Ubisoft Entertainment · EURONEXT:UBI
Ubisoft Entertainment — H1 FY14 Earnings Presentation
39 slides from Ubisoft Entertainment's earnings presentation, Nov 12, 2013
Slide 1: H1 FY14 Earnings presentation
H1 FY14 Earnings presentation November 12, 2013
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: Agenda: Positioned to be a next-gen winner
AGENDA POSITIONED TO BE A NEXT-GEN WINNER H1 H2 & FY14 FY15 3
Slide 4: Open worlds take an ever-bigger share of the market
OPEN WORLDS, EVER-MORE DOMINANT in action-adventure in action-driving in RPG in FPS Open worlds take an ever-bigger share of the market 4
Slide 5: Open worlds will receive a major boost with PS4 & XboxOne
OPEN WORLDS, EVER-MORE DOMINANT Open worlds will receive a MAJOR BOOST with PS4 & XboxOne 5
Slide 6: Why open worlds are so appealing
WHY OPEN WORLDS ARE SO APPEALING OPEN WORLDS, an IDEAL vehicle to implement the DIGITAL BREAKTHROUGHS They ARE playing FIELDS SYSTEMIC and COOP/SOCIAL at their BEST Player is FREE to define his experience and how he interacts with friends LOW BARRIERS to entry as players play at their OWN RYTHM FLEX
Slide 7: What's needed to win next gen?
WHAT’S NEEDED TO WIN NEXT GEN? MAJOR HIGH REGULAR production CAPACITY + QUALITY games + releases of OPEN WORLDS + MASTERING of the DIGITAL SKILLS = UBISOFT is READY to be a WINNER of this new generation 7
Slide 8: Ubisoft is ready: major production capacity
UBISOFT IS READY: MAJOR PRODUCTION CAPACITY LEAD & 8 000 ASSOCIATE DEVELOPERS proven organization 8
Slide 9: Ubisoft is ready: high quality games
UBISOFT IS READY: HIGH QUALITY GAMES Last 23 consoles titles Average Metacritic Developpers 1 GTA 5 97 TTWO 2 Rayman Legends 90 Ubisoft 3 Rocksmith 2014 88 Ubisoft 4 Diablo III 87 Activision 5 NBA 2K14 86 TTWO 6 FIFA 14 86 EA 3 in the top 7 7 Assassin's Creed 4 85 Ubisoft 8 Lego Marvel Super Heroes
Slide 10: Ubisoft is ready: regular releases of open worlds
UBISOFT IS READY: REGULAR RELEASES OF OPEN WORLDS Ubisoft has been preparing for this CREATE MASSIVE 8 massive OPEN WORLDS & LIVING released in 7 years! OPEN WORLDS HUGE & well COORDINATED production CAPACITIES 10
Slide 11: Ubisoft is ready: mastering of the digital skills
UBISOFT IS READY: MASTERING OF THE DIGITAL SKILLS Ubisoft has been preparing for this DEEP INTEGRATION of LEVERAGING the EXPERIENCE the Online & Social accumulated over the last 4 YEARS BREAKTHROUGHS Free to play – mobile – Facebook – online platforms – digital distribution … 11
Slide 12: Mastering of the digital skills
UBISOFT IS READY: MASTERING OF THE DIGITAL SKILLS BIG ACQUISITION 24/24 ENGAGEMENT CROSS DATA SERVERS MONETIZATION PLATFORMS ANALYTICS LEVERAGING KPIs the EXPERIENCE Accumulated over the COMMUNITY ALGORITHMS last 4 years MANAGEMENT BILLING FREE TO DIGITAL DIGITAL STRUCTURE PLAY MARKETING DISTRIBUTIO
Slide 13: Nextgen: the best of consoles and online entertainment
NEXTGEN : THE BEST OF CONSOLES AND ONLINE ENTERTAINMENT N°1 – Watch Dogs "The Division. N°2 – The Division How Ubisoft is making the Next Generation’s hottest project" Best Action Game – Watch Dogs Best New Franchise – The Division Best Racing Game – The Crew WatchDogs - The Crew - The Division Mass
Slide 14: Expand the visibility of our brands
