4v4 castle siege mode
Stronger PRI performance than The Crew 1
2nd major free update with PVP expected in December
Mobile revenues up 60%
PC up 4 points in total net bookings share
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H1 FY19 PERFORMANCE – DIGITAL
Digital Distribution
*Excluding mobile* *Includes ingame items, DLCs/season pass, subscription & advertising
H1 FY16 H1 FY17 H1 FY18 H1 FY19
100 M€
41
202 M€
107
95
343 M€
DIGITAL SPLIT
168
175
+ 52% yoy
Player RecurringInvestment**
+ 50% yoy
+ 52% yoy
262
256
519 M€
59
MAUs up 29%*
Gross margin up 245 M€ & 1.4 point with no digital revenue from AC Odyssey
R&D up 86 M€ & down 3.5 points
SG&A up 52 M€ & down 9.1 points : topline growth leverage + marketing efficiency from digital and back-
catalog impact + early ship-in of AC Odyssey
variable marketing expenses : 128 M€ or 17.1% of net bookings (87.9 M€ & 18.9% in H1 FY18)
fixed structure costs : 125 M€ or 16.8% of net bookings (113 M€ & 24.1% in H1 FY18)
Net Financial income : 70 M€ incl. 76 M€ related to the 200 m€ total return swap contract (March 2018)
H1 FY19 : NON-IFRS P&L
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€ million, except for per share data H12018-19
H12017-18
% %
Sales 767,0 466,2
Deferred services (21,0) 0
Net bookings 746,1 466,2
Gross profit based on net bookings 635,0 85,1 390,1 83,7
Non-IFRS R&D expenses (272,0) (36,5) ( 186,5) ( 40,0)
Non-IFRS Selling expenses (182,8) (24,5) ( 138,6) ( 29,7)
Non-IFRS G & A expenses (69,9) (9,4) ( 61,9) ( 13,3)
Non-IFRS SG & A expenses (252,8) (33,9) ( 200,5) ( 43,0)
Non IFRS operating income 110,2 14,8 3,1 0,7
Net Financial Income 69,9 ( 7,3)
Share in profit of associates 0,0 ( 0,1)
Income Tax ( 21,1) 23,7
Non IFRS Net Income 159,0 19,4
Non IFRS Diluted earnings per share 1,32 0,16
Non IFRS nbr of shares fully diluted 120 523 122 554
86 M€ increase in total R&D P&L : depreciation on heavier new releases + stronger post launch plans
63 M€ increase in R&D Cash: support long term growth opportunities
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H1 FY19: R&D
€ millionH1
2018-19
H1
2017-18
Depreciation of in-house software-related production 168,8 107,4
Depreciation of external software-related production and licenses 5,1 3,2
Royalties 6,5 4,9
Non Capitalized R&D & others* 91,7 70,9
Total R&D P&L 272,0 186,5
Capitalized in-house software-related production 281,7 238,9
Capitalized external software-related production and licenses5,8 8,0
(excluding future commitments)
Royalties 6,5 4,9
Non Capitalized R&D & others* 91,7 70,9
Total R&D Cash 385,6 322,8
*mostly Post-Launch content
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H1 FY19 : IFRS / NON-IFRS RECONCILIATION
Stock-based compensation : 36 M€ (incl. employees share plan)
Net Financial income : 4 M€ non cash related to the 400 M€ convertible loan
Tax rate : 12%
€ million, except for per share data
H1
2018-19
H1
2017-18
IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS
Sales 767,0 767,0 466,2 466,2
Deferred services (21,0) (21,0) na na
Net bookings 746,1 466,2 466,2
Total Operating expenses ( 672,7) 36,9 ( 635,8) ( 500,6) 37,5 ( 463,1)
Stock-based compensation ( 35,5) 35,5 0,0 ( 27,8) 27,8 0,0
Non-current operating income
and expenses( 1,4) 1,4 0,0 ( 9,7) 9,7 0,0
Operating Income 94,3 15,9 110,2 ( 34,4) 37,5 3,1
Net Financial income 66,0 3,9 69,9 ( 11,4) 4,1 ( 7,3)
Share in profit of associates 0,0 0,0 ( 0,1) ( 0,1)
Income tax ( 19,6) ( 1,6) ( 21,1) 25,1 ( 1,4) 23,7
Net Income 140,7 18,3 159,0 ( 20,8) 40,2 19,4
