FY13 Earnings Presentation May 15, 2013
2
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, 2012 with the French
Financial Markets Authority (l’Autorité des marchés financiers)).
Yves Guillemot, President and Chief Executive Officer
Alain Martinez, Chief Financial Officer
Jean-Benoît Roquette, Head of Investor Relations
FY13 : An outstanding performance in a challenging environment
Sales up 18% − EBIT up 79% − Slightly positive FCF
A broader sales base than 12 months ago
Assassin’s Creed − Just Dance − Far Cry − Online Digital − Watch_Dogs(e)
Continued investment in long term development
Excluding Free-to-Play investments, profitability and CF would have been significantly higher
FY14 : 4th year of regular progress
Continue to benefit from : core games and online/digital strong growth
New market shares gains
Casual : below 20% of total sales
Medium term : Nextgen finally there, will bring back strong growth
Ubisoft to benefit disproportionally from it
Key success factors : Quality − Regular Releases − Connectivity
Summary
3
2005-2012 : Current Gen key learnings
FY13 performance
FY14 & Next Gen
Strategy
4
Agenda
5
Current Gen key success factors : Quality & Regular Releases
Physical retail sales : NPD, GFK
Cumulated WW sales (value)
Xbox360 / PS3 / Wii / PC
2005-2012 (8 years)
Publisher
1 CALL OF DUTY ACTIVISION BLIZZARD F
2 MARIO NINTENDO F
3 FIFA SOCCER EA F
4 WII FIT* NINTENDO NB
5 ASSASSIN'S CREED UBISOFT NB
6 GUITAR HERO* ACTIVISION BLIZZARD NB
7 HALO MSFT F
8 MADDEN NFL EA F
9 THE SIMS EA F
10 NEED FOR SPEED EA F
11 BATTLEFIELD EA F
12 JUST DANCE UBISOFT NB
13 ROCK BAND EA NB
14 MARIO KART WII NINTENDO F
15 LEGO TELLTALE NB
16 GRAND THEFT AUTO TAKE-TWO F
17 WORLD OF WARCRAFT ACTIVISION BLIZZARD F
18 WWF/WWE THQ F
19 ELDER SCROLLS BETHESDA F
20 SONIC SEGA F
1 brand in the top 5 !
2 brands in the top 12 !
2 of the 4 biggest new IPs !
*includes hardware
Key learnings
Franchises
=
Lg term visibility
- Key factors of success :
- Quality
- Regular releases
- Deep production
capacity
- Connectivity (Next Gen)
- New cycles = opportunity to
establish new brands
Far Cry & Watchdogs
strong contenders for the Next Gen top 20
2005-2012 : Current Gen key learnings
FY13 performance
FY14 & Next Gen
Strategy
6
Agenda
FY13
7
Ubisoft now presents non-IFRS information in its earnings releases as Group Management
considers that “Non-IFRS operating income” and “Non-IFRS net income” – 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. “Non-IFRS operating income”, “Non-IFRS net
income” and “Non-IFRS earnings per share” are comparable to the following three
previously-used indicators: “Current operating income before stock-based compensation”,
“Net Income before non-recurring items and stock-based compensation” and “Earnings per
share before non-recurring items and stock-based compensation”.
