Ubisoft Entertainment · EURONEXT:UBI
Ubisoft Entertainment — H1 FY16 Earnings Presentation
27 slides from Ubisoft Entertainment's earnings presentation, Nov 4, 2015
Slide 1: H1 FY16 Earnings presentation
H1 FY16 Earnings presentation November 4th, 2015
Slide 2: Disclaimer
Yves Guillemot, President and Chief Executive Officer Alain Martinez, Chief Financial Officer Jean-Benoît Roquette, SVP Investor Relations D I S C L A I M E R This statement may contain estimated financial data, information on future projects and transactions and future business results/performance.
Slide 3: Key Takeaways
KEY TAKEAWAYS SOLID FIRST HALF Excellent staying power of major franchises Assassin’s Creed - Far Cry - Just Dance - The Crew - Watch Dogs Ever-growing importance of the digital segment STRONG GROWTH EXPECTED IN H2 UBISOFT, A GREAT VEHICLE TO PLAY THE VIDEOGAME MOMENTUM 3
Slide 4: Agenda
AGENDA UBISOFT, A GREAT VEHICLE TO PLAY THE VIDEOGAME MOMENTUM H1 PERFORMANCE PERSPECTIVES ON Q3 & FY16 4
Slide 5: Structural profitability transformation for the industry
STRUCTURAL PROFITABILITY TRANSFORMATION FOR THE INDUSTRY DIGITALIZATION RISING BOLSTERING A NEW CYCLE BARRIERS TO X ENGAGEMENT X OF GROWTH ENTRY & PROFITABILITY Average Profitability for the Top 4 (EA, ATVI, UBI, TTWO) 30% 25% 20% 15% 10% 5% 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Slide 6: Ubisoft: carries a unique value creation potential
UBISOFT : CARRIES A UNIQUE VALUE CREATION POTENTIAL 1 2 3 4 a PIONEER IDEALLY OWNS both in LEVERAGING POSITIONED EXPERTISE & IPs : CATCHING UP in its BRANDS to capture the into the broader the highly profitable a MASSIVE growth potential of ENTERTAINMENT DIGITAL SEGMENT ADVANTAGE OPEN-WORLDS industr
Slide 7: Going multiplayer: catch up opportunity in digital segment
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 11 - Going multiplayer : Catch up opportunity in the highly profitable digital segment Massive Betas Events/eSports Long Term Content In-Game Monetization 7
Slide 8: Open Worlds: Gaining market shares
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 2 - Open Worlds : Gaining market shares BEST SELLERS 2014 (value) 1 COD : Advanced Warfare 2 FIFA 15 OPEN WORLDS SHARE 3 GTA V OF TOTAL MARKET 4 Destiny 2008 2014 5 Watch_Dogs 16% 30% 6 AC Unity + Rogue 7 Far Cry 4 8 Super Smash Bros. 9 Madden NFL 15 10 FI
Slide 9: Open Worlds: Ubisoft's clear lead
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 2 - Open Worlds : Ubisoft’s clear lead BEST SELLERS 2014 (value) 1 COD : Advanced Warfare 2 FIFA 15 3 GTA V 4 Destiny 5 Watch_Dogs 6 AC Unity + Rogue 7 Far Cry 4 8 Super Smash Bros. 9 Madden NFL 15 10 FIFA 14 Physical retail sales : NPD, GFK 9
Slide 10: Open Worlds: capacity to release them regularly
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 22 - Open Worlds : A unique capacity to release them on a regular basis UBISOFT EA ATVI TTWO KONAMI CD PROJECT WARNER FY14 AC 4 GTA V BATMAN AC UNITY FAR CRY 4 FY15 WATCH DOGS DRAGON AGE DESTINY THE CREW AC SYNDICATE BATMAN FY16 FAR CRY PRIMAL METAL GEAR T
Slide 11: Shareholders own both the IP and the expertise
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 3 - Ubisoft’s shareholders own both the IP and the expertise New IPs owned and developed internally by publishers 11
Slide 12: Partnering with the best to leverage our IPs
UBISOFT : A UNIQUE VALUE CREATION POTENTIAL 44 - Partnering with the best to leverage our IPs ASSASSIN’S CREED TOM CLANCY’S GHOST RECON RABBIDS THE MOVIE RABBIDS TV SHOW TOM CLANCY’S SPLINTER CELL WATCH DOGS THE BEST PARTNERS WITH THE BEST PRODUCTION & MARKETING NETWORKS 12
Slide 13: Significant value creation lies in front of us