EXPAND THE VISIBILITY OF OUR BRANDS 100 MILLION Estimated VIEWERS in the US LEADER 6 times out of 9 for 2-11 years old category LOWERS CPA*! 14 *Cost per acquisition
Slide 15: Agenda: Positioned to be a next-gen winner
AGENDA POSITIONED TO BE A NEXT-GEN WINNER H1 H2 & FY14 FY15 15
Slide 16: H1 FY14: Sales
H1 FY14 : Sales H1 Sales : 293 M€, +5% (+8% at constant exchange rates) Driven by back-catalog sales and digital H1 Back-catalog : 113 M€, +16% Solid sales from Far Cry 3 and Assassin’s Creed 3 FY14 Digital : 71 M€, +29% 24% of total sales Driven by digital distribution, sale of items and DLCs 16
Slide 17: H1 FY14: Financial summary
H1 FY14 : Financial summary Gross margin flat at last year high level 69% Supported by better back-catalog + solid digital gross margins H1 Non-IFRS Operating Loss : (98) M€ vs (58,2) M€ FY14 A 42 M€ increase in R&D due to higher depreciation of H1 titles + cancellation of projects Cash flow from op
Slide 18: H1 FY14: Non-IFRS P&L
H1 FY14 : Non-IFRS P&L € million, except for per share data H1 2013-14 H1 2012-13 % % Sales 293,3 279,2 Gross profit 202,2 68,9 192,7 69,0 R&D expenses (138,9) (47,4) (96,8) (34,7) Selling expenses (123,5) (42,1) (116,8) (41,8) G & A expenses (37,8) (12,9) (37,2) (13,3) SG & A expenses (161,3) (55,0
Slide 19: H1 FY14: R&D
H1 FY14 : R&D € million H1 2013-14 H1 2012-13 Depreciation of in-house software-related production 107,8 61,4 Depreciation of external software-related production and licenses 6,2 7,9 Royalties 9,7 12,8 Non Capitalized R&D & others 15,2 14,8 Total R&D depreciation and royalties 138,9 96,8 Capitalize
Slide 20: H1 FY14: IFRS / non-IFRS reconciliation
H1 FY14 : IFRS / non-IFRS reconciliation H1 2013-14 H1 2012-13 € million, except for per share data IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS Sales 293,3 293,3 279,2 279,2 Total Operating expenses (407,3) 16,0 (391,3) (339,5) 2,1 (337,4) Stock-based compensation (4,3) 4,3 0,0 (2,1) 2,1 0,0 N
Slide 21: H1 FY14: Cash flows and closing cash position
H1 FY14 : Cash flows and closing cash position € million H1 2013-14 H1 2012-13 Opening cash position 104,5 84,6 Cash flows from operations (144,8) (146,4) Change in WCR (115,9) (98,4) Cash flows from operating activities (260,7) (244,8) Net investment in capital assets (16,3) (10,9) Net free cash fl
Slide 22: Agenda: Positioned to be a next-gen winner
AGENDA POSITIONED TO BE A NEXT-GEN WINNER H1 H2 & FY14 FY15 22
Slide 23: FY14: Targets
FY14 : TARGETS Sales : 995 M€ 1 045 M€ FY Non-IFRS Operating Loss : (70) M€ (40) M€ 14 Q3 sales : between 500 M€ and 540 M€ 23
Slide 24: Assassin's Creed Black Flag, another major entry in the franchise
ASSASSIN'S CREED 4 BLACK FLAG, ANOTHER MAJOR ENTRY IN THE FRANCHISE ““Black Flag’s world is built to amaze. The fantasy it delivers sets new benchmarks for open-world gaming” Edge, Nov. 2013 “The most ambitious AC game in years, an incredible adventure by any standard” Gamespot, Nov. 2013 The best r
Slide 25: Casual: managing the transition
CASUAL: MANAGING THE TRANSITION Casual over 20% of 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 25
Slide 26: Fiscal Q4: South Park + re-orders of nextgen SKUs
FISCAL Q4 : SOUTH PARK + RE-ORDERS OF NEXTGEN SKUS + Re-orders of NextGen skus 26
Slide 27: FY14 digital/online: broader distribution and stronger line-up