FY13
Sales : 1 256 M€, +18%
Core revenues : 928 M€, +60%
AC3 − FC3 − Ghost Recon FS
Online revenues : 148M€, +86%
Digital distribution − Free to Play − DLCs
12% of total sales
More than compensating for
Casual revenues : 328 M€, -32%
26% of total sales (vs 46% in FY12)
Just Dance one of the strongest brand of the industry
8,5 million units of JD4 sold-in (drop limited to 14% in value)
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FY13 : An outstanding performance from core and online segments
Blockbusters*
AC titles : 18 M units
JD titles : 11 M units
FC titles : 7 M units
*Sell-in + digital units
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FY13 : Driven by core games and online/digital
In million € Core Brands Casual Brands Total sales
FY12 578 483 1 061
FY13 928 328 1 256
+60% -32% +18%
In million € Core & Casual Online/Digital
FY12 80
FY13 148
+86%
FY13 Core Games : Major shares gains from significantly stronger offer on HD consoles
10
Ubisoft Core Games Sales PS2 + Xbox + Xbox360 + PS3
(sell-thru retail $ million)
HD consoles market software sales Xbox360 + PS3 ($ million, retail)
Confirmation of the significant progression opportunity
Assassin's Creed 3 + FarCry 3 + Ghost Recon Future Soldier
Excludes Asia. NPD, GFK, Chart-Track, Nielsen
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200
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800
1 000
1 200
2007 2008 2009 2010 2011 20120
2 000
4 000
6 000
8 000
10 000
12 000
14 000
2007 2008 2009 2010 2011 2012
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FY13 : Financial summary
FY13
Gross margin up 5 percentage points
3rd year of improvement
Better ASPs for core titles (AC3, FC3, Ghost Recon FS) and Just Dance 4
+ growing online sales
Non-IFRS Operating Income : 100 M€, + 79%
> guidance provided 12 months ago (70-90 M€)
Solid net cash situation : 105 M€
Better than expected cash-flows generation,
with slightly positive Free-Cash flows
Gross margin up over 5 percentage point and +195 M€ on +195 M€ sales Better ASPs on core games (AC3, FC3, GRFS) & JD4 + continued online sales momentum
R&D up 80 M€, + 1 percentage point
SG&A up 71 M€, + 1 percentage point
variable marketing expenses up at 229 M€ or 18% of sales (177 M€ and 17% in FY12). End of cycle impact.
fixed structure costs at 156 M€ or 12.4% of sales (137 M€ and 12,9% in FY12), due mostly to higher online related costs.
Income tax rate of 28,7%
FY13 : Non-IFRS P&L
12
2012-13 2011-12
€ million % %
Sales 1 256,2 1 061,3
Gross profit 913,5 72,7 718,1 67,7
R&D expenses (428,2) 34,1 (348,4) 32,8
Selling expenses (304,0) 24,2 (238,4) 22,5
G & A expenses (81,0) 6,4 (75,3) 7,1
SG & A expenses (385,0) 30,6 (313,7) 29,6
Non-IFRS operating income 100,3 8,0 56,0 5,3
Net Financial Income (3,2) (6,0)
Income Tax (27,9) (12,7)
Non-IFRS Net Income 69,2 37,4
Non-IFRS Diluted EPS 0,71 0,39
Nbr of shares fully diluted 97 316 95 632
Depreciation up : 73 M€ = bigger games
Royalties down : 18 M€ = lower casual sales
Increased Non-Capitalized R&D : 24 M€ = FTP operating charges + accounting changes (bonuses & idle time)
7,7% increase in internal and external capitalized investment, 45% of it from exchange effect
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FY13 : R&D
€ million 2012-13 2011-12
Depreciation of in-house games 315,1 206,1
Depreciation of external games and licences 28,7 64,4
Royalties 33,7 51,2
Non Capitalized R&D & others 50,8 26,7
Total R&D depreciation and royalties 428,2 348,4
Capitalized software-related production 337,8 301,8
Investment in external production and licenses 36,6 48,1
(excluding future commitments)
Royalties 33,7 51,2
Others 50,8 26,7
Total development investment 458,9 427,8
FY13 IFRS income
• Includes: 8,1M€ stock base compensation charges + 4,3 M€ goodwill amortization, both non cash
• Excludes: 7,2M€ profit on the sale of Gameloft shares
14
FY13 : IFRS / non-IFRS reconciliation
In million of euros, except for per share data
2012-13 2011-12
IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS
Sales 1 256,2 1 256,2 1 061,3 1 061,3
Total Operating expenses (1 168,3) 12,4 (1 155,9) (1 015,7) 10,4 (1 005,3)
Stock-based compensation (8,1) 8,1 0,0 (10,4) 10,4 0,0
Fair value variation (4,3) 4,3 0,0 0,0 0,0 0,0
Other operating income and expenses 0,0 0,0 0,0 0,0 0,0 0,0
Operating Income 87,9 12,4 100,3 45,6 10,4 56,0
Net Financial income 4,0 (7,2) (3,2) 2,5 (8,5) (6,0)
Income tax (27,1) (0,8) (27,9) (10,8) (1,9) (12,7)
Net Income 64,8 4,4 69,2 37,3 0,0 37,4
Diluted earnings per share 0,67 0,04 0,71 0,39 0,00 0,39
