FY16 Earnings presentation May 12, 2016 Yves Guillemot, President - - PowerPoint PPT Presentation

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FY16 Earnings presentation May 12, 2016 Yves Guillemot, President - - PowerPoint PPT Presentation

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FY16 Earnings presentation May 12, 2016 Yves Guillemot, President and Chief Executive Officer Alain Martinez, Chief Financial Officer Jean-Benot Roquette, SVP Investor Relations D I S C L A I M E R This statement may contain estimated

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FY16 Earnings presentation

May 12, 2016

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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 July 2, 2015 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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KEY TAKEAWAYS

STRONG SHAREHOLDER VALUE CREATION TO BE EXPECTED FOR THE COMING YEARS EXECUTING ON THE STRATEGY EXPANDING & STRENGTHENING PORTFOLIO OF OWNED FRANCHISES DELIVERING STRONG MULTIPLAYER GAMES THAT DRIVE ENGAGEMENT HIGHER GROWING DIGITAL REVENUES THAT BOOTS PROFITABILITY IMPRESSIVE ENGAGEMENT & PLAYER RECURRING INVESTMENT METRICS

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AGENDA

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EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS

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20 YEARS OF STRONG VALUE CREATION

Source: FactSet as of May 9, 2016 IPO as of July 1, 1996

TOTAL SHAREHOLDER RETURN SINCE IPO (rebased to 100)

20-year 5-year 3-year 2-year 1-year

Ubisoft 1,287% 302% 209% 86% 55% NASDAQ 297% 67% 39% 17% (5%) CAC40 104% 8% 10% (3%) (15%) Euro Stoxx Media 18% 43% 31% 12% (11%)

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INTERNALIZATION OF PRODUCTION

KEY SUCCESS FACTOR: A TRUE INDUSTRIAL ORGANIZATION

WE DIFFERENTIATE THROUGH:

LESS RELIANCE ON BIG M&A COST-CONSCIOUS PRODUCTION ORGANISATION

2/3 OF TEAMS IN COMPETITIVE COSTS COUNTRIES

OWNERSHIP OF BRANDS & CREATION OF SUCCESSFUL NEW IP

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+

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KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL

AN INCREASINGLY RESOURCE INTENSIVE INDUSTRY MULTI-STUDIO ORGANISATION IS KEY TO SUCCEED

FY08 FY15

7 % 33% 33%

OPEN WORLDS’ SHARE OF TOTAL MARKET*

*NPD, GFK, value, physical sales

DEVELOP BIG MULTI PROJECTS SIMULTANOUSLY IMPROVE PRODUCTIVITY KNOWLEDGE, EXPERTISE & TECHNOLOGIES SHARING SOURCE OF GREAT INNOVATION STRONG POST LAUNCH OPERATIONS

+

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ONLY UBISOFT CAN REGULARLY DELIVER OPEN WORLDS WE LEARNED TO MASTER THIS COMPLEX MODEL SIGNIFICANT EDGE

KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL

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A STRATEGY THAT DELIVERS

1/ STRENGTHEN PORTFOLIO OF OWNED FRANCHISES x 3 audience of x 2 audience of

Sources: NPD, GFK Chart Track, Internal estimates

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2/ STRONG EXECUTION IN BRINGING PERFORMING MULTIPLAYER TITLES

A STRATEGY THAT DELIVERS

3/ SIGNIFICANTLY HIGHER ENGAGEMENT METRICS MUCH STRONGER DIGITAL RECURRING REVENUE PROFITABILITY BOOSTER

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REVENUES: 2.2BN€, +60%

FY19

NON-IFRS OPERATING INCOME MARGIN: 20% FREE CASH FLOW: ~300M€

3 YEARS PLAN: WELL POSITIONED

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AGENDA

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EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS

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FY16 SALES: 1 394 M€ (- 11% at cstt FX), excludes 34 M€ of digital deferred revenues

Higher than revised target of 1 360 M€

FY16

AMONG TOP 5 BEST SELLERS OF CALENDAR Q1 2016 : THE DIVISION: BIGGEST LAUNCH OF NEW IP

Record engagement:  9.5 M registered users  3h currently played on average per day by active players Record digital revenues

FAR CRY PRIMAL: BEST EVER SALES for a game released in February RAINBOW SIX SIEGE: HIGH PLAYER ENGAGEMENT

Average DAUs at 60% of peak DAUs (remarkable performance vs industry standards)

FY16 PERFORMANCE: SALES

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FY16

FY16 PERFORMANCE: DIGITAL

FY15 FY16

383 M€

Full game Digital distribution Recurring Player investment*

269 113

*includes in-game items, DLCs/season pass, subscription and advertising

+ 34

447 M€ 315 132

+ 16% + 17%

Deferred revenues

+ 47%

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FY16

FY16 PERFORMANCE: DIGITAL

74%

68% 74%

FY15

9%

Physical Digital Distribution Player recurring investment*

DIGITAL 26% OF TOTAL REVENUES FY16 DIGITAL 32% OF TOTAL REVENUES

23% 8% 18%

 12% with

deferred revenues

RECORD THE DIVISION SEASON PASS ATTACH RATE AT 20% THE CREW’S LIFETIME PLAYER RECURRING INVESTMENT = 27% OF TOTAL REVENUES

* Includes ingame items, DLCs/season pass, subscription & advertising

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FY16

STRONG PERFORMANCE OF BACKCATALOG AT 355 M€

25% OF TOTAL REVENUES A MORE RECURRING MODEL

FY16 PERFORMANCE: BACKCATALOG

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FY16

GROSS MARGIN: 78%

Positive digital impact & strength of franchises

FY16 PERFORMANCE: EARNINGS

NET DEBT: (42) M€ POSITIVE FREE CASH FLOW BEFORE WCR: 62 M€ NON-IFRS OPERATING INCOME: 169 M€

Higher than revised target of 150 M€

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  • Gross margin down 38 M€, but up 1 percentage point at 78%
  • Positive Digital impact and strength of franchises
  • R&D down 73 M€ : lower number of AAA releases (4 vs 5) and 2 titles released in Q4
  • SG&A up 37 M€
  • variable marketing expenses up to 217 M€ (206 M€ in FY15). FY15 benefited from Watch Dogs’ exp. incurred in FY14
  • fixed structure costs up to 202 M€ (177 M€ in FY15). 50% of increase due to constrained expenses
  • Low tax rate at 19%
  • Due to upcoming amendments to income tax rate in France on temporary differences. 28% expected going forward.