Weighted av. nbr of shares in issue 120 523 034 120 523 034 109 512 570 13 041 145 122 553 715
Diluted earnings per share 1,19 0,13 1,32 ( 0,19) 0,35 0,16
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172 M€ increase in CF from operations : EBIT growth + narrowing of R&D P&L/Cash gap + 76 M€ related to
the total swap return contract
69 M€ increase in WCR : early ship-in of AC Odyssey + mid-October launch of Starlink
229 M€ proceeds from issue of capital : related to employee share plan + modified accounting treatment on
100M€ deposit invested on total return swap contract
H1 FY19 : CASH FLOWS & CLOSING CASH POSITION
€ millionH1
2018-19
H1
2017-18
Opening cash position ( 548,1) ( 80,4)
Cash flows from operations 88,4 ( 83,6)
Change in WCR ( 66,4) 2,2
Cash flows from operating activities 22,0 ( 81,4)
Net investment in capital assets ( 35,0) ( 28,3)
Net free cash flow ( 13,0) ( 109,7)
Net acquisitions/disposals ( 4,9) 0,0
Proceeds from issue of capital and other financial flows 228,7 45,2
Net acquisitions/disposals of own shares 0,0 ( 23,3)
Effect of exchange rate fluctuations ( 4,0) ( 4,1)
Equity component 4,1 ( 13,9)
Decrease/(increase) in net debt 210,7 ( 105,7)
Closing cash position ( 337,4) ( 186,2)
AGENDA
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H 1 F Y 1 9 P E R F O R M A N C E
I N T R O D U C TO RY R E M A R K S
F Y 1 9 TA R G E T S
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FY19 TARGET
FY19 NET BOOKINGS: ~ 2 050 M€ FY19 IFRS 15 SALES: ~ 2 000 M€
NON-IFRS OPERATING INCOME: ~440 M€
FREE CASH FLOW: ~ 300 M€
FY19DIGITAL: ~65% of Net Bookings
PRI: ~ 30% of Net Bookings
BACK-CATALOG: ~50% of Net Bookings
3 new AAA releases: 19 M units
+ +
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H2 MAIN RELEASES
EXPANSIONS Q3
SPECIAL OPERATION 3
KING OF MAYHEM
SEASON 4
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TOPLINE GROWTH & PROFITABILITY PROGRESSION OPPORTUNITIES
UBISOFT IS JUST STARTING TO REAP THE BENEFITS OF THE DIGITAL TRANSFORMATION
SHORT & MEDIUM TERM OPPORTUNITIES
Mobile & PC marketsDigital
Asia Esports
LONG TERM OPPORTUNITIES
New forms of gaming (streaming…) significant expansion of TAM
Investment in Ubisoft Club, AI & machine learning taylor players experiences
H1 CONFIRMED UBISOFT’S MANY ONGOING GROWTH OPPORTUNITIES
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CONCLUSION
Ubisoft continues to deliver on its strategic plan. We are executing on our promise to
bring high quality games to players and to engage them over the long term with
amazing new content. We focus our energy on growing our biggest franchises, on
embedding the community in the development of our games and on building our online
platform and services.
This quarter confirmed the potential of Ubisoft’s many ongoing growth opportunities :
from the rapid digital growth and our dynamic PC and mobile businesses, to the
opening of major new geographical markets, notably Asia. Longer term opportunities
linked to Artificial Intelligence, Streaming and eSport are very promising future value
drivers. We are already showing nice progress on those fronts.
Overall, the videogame industry continues to thrive. Ubisoft’s unparalleled talent pool,
ability to operate our proven multi-studio organization, and capacity to regularly create
organically and grow blockbuster Ips, are what set us apart from the competition. These
strengths make us confident we can continue to grow and improve profitability over the
long term.
Yves Guillemot, President and Chief Executive Officer
THANK YOU !