THE FUTURE LOOKS GREAT FOR UBISOFT SHAREHOLDERS “We have been building Ubisoft over the long term with the aim of becoming one of the highest-performing groups in the video game industry and a leader in the overall entertainment sector” SIGNIFICANT VALUE CREATION LIES IN FRONT OF US 13
Slide 14: Agenda
AGENDA UBISOFT, A GREAT VEHICLE TO PLAY THE VIDEOGAME MOMENTUM H1 PERFORMANCE PERSPECTIVES ON Q3 & FY16 14
Slide 15: H1 FY16 Performance
H1 FY16 PERFORMANCE Q2 Sales : 111 M€ (- 17% at cstt FX) Beating target of 90 M€ H1 sales : 207 M€ H1 Very solid Back-catalog : 184 M€, + 53% Assassin’s Creed – Far Cry – Just Dance – The Crew – Watch Dogs FY16 Digital momentum continues : 100 M€, 48% of total revenues Extra content at 42 M€, 20% of
Slide 16: H1 FY16 Performance
H1 FY16 PERFORMANCE Gross margin at 74% Down vs 78% last year but up 5 points vs H1 FY14 & H1 FY13 Back-catalog momentum + Digital impact H1 Non-IFRS Operating loss : (108) M€ FY16 H1 FY14 at (98) M€ with revenues of 293 M€ Net Debt : (156) M€, vs (40) M€ in H1 FY15 and (142) M€ in H1 FY14 16
Slide 17: H1 FY16: Non-IFRS P&L
H1 FY16 : NON-IFRS P&L € million, except for per share data H1 2015-16 H1 2014-15 (Restated for IFRIC21) % % Sales 207,3 484,2 Gross profit 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) G & A expenses (51,5) (24,9) (44,9) (9,3) SG & A
Slide 18: H1 FY16: R&D
H1 FY16 : R&D € million H1 2015-16 H1 2014-15 Depreciation of in-house software-related production 55,3 138,8 Depreciation of external software-related production and licenses 8,9 2,5 Royalties 6,4 6,8 Non Capitalized R&D & others 29,0 33,1 Total R&D depreciation and royalties 99,5 181,2 Capitalized
Slide 19: H1 FY16: IFRS / Non-IFRS Reconciliation
H1 FY16 : IFRS / NON-IFRS RECONCILIATION H1 2014-15 H1 2015-16 (Restated for IFRIC21 impacts) € million, except for per share data IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS Sales 207,3 207,3 484,2 484,2 Total Operating expenses (324,6) 9,5 (315,1) (470,0) 10,6 (459,4) Stock-based compensatio
Slide 20: H1 FY16: Cash Flows & Closing Cash Position
H1 FY16 : CASH FLOWS & CLOSING CASH POSITION € million H1 2015-16 H1 2014-15* Opening cash position 211,3 (12,7) Cash flows from operations (208,8) (37,1) Change in WCR (125,9) 17,5 Cash flows from operating activities (334,7) (19,5) Net investment in capital assets (24,2) (28,2) Net free cash flow
Slide 21: Agenda
AGENDA UBISOFT, A GREAT VEHICLE TO PLAY THE VIDEOGAME MOMENTUM H1 PERFORMANCE PERSPECTIVES ON Q3 & FY16 21
Slide 22: FY16: Targets Confirmed
FY16 : TARGETS CONFIRMED Sales: stable H2 sales : up close to 30% (5 big titles vs 4 last year) Q3 sales : around 600 M€, down 26% Q4 : the strongest ever FY16 Non-IFRS Operating Income : at least 200 M€ Negative FCF (positive before WCR) 22
Slide 23: FY16: Games
FY16 : GAMES Oct 23, 2015 Feb 23, 2016 Oct 23, 2015 Dec 1, 2015 March 8, 2016 EXPANSIONS Early 2016 Nov 3, 2015 July 14, 2015 Nov 17, 2015 23
Slide 24: Ubisoft Financial Performance
UBISOFT FINANCIAL PERFORMANCE Industry Soft. Sales Sales (€ million) excl. Digital (€ billion) 15.7 14.5 1 464 12.2 1 256 10.8 1 039 1 061 1 007 9.5 378 148 193 38 78 FY11 FY12 FY13 FY14 FY15 FY16e 2010 2011 2012 2013 2014 2015e Digital Non-IFRS Op. 200e Gross Margin Income (€ million) 171 72.7% 71.
Slide 25: Appendices
APPENDICES UBISOFT
Slide 26: Past 10 Years Key Success Factors
PAST 10 YEARS KEY SUCCESS FACTORS Cumulated Retail Sales (Value) (Xbox360, PS3, Wii, WiiU, Xbox One, PS4 + PC) Publishers KEY LEARNINGS 2005 - 2014 (10 years) 1 CALL OF DUTY ACTIVISION BLIZZARD F 2 MARIO NINTENDO F 3 FIFA SOCCER EA F FRANCHISES 4 GTA TAKE-TWO F = AC THE 5TH 5 ASSASSIN'S CREED UBISOF
Slide 27: Ubisoft's stock much more liquid than it may appear
UBISOFT’S STOCK much more liquid than it may appear As of Oct, 30th Euronext 33% of total liquidity Average volume over 1 year at 1 190 000 shares 27
Ubisoft Entertainment — H1 FY16 Earnings Presentation on 6ix