Company Reports

Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. We expect these core titles will provide opportunities to create new content that generally produces consistent revenue. Over the past couple of years, however, the firm has sharply increased investment in new game development, but the results have been poor. As Ubisoft scales back these efforts, financial results should improve. Shareholders could also realize outsize gains if one of its newer games turns into a breakout success.

Ubisoft’s fiscal third-quarter trading update, which includes only sales data, was in line with management’s prior outlook, and the firm continues to expect record bookings for the fiscal year. Looking to fiscal 2025, management provided few concrete views but committed to the release of Star Wars Outlaws and Assassin’s Creed Codename Red during the year. Ubisoft expects to see strong demand for both. We are maintaining our EUR 33 fair value estimate.

Ubisoft posted an unusually large jump in net bookings during its fiscal second quarter, far exceeding the forecast management provided three months ago. However, management followed up that strong performance with a tepid outlook for the fiscal third quarter, unchanged expectations for the full year, and the announcement that the "large game" it had teased this year will be pushed into fiscal 2025. We are maintaining our EUR 33 fair value estimate, as we remain concerned that management has too much on its plate to handle well.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. We expect Ubisoft to continue creating games that leverage its existing franchises while developing new ones.

Microsoft announced that it will sell the global cloud streaming rights for all Activision Blizzard PC and console games, both library and future releases, to Ubisoft for the next 15 years upon the acquisition of Activision. The rights will be exclusive globally outside of the EU as a result of the previous cloud streaming deals made to satisfy EU regulators. The deal is yet another attempt, possibly the final one, to appease the U.K. authority, the last hurdle to closing the merger.

Ubisoft started fiscal 2024 by beating management’s outlook, as first-quarter net bookings declined 9% to EUR 268 million, ahead of the EUR 240 million guidance. Player recurring revenue fell 17% versus a year ago to EUR 127 million and represented 48% of net bookings. Ubisoft only reports top-line results for its fiscal first and third quarters. Management maintained its targets for fiscal 2024 as the firm held to its release dates for a packed second half. Ubisoft will release multiple titles this fiscal year, including a new installment of Assassin's Creed, the long-awaited launch of Skull and Bones, and the delayed Avatar game. We are maintaining our EUR 33 fair value estimate.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Ubisoft posted a weak end to a rebuilding fiscal 2023 as net booking fell over 50% and the full-year non-IFRS operating fell dramatically to a record loss. Management expects fiscal 2024 to be a bounceback year with “strong growth” in net bookings and non-IFRS operating income of EUR 400 million. This growth is projected to be driven by a possibly overstuffed slate that includes a new installment of Assassin’s Creed, Avatar, mobile version of Rainbow Six, Skull and Bones, and four other titles. We remain concerned that Ubisoft may be overstretching its resources to support such a large slate.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Ubisoft met fiscal third-quarter expectations as net bookings of EUR 726 million came in line with the recently revised and lowered guidance. Ubisoft only reports revenue for its fiscal first and third quarters. The firm announced that its fiscal 2024 slate includes three AAA titles, two major mobile games, and two new live service titles, including the oft-delayed Skull and Bones. We are maintaining our EUR 35 fair value estimate.

Ubisoft announced weak fiscal third-quarter results early due to much lower-than-expected sales of both Mario + Rabbids: Sparks of Hope and Just Dance 2023 in December and early January. Management slashed net bookings guidance for the quarter to EUR 725 million from EUR 830 million. For the full fiscal year, it cut expectations from “more than 10% growth” to “more than 10% decline.” Ubisoft is now retrenching its strategy to focus on core franchises and live-service games by canceling another three unannounced projects on top of the four terminated in July 2022 and accelerating the depreciation of EUR 500 million in R&D next quarter. As a bonus, the often-delayed Skull and Bones was pushed back for the seventh time from its March 2023 launch date to later in fiscal 2024.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Ubisoft posted a mixed first half of fiscal 2023 as revenue beat and operating income missed FactSet consensus. The first half was boosted by roughly EUR 120 million from the firm's previously disclosed yet still very mysterious mobile licensing partnership. Management maintained its 2023 topline guidance of "significant" growth, indicating 10% plus improvement. We are lowering our FVE to EUR 60 from EUR 75 to account for higher headcount and R&D expenses along with slower PC revenue expansion, slightly offset by higher mobile revenue.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Ubisoft began fiscal 2023 with a guidance beat as first-quarter net bookings declined 10% to EUR 293 million, ahead of guidance of EUR 280 million. While Ubisoft only reports top-line results for its fiscal first and third quarters, management updated its targets for fiscal 2023 due to pushing back the release dates for Avatar into fiscal 2024 with “significant” top-line growth now indicating 10%-plus instead of 20%-plus. The firm will still release multiple titles this fiscal year, including the long-awaited launch of Skull and Bones and the Mario + Rabbids sequel. We maintain our EUR 75 fair value estimate as we already projected 10% growth in fiscal 2023 due to the potential for a game delay.

Ubisoft posted a mixed end to a challenging fiscal 2022 as second-half revenue just beat and operating income missed our projections. While the firm, like its peers, is no longer benefiting from gamers staying home, net bookings for fiscal 2022 only fell 5%, buoyed by strong catalog performance. The three main franchises (Assassin’s Creed, Far Cry, and Rainbow Six) each generated over EUR 300 million in bookings for the first time ever, setting up the firm for strong fiscal 2023 with management expecting high-double-digit bookings growth driven by titles like Avatar and the Mario + Rabbids sequel. We are maintaining our narrow moat rating and EUR 75 fair value estimate.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Ubisoft missed fiscal third-quarter expectations with net bookings of EUR 746 million coming in below FactSet consensus. Ubisoft only reports revenue for its fiscal first and third quarters. The firm’s fiscal 2023 slate includes three AAA titles and at least two major free-to-play games but will not include a new installment of Assassin’s Creed. We maintain our narrow moat but lowering our fair value estimate to EUR 75 from EUR 81 after reducing our expectations for fiscal 2022 and 2023.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of most well-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.

Despite being smaller than peers like EA and Activision Blizzard, Ubisoft owns some of most well-known video game franchises, including Assassin’s Creed and the Tom Clancy series. The firm continues to expand its roster by creating new franchises like Watch Dogs in 2014 and For Honor in 2017. We expect Ubisoft to continue benefiting from creating games for the current and next generation of consoles, the ongoing revitalization of PC gaming, and the growth of mobile gaming.