Ubisoft Entertainment · EURONEXT:UBI
Ubisoft Entertainment — H1 FY13 Earnings Presentation
37 slides from Ubisoft Entertainment's earnings presentation, Nov 6, 2012
Slide 1: H1 FY13 Earnings Presentation
H1 FY13 Earnings Presentation November 6, 2012
Slide 2: Disclaimer
Yves Guillemot, President and Chief Executive Officer Alain Martinez, Chief Financial Officer Jean-Benoît Roquette, Head of Investor Relations Disclaimer This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such
Slide 3: Summary
Summary H1 : Sales better than anticipated H1 : Gross Margins significantly up, bottom line impacted by expected H2 marketing expenses Q3 : On track for best Q3 ever FY13 : Sales guidance and top end of current operating income guidance raised FY13 : A turning point. Past investments drive quality i
Slide 4: Agenda
Agenda H1 FY13 H2 FY13 line-up and FY13 guidance Longer term 4
Slide 5: H1 FY13: Sales
H1 FY13 : Sales Q2 sales higher than guidance (148 M€ vs 110 M€) Outperformance : Online, Ghost Recon Future Soldier, Back-catalog Extra Just Dance 4 shipments H1 H1 sales at 279 M€, up 12% FY13 Online up 59% to 28 M€ in Q2 (55 M€ for H1, +82%) H1 back-catalog down 9%, a significant improvement
Slide 6: H1 FY13: Financial summary
H1 FY13 : Financial summary Gross margin up 5 percentage points 3rd year of improvement Better online, core titles (Ghost Recon FS) and Just Dance 4 H1 Current operating loss : (58) M€ FY13 A 29 M€ increase in selling expenses for Q3 titles and online games Cash flows from operations : stable at (14
Slide 7: H1 FY13: Ghost Recon Future Soldier better than expected
H1 FY13 : Ghost Recon Future Soldier better than expected “If you’re after a superbly paced, thoughtful shooter that boasts a strong campaign and enjoyable multiplayer, GRFS is bang on target” IGN, May 2012 Sales better than planned High ASP GRFS generated more sales in Q1 FY13 than Driver + Tintin
Slide 8: H1 FY13: Online material impact
H1 FY13 : Online material impact H1 Online sales : 55 M€, up 82% Free-to-Play PC : continued strong growth Mobile : Rayman Jungle Run, N°1 in 39 countries at launch Xbla : Trials Evolution, was highest grossing day-1 sales in XBLA history Digital distribution : launch of Uplay PC distribution platfo
Slide 9: H1 FY13: Current Operating Income
H1 FY13 : Current Operating Income H1 2012-13 H1 2011-12 € million % €m % Sales 279,2 248,5 Gross profit 192,7 69,0 158,4 63,7 R&D expenses (96,8) 34,7 (86,7) 34,9 Selling expenses (116,8) 41,8 (87,7) 35,3 G&A expenses (37,2) 13,3 (33,2) 13,4 SG&A expenses (154,0) 55,1 (121,0) 48,7 Current operating
Slide 10: H1 FY13: R&D
H1 FY13 : R&D € million H1 2012-13 H1 2011-12 Depreciation of in-house games 61,4 45,2 Depreciation of external games and licences 7,9 11,1 Royalties 12,8 14,4 Non Capitalized R&D & others 14,8 16,0 Total R&D depreciation and royalties 96,8 86,7 Capitalized software-related production 171,5 148,3 In
Slide 11: H1 FY13: Net Income
H1 FY13 : Net Income € million H1 2012-13 H1 2010-12 Current operating income (58,1) (49, 3) Fair Value Variation 0,0 0,0 Stock-based compensation (2,1) (5,5) Other revenues (expenses) 0,0 0,0 Operating income/(loss) (60,2) (54,8) Net financial income/(expense) 5,1 (1,7) Share of profit of associate
Slide 12: H1 FY13: Cash flows and closing cash position
H1 FY13 : Cash flows and closing cash position € million H1 2012-13 H1 2011-12 Opening cash position 84,6 99,2 Cash flows from operations (146,4) (142,7) Change in WCR (98,4) (35,4) Cash flows from operating activities (244,9) (178,1) Net investment in capital assets (10,9) ( 15,3) Net free cash flo
Slide 13: Agenda
Agenda H1 FY13 H2 FY13 line-up and FY13 guidance Longer term 13