FY13 : Cash flows and closing cash position
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Significant improvement of cash flows from operation, reflecting greater operating results and reduced gap between R&D investments and R&D charges (31 M€ vs 79 M€ in FY12)
WCR increase partly due to lower factoring (25 M€ less vs FY12) and difference in starting points (Accounts Receivables at -13 M€ end of March 2012 vs +49 M€ at end of March 2011)
Solid financial position, with net cash of 105 M€ + total long term financing means of 310 M€
€ million 2012-13 2011-12
Opening cash position 84,6 99,2
Cash flows from operations 58,9 (27,0)
Change in WCR (30,5) 35,2
Cash flows from operating activities 28,4 8,2
Net investment in capital assets (25,0) (25,5)
Net free cash flow 3,4 (17,3)
Net acquisitions/disposals (4,9) (17,5)
Proceeds from issue of capital and other financial flows 6,0 (1,3)
Disposal of Gameloft Shares 10,7 13,7
Tax credit sales 0,0 0,0
Effect of exchange rate fluctuations 4,8 7,8
Decrease/(increase) in net debt 20,0 (14,6)
Closing cash position 104,6 84,6
2005-2012 : Current Gen key learnings
FY13 performance
FY14 & Next Gen
Strategy
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Agenda
A major graphical and animation leap
Unprecedented sense of immersion : graphics, AI, immersion, emotion
Very social, multi-screens
Share your experience, eSport like, streaming, instant-on demos
Data driven services, constantly evolving
A tailored experience to players’ habits and needs
Best VIP experience : Loyalty programs + connect a gamer across his
games & platforms to his community (Uplay)
Powerful entertainment hubs
Broaden home penetration & bring casual gamers to the living room
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“We live in a world of self-expression.
Everywhere, everyone is creative and
wants to add value. Customization, or
curating, is a huge growth area across
all services and that holds true for
games. People want to play in their own
way, they want to define their own
experience and they want to share the
way they're playing.” Yves Guillemot
Next Gen : will lead to record sales for the industry
FY14
Objectives
Sales : 1 420 M€ − 1 450 M€
Non-IFRS Operating Income : 110 M€ − 125 M€
Positive Free Cash Flows
Key drivers
Quality & scope boosted again by Lead/Associate organization & stronger focus
Bigger AAA line-up
New IPs to capitalize on PS4’s launch
Growing digital distribution
Richer online offering : Free-to-Play − mobile / tablets
Impact New market shares gains on core and digital segments
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FY14 : Continue to benefit from the strong momentum on online and core games
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FY14 : Driven by core games and online/digital
In million € Core Brands Casual Brands Total sales
FY13 928 328 1 256
FY14 Significant growth Less than 20% of total sales 1 420 − 1 450
In million € Core & Casual Online/Digital
FY13 148
FY14 +50 / +70% growth
Large scope, deep single / coop / multiplayer campaigns
Your rules, your way
Release date : August 20th (Xbox360, PS3, WiiU, PC)
Lead/Associate studios : Toronto – Montreal - Shangai
FY14 Core Games : Splinter Cell Blacklist, the perfect game for core and new fans
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“Blacklist features
the most ambitious multiplayer
Splinter Cell has ever seen, "
IGN, May 2013
“Spies vs. Mercs is without a real rival
in the multiplayer space today, "
Joystiq, May 2013
Yet another production prowess
New hero (Edward Kenway), new setting (Golden Age of Piracy)
Release date : Oct. 29th (PS4, Xbox360, PS3, WiiU, PC)
Lead/Associate studios : Montreal – Annecy – Singapore – Quebec City
– Sofia - Kiev
FY14 Core Games : Assassin's Creed 4 Black Flag, another major entry in the franchise
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“An open-word naval adventure done
by the kind of international mega-team
that makes Assassin's Creed games?
Sure. That's exciting enough.”
Kotaku, March 2013
Builds on Ubisoft’s strengths : IP creation − open world − massive
production values
CVG’s readers second most anticipated game of 2013 !
Release date : November 19th (PS4, Xbox360, PS3, WiiU, PC)
Lead/Associate studios : Montreal – Newcastle – Paris – Bucharest -
Quebec City
FY14 Core Games : Watch_Dogs, a highly expected new creation
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“Watch Dogs can end up being one
of the biggest games on any system"
IGN, May 2013
“From a visual perspective,
the engine is stunning and fluid.
