h1 fy17 earnings · perspec tives on q3 and fy17 fy19 h1 fy17 performance . 15 annual general...

H1 FY17 EARNINGS November 3, 2016

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 22, 2016 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

3

KEY TAKEAWAYS

BETTER PROFITABILITY PROFILE

BUILDING AN INCREASINGLY RECURRING DEPENDABLE BUSINESS

Expanding & strengthening portfolio of owned franchises

Growing digital revenues that boost profitability

STRONG ENGAGEMENT & PLAYER RECURRING INVESTMENT METRICS

AGENDA

4

A N I N C R E A S I N G LY R E C U R R I N G A N D D E P E N D A B L E B U S I N E S S

A N N U A L G E N E R A L M E E T I N G

H 1 F Y 1 7 P E R F O R M A N C E

P E R S P E C T I V E S O N Q 3 A N D F Y 1 7

F Y 1 9

5

INTERNALLY CREATED OWNED BRANDS

STRONG VISIBILITY ON THE FUTURE OF OUR FRANCHISES

*co-created or externally created

*

*

*

*

6

MULTI-STUDIOS ORGANIZATION

6

UNRIVALLED CAPACITY TO RELEASE OPEN-WORLD GAMES ON A REGULAR BASIS

*FY15 for ATVI & Warner

LIVE EXPERIENCES

ENGAGING THE PLAYER OVER THE LONGTERM

7 7

8

LIVE EXPERIENCES

>10 MILLION UNIQUE REGISTERED

USERS EACH

UBISOFT TOTAL MAUs UP 44% YOY

9

LIVE EXPERIENCES

PRO LEAGUE SEASON 3 RAINBOW SIX SIEGE:

UNIQUE VIEWERS UP 130% VS PRIOR SEASON

10

DISCIPLINED & WELL TARGETED ACQUISITIONS

ADDING TO THE GROUP BRICKS OF

RECURRING REVENUES EXPERTISE

11

H1 REFLECTS THIS STRATEGY’S BENEFITS

100%

80%

60%

40%

20%

0%

UPDATES DRIVE ENGAGEMENT HIGHER

12


TOM CLANCY’S RAINBOW SIX SIEGE PRAISED BY ITS FANS AND BY THE PRESS

13


ENGAGEMENT UP 51% WITH 1.4 UPDATE

AGENDA

14





F Y 1 9


15

ANNUAL GENERAL MEETING - SEPTEMBER 29, 2016

MASSIVE SUPPORT FROM OUR SHAREHOLDERS

AGENDA

16





F Y 1 9

H1 FY17 PERFORMANCE

17

H1 FY17

H 1 S A L E S :

281 M€, up 36% yoy

Q2 Sales : 142 M€, beating target of 100 M€

D I G I TA L M O M E N T U M C O N T I N U E S :

202 M€, + 102%, 72% of total revenues

Recurring Player Investment up 132%, at 95 M€

V E R Y S O L I D B A C K - C ATA L O G :

256 M€, + 46%

A MORE RECURRING PROFILE

H1 FY17 PERFORMANCE

18

H1 FY17

74 M€ increase in Topline :

4 6 M € N O N - I F R S O P E R A T I N G I N C O M E I N C R E A S E

6 points gross margin improvement

Solid costs control

N E T C A S H : 38 M€ vs (156) M€ in H1 FY16

A MORE PROFITABLE PROFILE

Gross margin up 72 M€, up 6 percentage point to 80%

Positive Digital impact

R&D up 24 M€ : releases of The Division & Far Cry Primal end of FY16 and development of Live operations

SG&A slightly up 2 M€ despite 74 M€ topline growth : good costs control

variable marketing expenses stable at 72 M€ (72 M€ in H1 FY16)

fixed structure costs slightly up to 93 M€ (90 M€ in H1 FY16)

H1 FY17: NON-IFRS P&L

19

€ million, except for per share data H1 2016-17 H1 2015-16

% %

Sales 281,4 207,3

Gross profit 226,4 80,5 154,3 74,4

Non-IFRS R&D expenses (123,8) (44,0) (99,5) (48,0)

Non-IFRS Selling expenses (113,4) (40,3) (111,1) (53,6)

Non-IFRS G & A expenses (51,0) (18,1) (51,5) (24,9)

Non-IFRS SG & A expenses (164,4) (58,4) (162,6) (78,4)

Non IFRS Current operating income (61,8) (22,0) (107,8) (52,0)

Net Financial Income (1,6) (5,9)

Income Tax 27,4 48,1

Non IFRS Net Income (35,9) (65,6)

Non IFRS Diluted earnings per share (0,30) (0,57)

Nbr of shares fully diluted 118 724 115 898

15 M€ total depreciation increase : releases of The Division & Far Cry Primal end of FY16

13 M€ increase in Non Capitalized R&D & others : development of Live operations

7 M€ Capitalized R&D increase

20

H1 FY17: R&D

€ million H1 2016-17 H1 2015-16

Depreciation of in-house software-related production 72,1 55,3

Depreciation of external software-related production and licenses 7,2 8,9

Royalties 2,8 6,4

Non Capitalized R&D & others 41,7 29,0

Total R&D depreciation and royalties 123,8 99,5

Capitalized in-house software-related production 231,0 222,2

Capitalized external software-related production and licenses 11,2 13,1

(excluding future commitments)

