Upload
others
View
11
Download
0
Embed Size (px)
Citation preview
H1 FY15 Earnings presentation October 30th, 2014
2
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
3
H1: Ubisoft’s strategy delivers
- Stronger sales than expected = Watch Dogs (9Mu), Digital and Back Catalog
- Record gross margin, better than expected operating income & cash flows
SUMMARY
FY15 & FY16: Targets confirmed
- FY15: sales ≥ 1 400 M€ & non-IFRS operating income ≥ 150M€
- FY16: non-IFRS operating income ≥ 200 M€
- 200 M€ of FCF over the 2 years (or net cash situation ~ 200 M€ by March 16)
Q3: Great momentum with 4 major releases
Short-Medium-Long Term: Ubisoft ready to generate significant value
for its shareholders
AGENDA
4
H1
Q3 & FY15
FY16
H1 FY15
H1 Sales : 484 M€, +68% at cstt exchange rates
Q2 sales: 124 M€, beating target of 85 M€
Watch Dogs continued success: > 9 Mu
> 10 Mu expected in FY15
Digital strong momentum : 135 M€, +90%
28% of total sales
Driven by digital distribution, mobile, sale of items & DLCs
Mobile up 6x, already 45% higher than full FY14
Back-catalog : 114 M€, +1%
AC 4, South Park, Far Cry 3 & Rayman Legends
5
H1 FY15 : SALES OUTPERFORMANCE
9 Mu already sold in. On track to >10 Mu in FY15
Builds on Ubisoft’s strengths : IP creation - open world -
massive production values
Xbox One, PS4, PS3, Xbox 360, PC, Wii U
H1 FY15 : WATCH DOGS
6
creation of a major franchise
7
H1 FY15 : EARNINGS OUTPERFORMANCE
H1 FY15
Record gross margin at 78% (up 9 pts)
Supported by Watch Dogs success, favorable mix (PS4/Xbox One/PC)
+ growing digital revenues
Non-IFRS Operating profit : 24 M€ vs loss expected
Positive impact from rev, gross margin & lower than anticipated expenses
A 122 M€ improvement yoy
Free Cash flow: (47,6) M€
A 229 M€ improvement yoy
H1 outperfomance demonstrates Ubisoft is now ready to
generate significant value for its shareholders
Gross margin up 176 M€, at record 78% level (+9 points yoy)
Strong performance of Watch Dogs + favorable mix (PS4, XboxOne, PC)
Growing digital footprint
R&D up 42 M€ but down 10 percentage points
SG&A up 12 M€, down 19 percentage points
variable marketing expenses marginally up at 92 M€ or 19% of sales (88 M€ and 30% in H1 FY14). Some Watch Dogs
expenses incurred in FY14
fixed structure costs up at 81 M€ or 17% of sales (73 M€ and 25% in H1 FY14)
Non-IFRS Income tax rate at 21%. 32% rate expected for the full year
H1 FY15 : NON-IFRS P&L
8
€ million, except for per share data H1 2014-2015 H1 2013-2014
% %
Sales 484,2 293,3
Gross profit 378,1 78,1 202,2 68,9
R&D expenses (181,2) (37,4) (138,9) (47,4)
Selling expenses (127,2) (26,3) (123,5) (42,1)
G & A expenses (45,6) (9,4) (37,8) (12,9)
SG & A expenses (172,8) (35,7) (161,3) (55,0)
Non-IFRS operating income 24,2 5,0 (98,0) (33,4)
Net Financial Income (2,5) (2,4)
Income Tax (4,6) 38,2
Non-IFRS Net Income 17,1 (62,1)
Non-IFRS Diluted EPS 0,15 (0,59)
Nbr of shares fully diluted (000) 112 931 104 508
27 M€ total depreciation increase : release of Watch Dogs
18 M€ increase in Non Capitalized R&D & others : live operations of FTP PC & mobile, post launch, higher
bonuses, accounting of in-between projects
1% increase in capitalized R&D
9
H1 FY15 : R&D
€ million H1 2014-15 H1 2013-14
Depreciation of in-house software-related production 138,8 107,8
Depreciation of external software-related production and licenses 2,5 6,2
Royalties 6,8 9,7
Non Capitalized R&D & others 33,1 15,2
Total R&D depreciation and royalties 181,2 138,9
Capitalized in-house software-related production 195,2 189,8
