FY16 Earnings presentation May 12, 2016
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. 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)).
KEY TAKEAWAYS 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 STRONG SHAREHOLDER VALUE CREATION TO BE EXPECTED FOR THE COMING YEARS 3
AGENDA EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS 4
20 YEARS OF STRONG VALUE CREATION 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%) Source: FactSet as of May 9, 2016 IPO as of July 1, 1996 5
KEY SUCCESS FACTOR: A TRUE INDUSTRIAL ORGANIZATION WE DIFFERENTIATE THROUGH : INTERNALIZATION OF PRODUCTION OWNERSHIP OF BRANDS & CREATION OF SUCCESSFUL NEW IP COST-CONSCIOUS PRODUCTION ORGANISATION 2/3 OF TEAMS IN COMPETITIVE COSTS COUNTRIES LESS RELIANCE ON BIG M&A 6
KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL AN INCREASINGLY MULTI-STUDIO ORGANISATION RESOURCE INTENSIVE IS KEY TO SUCCEED INDUSTRY DEVELOP BIG MULTI PROJECTS OPEN WORLDS’ SHARE SIMULTANOUSLY OF TOTAL MARKET* + FY08 FY15 IMPROVE PRODUCTIVITY 7 % 33% 33% *NPD, GFK, value, physical sales KNOWLEDGE, EXPERTISE & + TECHNOLOGIES SHARING STRONG SOURCE OF GREAT POST LAUNCH INNOVATION OPERATIONS 7
KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL ONLY UBISOFT CAN REGULARLY DELIVER OPEN WORLDS WE LEARNED TO MASTER THIS COMPLEX MODEL SIGNIFICANT EDGE 8
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 9
A STRATEGY THAT DELIVERS 2/ STRONG EXECUTION IN BRINGING PERFORMING MULTIPLAYER TITLES 3/ SIGNIFICANTLY HIGHER ENGAGEMENT METRICS MUCH STRONGER DIGITAL RECURRING REVENUE PROFITABILITY BOOSTER 10
3 YEARS PLAN: WELL POSITIONED REVENUES: 2.2BN € , +60% FY19 NON-IFRS OPERATING INCOME MARGIN : 20% FREE CASH FLOW: ~300M € 11
AGENDA EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS 12
FY16 PERFORMANCE: SALES FY16 SALES: 1 394 M € (- 11% at cstt FX), excludes 34 M € of digital deferred revenues Higher than revised target of 1 360 M € AMONG TOP 5 BEST SELLERS OF CALENDAR Q1 2016 : THE DIVISION: BIGGEST LAUNCH OF NEW IP FY16 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) 13
FY16 PERFORMANCE: DIGITAL Deferred revenues + 34 447 M € + 47% 383 M € Recurring Player investment* 132 + 16% 113 FY16 315 Full game Digital distribution + 17% 269 FY15 FY16 * includes in-game items, DLCs/season pass, subscription and advertising 14
FY16 PERFORMANCE: DIGITAL Physical Digital FY15 FY16 Distribution Player DIGITAL 26% DIGITAL 32% recurring investment* OF TOTAL REVENUES OF TOTAL REVENUES * Includes ingame items, DLCs/season pass, subscription & advertising 18% 23% 8% 12% with 9% 74% 68% FY16 deferred revenues 74% RECORD THE DIVISION SEASON PASS ATTACH RATE AT 20% THE CREW ’S LIFETIME PLAYER RECURRING INVESTMENT = 27% OF TOTAL REVENUES 15
FY16 PERFORMANCE: BACKCATALOG STRONG PERFORMANCE OF BACKCATALOG AT 355 M € FY16 25% OF TOTAL REVENUES A MORE RECURRING MODEL 16
FY16 PERFORMANCE: EARNINGS GROSS MARGIN: 78% Positive digital impact & strength of franchises NON-IFRS OPERATING INCOME: 169 M € FY16 Higher than revised target of 150 M € NET DEBT: (42) M € POSITIVE FREE CASH FLOW BEFORE WCR: 62 M € 17
FY16: NON-IFRS P&L € million, except for per share data 2015-16 2014-15 restated* % % 1 394,0 1 463,8 Sales 1 088,9 78,1 1 126,7 77,0 Gross profit (500,3) (35,9) (573,5) (39,2) R&D expenses (304,5) (21,8) (284,1) (19,4) Selling expenses (115,1) (8,3) (98,6) (6,7) G & A expenses TO BE UPDATED (419,6) (30,1) (382,7) (26,1) SG & A expenses 169,0 12,1 170,5 11,6 Non IFRS Current operating income (10,4) (4,4) Net Financial Income (29,7) (53,4) Income Tax 129,0 112,6 Non IFRS Net Income 1,13 1,00 Non IFRS Diluted earnings per share 114 198 113 298 Nbr of shares fully diluted 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% 18 Due to upcoming amendments to income tax rate in France on temporary differences. 28% expected going forward.