Slide 14: FY13: A very focused line-up of high potential titles
FY13 : A very focused line-up of high potential titles Number of retail titles Q3 FY13 16 Q3 FY12 30 Q3 FY10 >40 14
Slide 15: H2 FY13 Core Games: Significant growth expected
H2 FY13 Core Games : Significant growth expected FY13 FY12 Assassin's Creed 3 Assassin's Creed Revelations Ghost Recon Future Soldier Driver + Tintin Rayman Legends (WiiU exclusive) Rayman Origins Far Cry 3 ZombiU (WiiU excl.) + strong Settlers Online Settlers Online digital distribution Core Anno O
Slide 16: Assassin's Creed 3, the biggest launch in Ubisoft's history
H2 FY13 Core Games : Assassin's Creed 3, the biggest launch in Ubisoft’s history “Time disappears when you play AC3." IGN, October 2012 “Ubisoft Montreal and its sister studios around the world have crafted a prodigious and complex game rich in theme-driven storytelling and diverse gameplay. " GameI
Slide 17: Far Cry 3, a major contender in the biggest genre
H2 FY13 Core Games : Far Cry 3, a major contender in the biggest genre of the industry “Far Cry 3 = FC2 + Uncharted + Red Dead Redemption" Kotaku, October 2012 "The thin line between Far Cry 3 and Skyrim" Gamespot, October 2012 A MONSTER game, a unique kind of shooters An impressive and lively open
Slide 18: ZombiU, the top 1/3 party title on WiiU?
H2 FY13 Core Games : ZombiU, the top 1/3 party title on WiiU? “Ubisoft's zombie shooter is impressing us more and more, and just might be reason enough to buy a Wii U” IGN, October 2012 The top 1/3 party title for the launch of the WiiU? A true demonstration of the WiiU gameplay capabilities Zombies
Slide 19: Ubisoft brings its core brands to Free-to-Play
H2 FY13 Core Games : Ubisoft brings its core brands to Free-to-Play A cult PC brand Ubisoft BlueByte PC Free to play Closed beta First Ubisoft organic FTP success Ubisoft BlueByte (Germany) PC Free to play Already profitable and growing Connect with a huge PC audience A cult shoo
Slide 20: Ubisoft brings its core brands to Free-to-Play
H2 FY13 Core Games : Ubisoft brings its core brands to Free-to-Play Free to Play on Gree’s WW iOs/Android platform Developped by Gree To be released early 2013 Players compete online A hardcore brand on PC and iPad, Free to Play for a committed audience A cult PC brand Ubisoft Bluebyte
Slide 21: H2 FY13 Casual Games: Many opportunities but prudent expectations
H2 FY13 Casual Games : Many opportunities but prudent expectations FY13 FY12 Just Dance 3 Just Dance 4 Just Dance Party Just Dance Disney Black Eyed Peas Experience Hip Hop Dance Experience Abba Rocksmith Rocksmith Casual sales YourShape (WiiU excl.) Rabbids Alive & Kicking material decrease Casual
Slide 22: H2 FY13 Casual Games: Many opportunities but prudent expectations
H2 FY13 Casual Games : Many opportunities but prudent expectations First 5 weeks estimated sales down double digit (in line with guidance) Geographical expansion + new WiiU platform Released (Wii, WiiU, Kinect, Move) Lead/Associate studios : Paris, Reflections, Bucarest 22
Slide 23: H2 FY13: Digital growth drivers for our core and casual brands
H2 FY13 : Digital growth drivers for our core and casual brands Make a difference in the online world = quality + brands’ reputation Digital distribution PC Free-to-Play, eSport iOs/Android & Xbla/PSN … (paymium & Free to Play) + DLCs from consoles games 23
Slide 24: FY13: A turning point
FY13 : A turning point Raised expectations Q3 Sales : 740 M€ – 800 M€, up 13% to 23% FY13 Sales : 1 200 M€ – 1 260 M€ (vs 1 160 M€ – 1 200 M€) up yoy +13% to +19% FY13 FY13 Gross margin : up 3 to 4 percentage points (vs 2 to 3 points) FY13 Current Op. Income : 70 M€ – 100 M€ (vs 70 M€ – 90 M€), up y
