FY15 Earnings presentation May 12th, 2015 Yves Guillemot, President - - PowerPoint PPT Presentation

FY15 Earnings presentation

May 12th, 2015

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 June 26, 2014 with the French Financial Markets Authority (l’Autorité des marchés financiers)).

D I S C L A I M E R Yves Guillemot, President and Chief Executive Officer Alain Martinez, Chief Financial Officer Jean-Benoît Roquette, SVP Investor Relations

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SUMMARY

FY16: Record operating income target

Videogames increasingly the dominant form of Entertainment

Teams’ strong execution on all strategic priorities

• Strong portfolio of entertainment brands
• Systemic open worlds
• Growing communities & engagement
• Digital

Beyond: Financial performance driven by Ever more engaged communities / High potential live services / Market growth 2 years 100 M€ share buyback program Players at the heart of our games and brands success

AGENDA

FY15 performance FY16 targets

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OPEN WORLDS TAKE A BIGGER SHARE

Physical retail sales : NPD, GFK

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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

OPEN WORLDS SHARE OF TOTAL MARKET

2008 2014 16% 30%

Players’ growing appetite for Freedom

UBISOFT’S STRATEGY HAS DELIVERED HANDSOMELY

Physical retail sales : NPD, GFK

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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

GROWING COMMUNITY & ENGAGEMENT Community + 54%

Rewards collection +100%

XBOX ONE & PS4

52% of FY15 revenues

Early move on newgen + growing communities + growing digital capabilities + massive systemic open worlds

FY15

Sales : 1,464 M€ (+42% at cstt FX) Outstanding new releases :

Assassin’s Creed (U+R) - Watch Dogs - Far Cry 4 - the Crew > 30 M units collectively Just Dance BIGGEST MUSIC VIDEOGAME BRAND EVER

Back-catalog : 233 M€ (flat yoy), 16% total revenues

Assassin’s Creed - Far Cry - Rocksmith - Rayman - South Park: The Stick of Truth

FY15 PERFORMANCE

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FY15

Digital strong momentum : 26% of total rev (vs 19%)

FY14 FY15

FY15 PERFORMANCE

383 M€ 195 M€

Full game Digital distribution Other Digital revenues *

+97% 87 108 269 113

+31% +149%

*mostly extra contents for console, PC & mobile

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FY15 : FINANCIAL SUMMARY

FY15

Record gross margin at 77%

top franchises momentum + digital revenues impact

Record non-IFRS Operating profit : 171 M€ (target of 165 M€) Record Free Cash flow: 176 M€ Net cash situation: 211 M€

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• Gross margin up 405 M€, at record 77% level (+5 points yoy)
• Strong line-up performance + favorable mix (PS4, XboxOne)
• Growing digital footprint
• R&D up 148 M€, down 3 points
• SG&A up 21 M€, down 10 percentage points
• variable marketing expenses marginally up to 206 M€ & down to 14% of sales (204 M€ and 20% in FY14). Positive impacts

from marketing efficiencies + Watchdogs marketing expenses in FY14

• fixed structure costs up to 176 M€ and down to 12% of sales (157 M€ and 16% in FY14)
• Non-IFRS Income tax rate at 32%.

FY15 : NON-IFRS P&L

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TO BE UPDATED

€ million, except for per share data

2014-2015 2013-2014

% %

Sales 1 463,8 1 007,1 Gross profit 1 126,7 77,0 721,8 71,7 R&D expenses (573,5) (39,2) (426,1) (42,3) Selling expenses (284,1) (19,4) (279,3) (27,7) G & A expenses (98,4) (6,7) (82,0) (8,1) SG & A expenses (382,5) (26,1) (361,3) (35,9) Non IFRS Current operating income 170,7 11,7 (65,6) (6,5) Net Financial Income (4,5) (5,8) Income Tax (53,5) 22,1 Non IFRS Net Income 112,7 (49,3) Non IFRS Diluted earnings per share 1,00 (0,46) Nbr of shares fully diluted 113,3 107,3

• 101 M€ total depreciation increase : mostly more games
• 45 M€ increase in Non Capitalized R&D & others : highlights growing post launch operations & bonuses
• 11 M€ Capitalized R&D increase : less than 3% increase

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FY15 : R&D

€ million

2014-15 2013-14

Depreciation of in-house software-related production 423,8 313,0 Depreciation of external software-related production and licenses 34,1 44,4 Royalties 23,0 21,4 Non Capitalized R&D & others 92,6 47,3 Total R&D depreciation and royalties 573,5 426,1 Capitalized in-house software-related production 389,7 373,8 Capitalized external software-related production and licenses 32,0 37,2 (excluding future commitments) Royalties 23,0 21,4 Non Capitalized R&D & others 92,6 47,3 Total development investment 537,3 479,7

IFRS Non-Current expenses and income : (21,7) M€

• Goodwill and brands depreciation

IFRS Net financial income : 0,7 M€

• Includes : 5,2 M€ (non-cash) from adjustment of earn-out liabilities

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FY15 : IFRS / NON-IFRS RECONCILIATION

