Ubisoft Entertainment · EURONEXT:UBI
Ubisoft Entertainment — H1 FY15 Earnings Presentation
28 slides from Ubisoft Entertainment's earnings presentation, Oct 30, 2014
Slide 1: H1 FY15 Earnings presentation
H1 FY15 Earnings presentation October 30th, 2014
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: Summary
SUMMARY H1: Ubisoft’s strategy delivers - Stronger sales than expected = Watch Dogs (9Mu), Digital and Back Catalog - Record gross margin, better than expected operating income & cash flows Q3: Great momentum with 4 major releases FY15 & FY16: Targets confirmed - FY15: sales ≥ 1 400 M€ & non-IFRS op
Slide 4: Agenda
AGENDA H1 Q3 & FY15 FY16 4
Slide 5: H1 FY15: Sales Outperformance
H1 FY15 : SALES OUTPERFORMANCE H1 Sales : 484 M€, +68% at cstt exchange rates Q2 sales: 124 M€, beating target of 85 M€ Watch Dogs continued success: > 9 Mu > 10 Mu expected in FY15 H1 Digital strong momentum : 135 M€, +90% 28% of total sales FY15 Driven by digital distribution, mobile, sale of item
Slide 6: H1 FY15: Watch Dogs, creation of a major franchise
H1 FY15 : WATCH DOGS creation of a major franchise 9 Mu already sold in. On track to >10 Mu in FY15 Builds on Ubisoft’s strengths : IP creation - open world - massive production values Xbox One, PS4, PS3, Xbox 360, PC, Wii U 6
Slide 7: H1 FY15: Earnings Outperformance
H1 FY15 : EARNINGS OUTPERFORMANCE Record gross margin at 78% (up 9 pts) Supported by Watch Dogs success, favorable mix (PS4/Xbox One/PC) + growing digital revenues H1 Non-IFRS Operating profit : 24 M€ vs loss expected FY15 Positive impact from rev, gross margin & lower than anticipated expenses A 12
Slide 8: H1 FY15: Non-IFRS P&L
H1 FY15 : NON-IFRS P&L € million, except for per share data H1 2014-2015 H1 2013-2014 % % Sales 484,2 293,3 Gross profit 378,1 78,1 202,2 68,9 R&D expenses (181,2) (37,4) (138,9) (47,4) Selling expenses (127,2) (26,3) (123,5) (42,1) G & A expenses (45,6) (9,4) (37,8) (12,9) SG & A expenses (172,8) (
Slide 9: H1 FY15: R&D
H1 FY15 : R&D € million H1 2014-15 H1 2013-14 Depreciation of in-house software-related production 138,8 107,8 Depreciation of external software-related production and licenses 2,5 6,2 Royalties 6,8 9,7 Non Capitalized R&D & others 33,1 15,2 Total R&D depreciation and royalties 181,2 138,9 Capitaliz
Slide 10: H1 FY15: IFRS / Non-IFRS Reconciliation
H1 FY15 : IFRS / NON-IFRS RECONCILIATION H1 2014-15 H1 2013-14 € million, except for per share data IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS Sales 484,2 484,2 293,3 293,3 Total Operating expenses -470,6 10,6 -460,0 -407,3 16,0 -391,3 Stock-based compensation -5,0 5,0 0,0 -4,3 4,3 0,0 Non-cu
Slide 11: H1 FY15: Cash Flows & Closing Cash Position
H1 FY15 : CASH FLOWS & CLOSING CASH POSITION € million H1 2014-15 H1 2013-14 Opening cash position (12,7) 104,5 Cash flows from operations (37,5) (144,8) Change in WCR 17,9 (115,9) Cash flows from operating activities (19,5) (260,7) Net investment in capital assets (28,1) ( 16,3) Net free cash flow
Slide 12: Agenda
AGENDA H1 Q3 & FY15 FY16 12
Slide 13: FY15: Driven by Core & Digital Strong Growth
FY15 : DRIVEN BY CORE & DIGITAL STRONG GROWTH FY Sales : minimum 1 400 M€, up 39% Gross margin : up 3 to 4 points Marketing expenses down in % : < 18% of total sales FY15 Non-IFRS Operating Income : minimum 150 M€ Positive Free Cash Flows Q3 Sales : 730 M€, up 40% 13
Slide 14: Q3: Assassin's Creed Unity & Rogue
Q3 : ASSASSIN’S CREED UNITY & ROGUE two strong offerings for new and last gen PS4 PS3 Xbox One Xbox 360 PC PC (early 2015) The most beautiful game ever created by Ubisoft Great story telling - Play as a Templar New state of the art engine: fully new gen Return of the acclaimed naval gameplay New inn