Capitalized external software-related production and licenses 14,9 18,7
(excluding future commitments)
Royalties 6,8 9,7
Non Capitalized R&D & others 33,1 15,2
Total development investment 250,0 233,3
IFRS Non-Current expenses and income : (5.7) M€
• Goodwill depreciation
IFRS Net financial income : 2.7 M€
• Includes : 5,3 M€ (non-cash) from adjustment of earn-out liabilities
10
H1 FY15 : IFRS / NON-IFRS RECONCILIATION
€ million,
except for per share data
H1 2014-15 H1 2013-14
IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS
Sales 484,2 484,2 293,3 293,3
Total Operating expenses -470,6 10,6 -460,0 -407,3 16,0 -391,3
Stock-based compensation -5,0 5,0 0,0 -4,3 4,3 0,0
Non-current expenses and
income -5,7 5,7 0,0 -11,7 11,7 0,0
Other operating income and
expenses 0,0 0,0 0,0 0,0 0,0
Operating Income 13,5 10,6 24,2 -114,0 16,0 -98,0
Net Financial income 2,7 -5,3 -3,0 13,4 -15,8 -2,4
Income tax -4,6 0,0 4,6 38,2 0,0 38,2
Net Income 11,7 5,4 17,1 -62,3 0,2 -62,1
Diluted earnings per share 0,10 0,05 0,15 -0,60 0,00 -0,59
11
Sharp improvement of Cash flows from Operations :
Reflection of the strong top and bottom lines performance
Sharp WCR improvement : More favorable starting basis for Account Receivables, plus early launch of
Watch Dogs, versus late launch of JD 2014, Splinter Cell and Rayman Legends last year
€ million H1 2014-15 H1 2013-14
Opening cash position (12,7) 104,5
Cash flows from operations (37,5) (144,8)
Change in WCR 17,9 (115,9)
Cash flows from operating activities (19,5) (260,7)
Net investment in capital assets (28,1) ( 16,3)
Net free cash flow (47,6) (276,9)
Net acquisitions/disposals (2,3) (3,0)
Proceeds from issue of capital and other financial flows 7,5 36,3
Disposal of Gameloft Shares 0,0 6,0
Effect of exchange rate fluctuations 14,9 (8,7)
Decrease/(increase) in net debt (27,6) (246,3)
Closing cash position (40,3) (141,8)
H1 FY15 : CASH FLOWS & CLOSING CASH POSITION
AGENDA
12
H1
Q3 & FY15
FY16
FY15
FY Sales : minimum 1 400 M€, up 39%
Gross margin : up 3 to 4 points
Marketing expenses down in % : < 18% of total sales
Non-IFRS Operating Income : minimum 150 M€
Positive Free Cash Flows
Q3 Sales : 730 M€, up 40%
FY15 : DRIVEN BY CORE & DIGITAL STRONG GROWTH
13
The most beautiful game ever created by Ubisoft
New state of the art engine: fully new gen
New innovations, co-op, customization abilities
Release : November 11
Q3 : ASSASSIN’S CREED UNITY & ROGUE
two strong offerings for new and last gen
14
Great story telling - Play as a Templar
Return of the acclaimed naval gameplay
Release : November 11
PS4
Xbox One
PC
PS3
Xbox 360
PC (early 2015)
14
FC4’s systemic open world rated* significantly > FC3’s
Doubled FC3’s search & website traffic & Youtube views
Release : November 18 (PS4, Xbox One, PC, 360, PS3)
Q3 : FAR CRY 4
the return of the Anecdote Factory
15
Best of E3
Best E3 Shooter
* Ubisoft internal playtests
Q3 : THE CREW
A seamless single, coop and multiplayer experience
A major step forward for the racing genre
Release : December 2 (PS4, Xbox One, PC, Xbox 360)
designed to be the “World of Warcraft” of driving games
16
Best E3 Racing game
Q3 : JUST DANCE 2015 & JUST DANCE NOW
Best songs of the years
Smartphones as a controller, no need for Kinect
or PS move
constant flow of innovation
17
Downloaded ~ 6 million times:
Brazil & the Philippines among top 5 countries
(downloads)
Local adaptation:
“India Waale” from
Bollywood blockbuster of the year
FY15 : DIGITAL REVENUES significant growth expected
DIGITAL DISTRIBUTION
PC FREE-TO-PLAY
MOBILE FREE-TO-PLAY
CONSOLES & PC DLC/ITEMS