Slide 25: Agenda
Agenda H1 FY13 H2 FY13 line-up and FY13 guidance Longer term 25
Slide 26: 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 27: Long term growth opportunities with the console market
Long term growth opportunities with the console market Long term opportunities HD consoles grew significantly : Players even more connected an unmatched experience = for core gamers Bring social benefits & online services Market software sales = (€ billion) A growing ARPU 16 + 14 12 +60% 10 New HD c
Slide 28: Long term growth opportunities on PC and wireless with Free to Play
Long term growth opportunities on PC and wireless with the Free to Play model Long term opportunities 1- Bring core and casual brands to huge PC audiences previously unreachable 2- Expand brands on mobile and tablet platforms The Free to Play model adapts to ≠ purchasing power and consumption patter
Slide 29: Conclusion
Conclusion Make a difference Capture with Ubisoft's unique capacity the long term growth to create great experiences of the videogame markets for both core and casual audiences Long term progression 29
Slide 30: Agenda: Appendices
Agenda Appendices 30
Slide 31: FY13: Driven by core games and online/digital
FY13 : Driven by core games and online/digital In million € Core Brands Casual Brands Total sales FY12 578 483 1 061 Material decrease FY13 Significant growth conservatively 1 200 – 1 260 budgeted Core & Casual In million € Online/Digital FY12 80 FY13 +80 / +100% growth 31
Slide 32: FY13 Core Games: Significantly stronger offer on HD consoles
FY13 Core Games : Significantly stronger offer on HD consoles A significant progression opportunity lies in front of Ubisoft Ubisoft Core Games Sales HD consoles market software sales PS2 + Xbox + Xbox360 + PS3 Xbox360 + PS3 (sell-thru $ million) ($ million) 1 200 12 000 1 000 10 000 800 8 000 600 6
Slide 33: FY13 Core Games: Ubisoft re-enters the shooter category
FY13 Core Games : Ubisoft re-enters the shooter category Ubisoft re-enters the biggest segment of the industry ShootMania Ghost Recon Online FarCry 3 Ghost Recon Future Soldier 20% Shooters 19% RPG 35% Shooters 40% Driving RPG 15% Others Sport 40% Action Adventure 15% 8% Others 8% The console opport
Slide 34: Core Games: Splinter Cell Black List (Spring 2013)
Core Games : Splinter Cell Black List (Spring 2013) “SC Blacklist is visually stunning and colorfully gruesome, but what really stands out is stunning choreography.” Gamespot, June 2012 “SC Blacklist simply comes across as a more ambitious game than its predecessors.” GameInformer, June 2012 Builds
Slide 35: FY13 Online/Digital: A strong growth and profitability driver
FY13 Online/Digital : A strong growth and profitability driver Ubisoft targets the fast growing online market PC online games & wireless games CAGR 2012-16 Worldwide revenues ($ million) +10% 50 000 45 000 +13% 40 000 35 000 30 000 25 000 Wireless games PC Online games 20 000 15 000 10 000 5 000 - 2
Slide 36: H1 FY13: Net income before non recurring elements and stock-based compensation
H1 FY13 : Net income before non recurring elements and stock-based compensation H1 2012-13 H1 2011-12 In million of euros, Before non recurring Before non recurring except for per share data As reported Adjustment elements and stock As reported Adjustment elements and stock based compensation based
Slide 37: H1 FY13: Working Capital
H1 FY13 : Working Capital € million H1 2012-13 H1 2011-12 Δ Inventories 22,5 12,2 Δ Trade receivables 79,3 6,6 Δ Other receivables 23,3 23,2 Δ Trade payables -24,6 -12,9 Δ Other payables -2,1 6,3 Change in WCR 98,4 35,4 37
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