FY16: R&D € million 2015-16 2014-15 restated 374,2 423,8 Depreciation of in-house software-related production 28,8 34,1 Depreciation of external software-related production and licenses 15,6 23,0 Royalties 81,7 92,6 Non Capitalized R&D & others 500,3 573,5 Total R&D depreciation and royalties 464,6 389,7 Capitalized in-house software-related production Capitalized external software-related production and licenses 24,9 32,0 (excluding future commitments) 15,6 23,0 Royalties 81,7 92,6 Non Capitalized R&D & others 586,8 537,3 Total development investment 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 19
FY16: IFRS / NON-IFRS RECONCILIATION 2015-16 2014-15 restated* € million, except for per share data IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS 1 394,0 1 394,0 1 463,8 1 463,8 Sales (1 257,2) 32,3 (1 225,0) (1 324,6) 31,3 (1 293,3) Total Operating expenses (12,9) 12,9 0,0 (9,6) 9,6 0,0 Stock-based compensation Non-current operating income (19,3) 19,3 (0,0) (21,7) 21,7 0,0 and expenses 136,8 32,3 169,0 139,1 31,3 170,5 Operating Income (13,7) 3,3 (10,4) 0,7 (5,2) (4,4) Net Financial income (29,7) 0,0 (29,7) (53,0) (0,4) (53,4) Income tax 93,4 35,6 129,0 86,8 25,7 112,6 Net Income 0,82 0,31 1,13 0,77 0,23 1,00 Diluted earnings per share Non-current operating income : 19 M € related to goodwill depreciation Net Financial income : 3 M € related to additional earn-out 20
FY16: CASH FLOWS & CLOSING CASH POSITION € 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 * Restated for IFRIC21 impacts 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 21
AGENDA EXECUTING ON THE STRATEGY FY16 PERFORMANCE FY17 TARGETS 22
FY17 TARGETS SALES: ~1 700 M € NON IFRS OPERATING INCOME: ~230 M € STRONG FREE CASH FLOWS NEW RELEASES GROWTH WITH 5 BIG GAMES VS 4 IN FY16: + NEW AAA IP FY17 STRONG INCREASE IN BACK CATALOG: ~ 30% OF TOTAL REVENUES SIGNIFICANT GROWTH OF EXTRA CONTENT REVENUES DIGITAL REVENUE > 35% Q1 REVENUE TARGET: ~ 125 M € 23
ASSASSIN’S CREED MOVIE GOALS BEST EVER VIDEO GAME FRANCHISE MOVIE ADAPTATION SIGNIFICANT FAN ACQUISITION AROUND THE BRAND 24
A P P E N D I C E S
A MORE DEPENDABLE AND PROFITABLE INDUSTRY Xbox One/PS PS4 transi nsition ion Xbox 360/PS PS3 transi nsition ion RISING BARRIERS DIGITALIZATION X TO ENTRY IMPACT 26
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