It’s been a tumultuous year for Ubisoft. The company has been in the midst of a number of controversies such as gamers need to start “feeling comfortable with not owning your game” to releasing a half-baked Skull and Bones, the reception of Star Wars Outlaws, and delaying the highly controversial Assassin’s Creed Shadows to 2025. The first-half earnings report for fiscal year 2024-2025 revealed that Ubisoft has experienced a decline in sales with Star Wars Outlaws having “underperformed sales expectations,” employee firings, and the company’s back catalog keeping it afloat.
The company reported a significant decline in sales, with International Financial Reporting Standards (IFRS) 15 sales down 19.6% year-over-year to €671.9 million. Net bookings also dropped by 21.9%, largely influenced by weak performances from newer titles. Despite setbacks, Ubisoft’s back catalog was up 12% from last year, which helped the company, including Rainbow Six Siege and The Crew, which saw increased engagement.
As stated, newer titles have underperformed though no specifics were provided and only Star Wars Outlaws mentioned as having “underperformed sales expectations” despite favorable reviews (Metacritic MetaScore of 75) and user scores (5.4 on Metacritic). The company expects additional sales following Star Wars Outlaws’ release on Steam that will see a simultaneous release of the Wild Card story pack which will feature the Lando Calrissian character.
A further result of the company’s cost reduction play to streamline operations and improve profitability saw 744 employees bringing its total work pool of 18,666 by the end of September 2024 down from 19,410 of September 2023. According to the report, that brings the total number of firings to over 2,000 over the past 24 month period.
Ubisoft CEO Yves Guillemot acknowledged setbacks for the company stating,
“Despite recent setbacks, we are continuing to deeply transform Ubisoft in order to restore the level of creativity and innovation that built Ubisoft’s success while delivering stronger execution and predictability. Even if our first-half performance fell short of our initial expectations, the double-digit growth of our back catalog excluding partnerships reaffirms the quality, uniqueness and value embedded in our brand portfolio and the strength of our Live services. This highlights our potential to deliver more recurring revenue, sustainable growth, and long-term value for our stakeholders.
To succeed, we must redouble our focus on execution and reinforce a player-centric mindset in everything we do. For example, we are improving the quality of Star Wars Outlaws, including actively addressing player feedback through title updates as we get ready for the Steam launch, the first story pack, and the upcoming holiday season. We are also taking the additional time to ensure that the upcoming very ambitious opus in our flagship franchise, Assassin’s Creed Shadows, is a highly polished, exceptional experience on day one and that it resonates strongly with players.”
The following is a breakdown of Ubisoft’s key financial data.
Sales and Bookings
- Sales (IFRS 15): €348.4 million in Q2, a 36.3% decrease year-over-year. First half total was €671.9 million, down 19.6%.
- Net Bookings: Q2 bookings reached €352.3 million, a 36.5% drop. H1 bookings were €642.3 million, down 21.9%.
Profit and Income
- Non-IFRS Operating Income: Loss of €252.1 million, down from a €43.5 million profit in H1 2023-24.
- Non-IFRS Net Income: Loss of €208.1 million (€1.64 per share).
- IFRS Net Income: Loss of €246.7 million (€1.94 per share).
Cash Flow and Debt
- Operating Cash Flow: Negative €106.1 million.
- Net Debt: Non-IFRS debt at €1.1 billion (up from €881 million); IFRS debt at €1.4 billion.
Outlook
- Q3 2024-25: Expected bookings around €380 million.
- Full-Year 2024-25: Projected net bookings of €1.95 billion, aiming for break-even non-IFRS operating income and free cash flow.
Guillemot touched upon Ubisoft’s restructuring efforts saying,
“Over the past semester, we also further advanced our cost reduction plan thanks to strict control on recruitments, targeted restructurings and lower external spend. This is the fruit of a group-wide effort, and I would like to thank the teams as we are transforming the Company into a more efficient and agile organization. Over the first semester, we have already achieved more than €200m savings versus two years ago on an annualized basis. There still remains work to be done to support robust cash-flow generation in the future.”
Ubisoft has made a number of deals with Chinese mega conglomerate Tencent which acquired a minority stake in Ubisoft back in 2023, which also included a loan for an undisclosed amount, and recent speculation that the Guillemot family is working with Tencent to purchase ownership of Ubisoft and make it a private company.
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