Slide 15: Q3: Far Cry 4
Q3 : FAR CRY 4 the return of the Anecdote Factory FC4’s systemic open world rated* significantly > FC3’s Best of E3 Doubled FC3’s search & website traffic & Youtube views Release : November 18 (PS4, Xbox One, PC, 360, PS3) Best E3 Shooter 15 * Ubisoft internal playtests
Slide 16: Q3: The Crew
Q3 : THE CREW designed to be the “World of Warcraft” of driving games A seamless single, coop and multiplayer experience A major step forward for the racing genre Best E3 Racing game Release : December 2 (PS4, Xbox One, PC, Xbox 360) 16
Slide 17: Q3: Just Dance 2015 & Just Dance Now
Q3 : JUST DANCE 2015 & JUST DANCE NOW constant flow of innovation Downloaded ~ 6 million times: Best songs of the years Brazil & the Philippines among top 5 countries (downloads) Smartphones as a controller, no need for Kinect or PS move Local adaptation: “India Waale” from Bollywood blockbuster of
Slide 18: FY15: Digital Revenues significant growth expected
FY15 : DIGITAL REVENUES significant growth expected DIGITAL DISTRIBUTION PC FREE-TO-PLAY MOBILE FREE-TO-PLAY … CONSOLES & PC DLC/ITEMS CONSOLES & PC DIGITAL 18
Slide 19: Agenda
AGENDA H1 Q3 & FY15 FY16 19
Slide 20: FY16: Targets Confirmed
FY16 : TARGETS CONFIRMED TARGETS Non-IFRS Operating Income : minimum 200 M€ Positive Free Cash Flows KEY DRIVERS Built on a mix of topline, gross margins and operating margins strengths FY16 Resurgent growth of the market in calendar 2015 Very strong line-up Another improvement in gross margin Signi
Slide 21: FY16: The Division
FY16 : THE DIVISION buzz and players’ anticipation at high levels “It was a pretty outstanding demo” A persistent online open-world RPG shooter IGN, June 2014 The Snowdrop engine : amazing graphics “The Division vs Destiny” Gamespot, October 2014 Release : 2015 (Xbox One, PS4 & PC) 21
Slide 22: FY16: Rainbow 6 Siege
FY16 : RAINBOW 6 SIEGE a cult franchise is back ! Very strong reaction from die-hard shooters fans Solo campaign to broaden the audience Best E3 PC game “Rainbow Six was our favorite game at E3” Release : 2015 (Xbox One, PS4 & PC) PC Game Gamer, of May 14 the show 22
Slide 23: Appendices
APPENDICES UBISOFT
Slide 24: We believe that our major production capacity...
"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 25: A Major Opportunity for Ubisoft
A MAJOR OPPORTUNITY FOR UBISOFT Open Worlds will take a bigger share of the market New cycle’s early years = great timing for new IPs Fast growing digital footprint = better players’ engagement Ubisoft to benefit disproportionaly from the market’s growth 25
Slide 26: Past 9 Years Key Success Factors: Quality and regular releases
PAST 9 YEARS KEY SUCCESS FACTORS : Quality and regular releases Cumulated Retail Sales (Value) (Xbox360, PS3, Wii, WiiU, Xbox One, PS4 + PC) Publishers KEY LEARNINGS 2005 - 2013 (9 years) 1 CALL OF DUTY ACTIVISION BLIZZARD F 2 MARIO NINTENDO F FRANCHISES 3 FIFA SOCCER EA F = 4 ASSASSIN'S CREED UBISO
Slide 27: FY15: Back to financial performance improvement
FY15 : Back to financial performance improvement Industry Soft. Sales Sales (€ million) 1 400e (€ billion) 15.9 1 256 1 007 15.7 14.5 1 061 1 039 12.2 871 10.8 20 38 78 148 193 FY10 FY11 FY12 FY13 FY14 FY15e 2009 2010 2011 2012 2013 2014e Digital Non-IFRS Op. 150e Gross Margin Income (€ million) 100
Slide 28: Ubisoft's Stock much more liquid than it may appear
UBISOFT’S STOCK much more liquid than it may appear Volume Fragmentation As of October, 29th Euronext 43% of total liquidity Average volume over 1 year at 833 000 shares 28
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