Royalties 2,8 6,4

Non Capitalized R&D & others 41,7 29,0

Total development investment 286,7 270,6

21

H1 FY17: IFRS / NON-IFRS RECONCILIATION

Stock-based compensation : increase mostly related to recent employee plan

Non-current operating expenses : 3.5 M€ related to brand depreciation

Net Financial income : 2.3 M€ related to earn-out payments

€ million,

except for per share data

H1 2016-17 H1 2015-16

IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS

Sales 281,4 281,4 207,3 207,3

Total Operating expenses (371,7) 28,5 (343,2) (324,7) 9,5 (315,2)

Stock-based compensation (24,9) 24,9 0,0 (6,0) 6,0 0,0

Non-current operating income

and expenses (3,6) 3,6 0,0 (3,5) 3,5 0,0

Operating Income (90,3) 28,5 (61,8) (117,4) 9,5 (107,8)

Net Financial income (3,9) 2,3 (1,6) (5,9) 0,0 (5,9)

Income tax 28,1 ( 0,7) 27,4 48,1 0,0 48,1

Net Income (66,1) 30,2 (35,9) (75,2) 9,5 (65,6)

Diluted earnings per share (0,56) 0,25 (0,30) (0,65) 0,08 (0,57)

22

29 M€ increase in CF from Operation

315 M€ improvement in WCR : Releases of FarCry Primal and The Division in FY16 Q4

54 M€ net proceeds from employee shares plan

40 M€ OCEANE : the IFRS equity element that will be expensed over 5 years as financial charge

H1 FY17: CASH FLOWS & CLOSING CASH POSITION

€ million H1 2016-17 H1 2015-16

Opening cash position (41,7) 211,3

Non-IFRS Cash flows from operations (180,2) (208,8)

Non-IFRS Change in WCR 189,4 (125,9)

Cash flows from Non-IFRS operating activities 9,2 (334,7)

Net investment in capital assets (27,0) ( 24,2)

Net free cash flow (17,7) (358,9)

Net acquisitions/disposals 0,0 (0,0)

Proceeds from issue of capital and other financial flows 5,2 16,8

Net acquisitions/disposals of own shares 54,1 (18,5)

Equity component 39,6 -

Effect of exchange rate fluctuations (1,8) (6,1)

Decrease/(increase) in net debt 79,4 (366,8)

Closing cash position 37,7 (155,5)

AGENDA

23





F Y 1 9

24

S A L E S :

between 1 610 and 1 670 M€ versus 1700 M€ prev.

Digital: ~ 40% of total revenues

Back Catalog: ~ 35%

N O N - I F R S O P E R AT I N G I N C O M E :

between 230 and 250 M€ versus 230M€ prev.

N O N - I F R S O P E R AT I N G M A R G I N :

between 14,3% and 15% versus 13,5% prev.

FY17

FY17 TARGETS ADJUSTED: IMPROVED PROFITABILTY

S A L E S : 560 M€, stable yoy

Q3

EXPANSIONS

25

H2 FY17: LINE-UP

•

26

H2 FY17: LINE-UP

Q3

Q4

WATCH DOGS 2

STEEP

JUST DANCE 2017

+ Assassin’s Creed Movie

+ Expansions The Division Survival Rainbow 6 Siege Operation Red Crow The Crew Calling all Units

FOR HONOR

SOUTH PARK THE FRACTURED BUT WHOLE

GHOST RECON WILDLANDS

+ Expansion The Division Last Stand

ASSASSIN’S CREED SYNDICATE

RAINBOW SIX SIEGE

JUST DANCE 2016

+ Expansion The Crew Wild Run

FAR CRY PRIMAL

THE DIVISION

FY16 FY17

AGENDA

27




F Y 1 9


28

R E V E N U E S : 2.2BN€

FY19 N O N - I F R S O P E R AT I N G I N C O M E : 20%

F R E E C A S H F L O W : ~300M€

3 YEARS PLAN: ON TRACK

APPENDICES

30

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)

Since IPO 5-year 3-year 2-year 1-year

UBISOFT +1,527% +610% +227% +115% +14%

NASDAQ* +333% * +106% +37% +15% +4%

CAC40 Net Return +246% +58% +13% +12% (5%)

Euro Stoxx Media Supersector Return +87% +86% +19% +12% (9%)

Source: FactSet as of October 31, 2016

IPO as of July 1, 1996

* Excludes dividends

31

AS THE LEADING 3RD PARTY

PUBLISHER ON NINTENDO HOME

CONSOLES FOR THE PAST 10 YEARS,

UBISOFT WILL BENEFIT

DISPROPORTIONATELY

NINTENDO SWITCH

TRUE INNOVATION

A MORE DEPENDABLE AND PROFITABLE INDUSTRY

32

Xbox 360/PS3 transition

Xbox One/PS4

transition

RISING BARRIERS TO ENTRY

DIGITALIZATION IMPACT

X

Solo Centric titles Multi Centric titles

AVERAGE DAUS (AFTER 3 MONTHS)

33

Solo Centric titles Multi Centric titles

AVERAGE PRI* (AFTER 3 MONTHS)

* Player recurring investment

MULTIPLAYER DRIVES ENGAGEMENT WHICH DRIVES MTX

[at scale]

FY19: KEY ASSUMPTIONS – DIGITAL

(REVENUE BREAKDOWN PER FISCAL YEAR)

100

11

100

44

Year 1 Year 2

Solo Centric title

Live title*

LIVE SERVICES BRING MORE PERSISTENT REVENUES

* The Crew

34

FY19: KEY ASSUMPTIONS – DIGITAL

h1 fy17 earnings · perspec tives on q3 and fy17 fy19 h1 fy17 performance . 15 annual general...

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