fy15 earnings presentation · fy15 earnings presentation may 12th, 2015 . ... non ifrs diluted...

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

16

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)

1 CALL OF DUTY ACTIVISION BLIZZARD F

2 MARIO NINTENDO F

3 FIFA SOCCER EA F

4 GTA TAKE-TWO F

5 ASSASSIN'S CREED UBISOFT NB

6 WII FIT* NINTENDO NB

7 MADDEN NFL EA F

8 THE SIMS EA F

9 GUITAR HERO* ACTIVISION NB

10 BATTLEFIELD EA F

11 HALO MICROSOFT F

12 NEED FOR SPEED EA F

13 JUST DANCE UBISOFT NB

14 LEGO WARNER NB

15 NBA 2K TAKE-TWO F

16 Warcraft ACTIVISION BLIZZARD F

17 SONIC SEGA F

18 ROCK BAND* EA NB

19 ELDER SCROLL BETHESDA F

20 SKYLANDERS ACTIVISION BLIZZARD NB

Publishers

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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