The detailing on vehicles, houses,
and pedestrians is impressive”
GameInformer, May 2013
+ 1 AAA franchise
+ 1 AAA new creation
FY14 Core Games : And also
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+ +
FY14 Digital/Online : Broader distribution and stronger line-up
24
Digital distribution
PC Free-to-Play, eSport
Mobile & Console Digital
(Paymium & Free to Play)
+ DLCs from consoles & PC games
…
…
FY14 Casual : Managing the transition
25
Casual < 20% total FY14 sales
Great business : 7 very profitable years for Ubisoft
Committed and adaptative approach
Next generation to bring back casual gamers to living room
Financial performance : FY14, 4th year of regular progress
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Sales (€ million)
Non-IFRS Op. Income (€ million)
FY10 FY11 FY12 FY13 FY14e
-60
29
56
100 110-125
FY10 FY11 FY12 FY13 FY14e
871 1 039 1 061
1 256 1 420-1450
852 1 001 983 1 108
1 193*
*Mid-point
20 38 78 148 237*
Packaged
Digital
Gross Margin
FY10 FY11 FY12 FY13 FY14e
58.9% 64.8% 67.7% 72.7% 73.7%
2005-2012 : Current Gen key learnings
FY13 performance
FY14 & Next Gen
Strategy
27
Agenda
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Long term opportunities for our core and casual brands
Ubisoft Core brands Ubisoft Casual Brands
A highly committed, growing audience > 1 billion people
On consoles
On PC, mobile, tablet (Free to Play model)
Social interactions
Value
added
for player
Multi-screens gaming
Item based model
Grow ARPU and each brand’s profitability
Ubisoft’s
benefits
Drive players acquisition
Increase players engagement & therefore monetization
Expand to new territories (Asia, Turkey…) and to new platforms (mobile, tablet)
Direct relation with player = knowledge (through analytics)
Conclusion
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"We believe that our major production capacity, strong of a network of 26 international studios and
over 7 000 developers, now optimized with our lead and associate organization, will allow us to
come with an enhanced pipeline of increasingly high quality franchises and new IPs. We will be
able to release our franchises more and more regularly, providing solid visibility on our future
revenue and profitability streams. All that, combined with the online expertise and know-how that
we have been growing steadily internally make us believe that we will benefit disproportionally
from the arrival of the new generation and from the continued growth of the online market" Yves
Guillemot, Ubisoft CEO
Agenda
30
Appendices
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Calendar 2012 : Focus on bigger games is paying off
2012 best performers
EMEA + North America (units)
Publisher
1 CALL OF DUTY: BLACK OPS 2 ACTIVISION BLIZZARD
2 FIFA SOCCER 13 EA
3 ASSASSIN’S CREED III UBISOFT
4 HALO 4 MICROSOFT
5 JUST DANCE 4 UBISOFT
6 MADDEN NFL 13 EA
7 CALL OF DUTY: MODERN WARFARE 3 ACTIVISION BLIZZARD
8 BORDERLANDS 2 TAKE 2
9 FIFA SOCCER 12 EA
10 BATTLEFIELD 3 EA
11 THE ELDER SCROLLS V: SKYRIM BETHESDA
12 DIABLO 3 ACTIVISION BLIZZARD
13 MASS EFFECT 3 EA
14 NBA 2K13 TAKE 2
15 JUST DANCE 3 UBISOFT
16 NEW SUPER MARIO BROS. 2 NINTENDO
17 FAR CRY 3 UBISOFT
2 titles in the top 5
After only 1 month of sale
4 titles in the top 17
NPD, GFK, Chart-Track, Nielsen
32
Calendar 2012 : New market shares gains
Rank Publisher M.S. M.S.1 Activision Blizzard 19,5% 15,7%2 EA 18,4% 19,7%3 Ubisoft 11,2% 8,8%4 Nintendo 10,8% 12,4%5 Take 2 6,4% 4,8%6 Microsoft 5,0% 4,8%7 Sony 3,5% 5,3%8 THQ 3,3% 4,9%9 WB 3,3% 3,7%
10 Capcom 2,4% 1,1%
2012 2011
NPD, GFK, Chart-Track, Nielsen
0
2
4
6
8
10
12
14
16
2005 Xbox + PS2
2011 Xbox360 + PS3
Ubisoft is ready for this
Players even more connected
=
Bring social benefits & online services
=
A growing ARPU
+ New HD consoles cycle
=
Better graphics, more power
=
Core gamers love it
FY14 : Next Gen at last!
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Market software sales (€ billion)
+60%
8 years without a new console :
Core gamers are starving!
Long term opportunities
Excludes Asia. NPD, GFK, Chart-Track, Nielsen
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