…
CONSOLES & PC DIGITAL
18
AGENDA
19
H1
Q3 & FY15
FY16
FY16
TARGETS
Non-IFRS Operating Income : minimum 200 M€
Positive Free Cash Flows
KEY DRIVERS
Built on a mix of topline, gross margins and operating margins strengths
Resurgent growth of the market in calendar 2015
Very strong line-up
Another improvement in gross margin
Significant growth of high margins back-catalog revenues
Further improvement of the profitability of FTP business
Positive effects of improved efficiency in marketing spending
FY16 : TARGETS CONFIRMED
20
A persistent online open-world RPG shooter
The Snowdrop engine : amazing graphics
Release : 2015 (Xbox One, PS4 & PC)
FY16 : THE DIVISION
buzz and players’ anticipation at high levels
21
“It was a pretty outstanding demo”
IGN, June 2014
“The Division vs Destiny”
Gamespot, October 2014
FY16 : RAINBOW 6 SIEGE
“Rainbow Six
was our favorite game at E3”
PC Gamer, May 14
Very strong reaction from die-hard shooters fans
Solo campaign to broaden the audience
Release : 2015 (Xbox One, PS4 & PC)
22
Best E3 PC game
Game of the show
a cult franchise is back !
APPENDICES
"We believe that our major
production capacity, strong of a
network of 26 international studios and
over 8 000 developers, now optimized
with our lead and associate
organization, will allow us to come
with an enhanced pipeline of
increasingly high quality franchises
and new IPs. We will be able to release
our franchises more and more
regularly, providing solid visibility on
our future revenue and profitability
streams.
All that, combined with the Open-World
and Online expertise/know-how that
we have been growing steadily
internally make us believe that we will
benefit disproportionally from the
arrival of the new generation and from
the continued growth of the online
market"
Yves Guillemot, Ubisoft CEO
24
A MAJOR OPPORTUNITY FOR UBISOFT
Open Worlds will take a bigger share
of the market
New cycle’s early years
= great timing for new IPs
Fast growing digital footprint
= better players’ engagement
Ubisoft to benefit disproportionaly
from the market’s growth 25
KEY LEARNINGS
FRANCHISES =
LG TERM VISIBILITY
KEY FACTORS OF SUCCESS
– Quality
– Regular Releases
– Deep Production
Capacity
NEW CYCLES =
OPPORTUNITY FOR NEW BRANDS
PAST 9 YEARS KEY SUCCESS FACTORS : Quality and regular releases
Physical retail sales : NPD, GFK
AC THE 4TH BIGGEST BRAND !
2 OF THE 4 BIGGEST NEW IPS !
*includes hardware
Far Cry – Watch Dogs – The Division – The Crew – 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 - 2013 (9 years)
1 CALL OF DUTY ACTIVISION BLIZZARD F
2 MARIO NINTENDO F
3 FIFA SOCCER EA F
4 ASSASSIN'S CREED UBISOFT NB
5 GRAND THEFT AUTO TAKE-TWO F
6 WII FIT* NINTENDO NB
7 THE SIMS EA F
8 MADDEN NFL 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 WORLD OF WARCRAFT ACTIVISION F
15 NBA 2K TAKE-TWO F
16 LEGO WARNER NB
17 SONIC SEGA F
18 ROCK BAND* EA NB
19 ELDER SCROLLS BETHESDA F
20 GEARS OF WAR MICROSOFT NB
Publishers
26
FY10 FY11 FY12 FY13 FY14 FY15e
-60
29
56
100
150e Gross Margin
FY10 FY11 FY12 FY13 FY14 FY15e
58.9% 64.8% 67.7%
72.7%
Non-IFRS Op.
Income (€ million)
2009 2010 2011 2012 2013 2014e
15.9 14.5
12.2
15.7
Industry Soft. Sales (€ billion)
FY10 FY11 FY12 FY13 FY14 FY15e
871 1 039 1 061
1 256
20 38 78 148 193
Digital
Sales (€ million)
FY15 : Back to financial performance improvement
1 400e
-66
10.8
71.7%
1 007
27
28
UBISOFT’S STOCK much more liquid than it may appear
As of October, 29th
Euronext 43% of total liquidity
Average volume over 1 year at 833 000 shares
Volume Fragmentation