€ million, except for per share data

2014-15 2013-14

IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS

Sales 1 463,8 1 463,8 1 007,1 1 007,1 Total Operating expenses (1 324,4) 31,3 (1 293,1) (1 105,0) 32,3 (1 072,7) Stock-based compensation (9,6) 9,6 0,0 (9,7) 9,7 0,0 Non current operating income and expenses (21,7) 21,7 0,0 (22,6) 22,6 0,0 Operating Income 139,4 31,3 170,7 (97,9) 32,3 (65,6) Net Financial income 0,7 (5,2) (4,5) 10,3 (16,1) (5,8) Income tax (53,1) (0,4) (53,5) 22,1 0,0 22,1 Net Income 87,0 25,7 112,7 (65,5) 16,2 (49,3) Diluted earnings per share 0,77 0,23 1,00 (0,61) 0,15 (0,46)

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• Sharp improvement of Cash flows from Operations : +253 M€
• Reflection of the strong top and bottom lines performance
• Sharp WCR improvement : + 100 M€
• No big titles released since early December vs South Park in Q4 FY14

€ million

2014-2015 2013-2014

Opening cash position (12,7) 104,5 Cash flows from operations 173,6 (79,3) Change in WCR 58,8 (40,8) Cash flows from operating activities 232,4 (120,1) Net investment in capital assets (56,1) (42,9) Net free cash flow 176,3 (163,0) Net acquisitions/disposals (3,5) (9,7) Proceeds from issue of capital and other financial flows 18,4 65,7 Disposal of Gameloft Shares 0,0 6,0 Effect of exchange rate fluctuations 32,9 (16,3) Decrease/(increase) in net debt 224,0 (117,3) Closing cash position 211,3 (12,7)

FY15 : CASH FLOWS & CLOSING CASH POSITION

AGENDA

FY15 performance FY16 targets

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FY16

TARGETS

Sales: Stable Non-IFRS Operating Income : minimum 200 M€

KEY DRIVERS

New releases down yoy AC Syndicate - R6 Siege – Just Dance - The Division + 1 AAA title Digital (~30% of total rev) & back catalogue growth Favorable FX Higher GM and lower R&D as a % of sales Negative FCF

Positive gap between cash R&D and P&L R&D WCR impact from The Division + AAA title in Q4 Assassin’s Creed movie investment

FY16 : TARGETS CONFIRMED

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FY11 FY12 FY13 FY14 FY15 FY16e 29 56 100 171

Gross Margin

FY11 FY12 FY13 FY14 FY15e FY16e 64.8% 67.7% 72.7%

Non-IFRS Op. Income (€ million)

2010 2011 2012 2013 2014 2015e 14.5 12.2 15.7

Industry Soft. Sales

• excl. Digital (€ billion)

FY11 FY12 FY13 FY14 FY15 FY16e 1 039 1 061 1 256 38 78 148 193

Digital

Sales (€ million)

1 464

• 66

10.8 71.7% 1 007

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9.5 77% 200e 378

UBISOFT FINANCIAL PERFORMANCE

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FY16 : ASSASSIN’S CREED SYNDICATE

New setting: Birth of organized crime in London at the height of the Industrial Revolution Play Evie and Jacob Frye Single player only Release: October 23rd (Xbox One & PS4) / Fall 2015 (PC)

FY16 : RAINBOW 6 SIEGE

“Rainbow Six was our favorite game at E3” PC Gamer, May 14

Community’s positive reception to the Closed Alpha Deep replayability potential procedural destruction + asymmetrical assault gameplay + operators class system Release : FY Q3 (Xbox One, PS4 & PC)

Best E3 PC game Game of the show 18

Highly anticipated open-world MMO RPG The Snowdrop engine: amazing graphics Release : FY Q4 (Xbox One, PS4 & PC)

FY16 : THE DIVISION

Most anticipated titles

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New for

FY16 FY15

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FY16 : DIGITAL LIVE SERVICES

more to be announced

CONSOLE / PC LIVE SERVICES MOBILE

APPENDICES

Physical retail sales : NPD, GFK

AC THE 5TH BIGGEST BRAND ! 2 OF THE 4

BIGGEST NEW IPS !

*includes hardware

Far Cry – Watch Dogs – The Division – Rainbow 6 strong contenders for Next-Gen top 20

F: Franchise NB: New Brands

Cumulated Retail Sales (Value) (Xbox360, PS3, Wii, WiiU, Xbox One, PS4 + PC) 2005 - 2014 (10 years)

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CALL OF DUTY ACTIVISION BLIZZARD F

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MARIO NINTENDO F

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FIFA SOCCER EA F

4 GTA TAKE-TWO F

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ASSASSIN'S CREED UBISOFT NB

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WII FIT* NINTENDO NB

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MADDEN NFL EA F

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THE SIMS

EA F

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GUITAR HERO* ACTIVISION NB

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BATTLEFIELD EA F

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HALO MICROSOFT F

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NEED FOR SPEED EA F

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JUST DANCE UBISOFT NB

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LEGO WARNER NB

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NBA 2K TAKE-TWO F

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Warcraft ACTIVISION BLIZZARD F

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SONIC SEGA F

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ROCK BAND* EA NB

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ELDER SCROLL BETHESDA F

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SKYLANDERS ACTIVISION BLIZZARD NB

Publishers 22

PAST 10 YEARS KEY SUCCESS FACTORS

KEY LEARNINGS

FRANCHISES = LG TERM VISIBILITY KEY FACTORS OF SUCCESS – Strong communities – Quality – Regular Releases – Deep Production Capacity NEW CYCLES = OPPORTUNITY FOR NEW BRANDS

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UBISOFT’S STOCK much more liquid than it may appear

Euronext 35% of total liquidity Average volume over 1 year at 963 000 shares

As of May, 11th

Volume Fragmentation