FY14 DIGITAL/ONLINE : BROADER DISTRIBUTION AND STRONGER LINE-UP DIGITAL DISTRIBUTION PC FREE-TO-PLAY, eSPORT MOBILE & CONSOLE DIGITAL (Paymium & Free to Play) + DLCS FROM CONSOLES & PC GAMES 27
Slide 28: Agenda: Positioned to be a next-gen winner
AGENDA POSITIONED TO BE A NEXT-GEN WINNER H1 H2 & FY14 FY15 28
Slide 29: FY15: A significantly stronger line-up
FY15 : A significantly stronger line-up Calendar 2014 : consoles market expected to grow again Much stronger line up for Ubisoft (franchises and new brands) FY 15 Starting in Q1 with Watch Dogs Non-IFRS Operating Income : minimum 150 M€ 29
Slide 30: Appendices
APPENDICES UBISOFT
Slide 31: CEO statement on production capacity and new generation
"We believe that our major All that, combined with the Open-World production capacity, strong of a and Online expertise/know-how that network of 26 international studios and we have been growing steadily over 8 000 developers, now optimized internally make us believe that we will with our lead and a
Slide 32: Current gen key success factors: quality & regular releases
CURRENT GEN KEY SUCCESS FACTORS : QUALITY & REGULAR RELEASES Cumulated WW Sales (value) KEY LEARNINGS XBOX360 / PS3 / WII / PC Publishers 2005-2012 (8 years) 1 CALL OF DUTY ACTIVISION BLIZZARD F FRANCHISES 2 MARIO NINTENDO F 3 FIFA SOCCER EA F = 1 BRAND 4 WII FIT* NINTENDO NB LG TERM VISIBILITY IN T
Slide 33: Long term opportunities for our core and casual brands
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 Multi-screens gaming for player Item based model Direct rela
Slide 34: Online & social breakthroughs
ONLINE & SOCIAL 5 BREAKTHROUGHS (details in appendices) 1 SYSTEMIC GAMEPLAY 2 COOP & SOCIAL 3 LOW BARRIERS TO ENTRY 4 USER GENERATED CONTENT 5 ANALYTICS = PERSONALIZED EXPERIENCE 34
Slide 35: Online & social: systemic gameplay
ONLINE & SOCIAL 1 SYSTEMIC GAMEPLAY The BEST and MOST LUCRATIVE online games are built on SOLID SYSTEMIC FOUNDATIONS COMMON RESOURCES for INFINITE entertainment combinations Huge world LOWER Retention development COST LONG GAMING HOURS per hour played 35
Slide 36: Online & social: coop & social
ONLINE & SOCIAL COOP 2 & SOCIAL PROGRESS and interact WITH FRIENDS Requires Updates in real time (things 360 & PS3 could not do) Players Players spend LOWER COME BACK REGULARLY MORE TIME the COST Per to the world playing Acquisition (CPA) 36
Slide 37: Online & social: low barriers to entry
ONLINE & SOCIAL LOW BARRIERS 3 TO ENTRY ULTRA-ACCESSIBLE : TRY for FREE and KEEP INSTANT-ON platforms ASYNCHRONOUS, your PROGRESS MOBILE interfaces WHENEVER with when you start to PAY SMALL SESSIONS that add to A LOT OF TIME your FRIENDS CROSS PLATFORM Asynchronous, Seamless ACCESSIBLE COOL
Slide 38: Online & social: user generated content
ONLINE & SOCIAL MORE CONTENT ENHANCED 4 FROM UGC MODING & UGC due to cross platform SHARING & to ALWAYS ON UGC CREATORS become INCREASES LIFESPAN SUPER AMBASSADORS of gaming experience (Lower Cost Per Acquisition) 38
Slide 39: Online & social: analytics
ONLINE & SOCIAL 5 ANALYTICS KNOW PLAYERS (profile, what they play, what interests them most), track their sessions = Offer CONTENT that MEETS their NEEDS a PERSONNALIZED STRONGER TARGETED RELATIONSHIP experience increases MARKETING with gamers ENGAGEMENT and RETENTION 39
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