FY16: NON-IFRS P&L

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TO BE UPDATED

€ million, except for per share data

2015-16 2014-15 restated*

% %

Sales

1 394,0 1 463,8

Gross profit

1 088,9 78,1 1 126,7 77,0

R&D expenses

(500,3) (35,9) (573,5) (39,2)

Selling expenses

(304,5) (21,8) (284,1) (19,4)

G & A expenses

(115,1) (8,3) (98,6) (6,7)

SG & A expenses

(419,6) (30,1) (382,7) (26,1)

Non IFRS Current operating income

169,0 12,1 170,5 11,6

Net Financial Income

(10,4) (4,4)

Income Tax

(29,7) (53,4)

Non IFRS Net Income

129,0 112,6

Non IFRS Diluted earnings per share

1,13 1,00

Nbr of shares fully diluted

114 198 113 298

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  • 55 M€ total depreciation decrease : Fewer big titles (4 vs 5 including AC Rogue) & 2 titles released end of year
  • 7 M€ decrease in royalties : Mostly related to integration of Ivory Tower studio
  • 68 M€ Capitalized R&D increase : 22% topline increase expected in FY17 + material movie impact

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FY16: R&D

€ million

2015-16 2014-15 restated

Depreciation of in-house software-related production

374,2 423,8

Depreciation of external software-related production and licenses

28,8 34,1

Royalties

15,6 23,0

Non Capitalized R&D & others

81,7 92,6

Total R&D depreciation and royalties

500,3 573,5

Capitalized in-house software-related production

464,6 389,7

Capitalized external software-related production and licenses

24,9 32,0

(excluding future commitments) Royalties

15,6 23,0

Non Capitalized R&D & others

81,7 92,6

Total development investment

586,8 537,3

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FY16: IFRS / NON-IFRS RECONCILIATION

€ million, except for per share data

2015-16 2014-15 restated* IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS Sales

1 394,0 1 394,0 1 463,8 1 463,8

Total Operating expenses

(1 257,2) 32,3 (1 225,0) (1 324,6) 31,3 (1 293,3)

Stock-based compensation

(12,9) 12,9 0,0 (9,6) 9,6 0,0

Non-current operating income and expenses

(19,3) 19,3 (0,0) (21,7) 21,7 0,0

Operating Income

136,8 32,3 169,0 139,1 31,3 170,5

Net Financial income

(13,7) 3,3 (10,4) 0,7 (5,2) (4,4)

Income tax

(29,7) 0,0 (29,7) (53,0) (0,4) (53,4)

Net Income

93,4 35,6 129,0 86,8 25,7 112,6

Diluted earnings per share

0,82 0,31 1,13 0,77 0,23 1,00

  • Non-current operating income : 19 M€ related to goodwill depreciation
  • Net Financial income : 3 M€ related to additional earn-out
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  • 69 M€ decrease in CF from Operation : gap between Cash and P&L R&D
  • 253 M€ increase in WCR : late releases of FarCry Primal and The Division
  • 62 M€ Free-Cash-Flows before WCR
  • 79 M€ share-buyback

€ million

2015-16 2014-15 restated*

Opening cash position

211,3 (12,7)

Cash flows from operations

104,5 173,5

Change in WCR

(253,3) 58,9

Cash flows from operating activities

(148,8) 232,4

Net investment in capital assets

(42,7) (56,5)

Net free cash flow

(191,5) 175,9

Net acquisitions/disposals

0,4 (3,2)

Proceeds from issue of capital and other financial flows

22,2 17,9

Net acquisitions/disposals of own shares

(77,3) 0,6

Effect of exchange rate fluctuations

(6,8) 32,9

Decrease/(increase) in net debt

(253,0) 224,1

Closing cash position

(41,7) 211,3

FY16: CASH FLOWS & CLOSING CASH POSITION

* Restated for IFRIC21 impacts

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AGENDA

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EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS

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SALES: ~1 700 M€ NON IFRS OPERATING INCOME: ~230 M€ STRONG FREE CASH FLOWS

FY17

FY17 TARGETS

Q1 REVENUE TARGET: ~ 125 M€ NEW RELEASES GROWTH WITH 5 BIG GAMES VS 4 IN FY16: STRONG INCREASE IN BACK CATALOG: ~ 30% OF TOTAL REVENUES SIGNIFICANT GROWTH OF EXTRA CONTENT REVENUES DIGITAL REVENUE > 35% + NEW AAA IP

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BEST EVER VIDEO GAME FRANCHISE MOVIE ADAPTATION SIGNIFICANT FAN ACQUISITION AROUND THE BRAND

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ASSASSIN’S CREED MOVIE GOALS

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A P P E N D I C E S

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A MORE DEPENDABLE AND PROFITABLE INDUSTRY

26 Xbox 360/PS PS3 transi nsition ion Xbox One/PS PS4 transi nsition ion

RISING BARRIERS TO ENTRY DIGITALIZATION IMPACT

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