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[2013] Ubisoft - FY13 Earnings Presentation 2013
 

[2013] Ubisoft - FY13 Earnings Presentation 2013

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    [2013] Ubisoft - FY13 Earnings Presentation 2013 [2013] Ubisoft - FY13 Earnings Presentation 2013 Presentation Transcript

    • FY13 Earnings PresentationMay 15, 2013
    • 2DisclaimerThis statement may contain estimated financial data, information on future projects and transactions and future businessresults/performance. Such forward-looking data are provided for estimation purposes only. They are subject to marketrisks and uncertainties and may vary significantly compared with the actual results that will be published. The estimatedfinancial 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, 2012 with the FrenchFinancial Markets Authority (l’Autorité des marchés financiers)).Yves Guillemot, President and Chief Executive OfficerAlain Martinez, Chief Financial OfficerJean-Benoît Roquette, Head of Investor Relations
    • FY13 : An outstanding performance in a challenging environmentSales up 18% − EBIT up 79% − Slightly positive FCFA broader sales base than 12 months agoAssassin’s Creed − Just Dance − Far Cry − Online Digital − Watch_Dogs(e)Continued investment in long term developmentExcluding Free-to-Play investments, profitability and CF would have been significantly higherFY14 : 4th year of regular progressContinue to benefit from : core games and online/digital strong growthNew market shares gainsCasual : below 20% of total salesMedium term : Nextgen finally there, will bring back strong growthUbisoft to benefit disproportionally from itKey success factors : Quality − Regular Releases − ConnectivitySummary3
    • 2005-2012 : Current Gen key learningsFY13 performanceFY14 & Next GenStrategy4Agenda
    • 5Current Gen key success factors : Quality & Regular ReleasesPhysical retail sales : NPD, GFKCumulated WW sales (value)Xbox360 / PS3 / Wii / PC2005-2012 (8 years)Publisher1 CALL OF DUTY ACTIVISION BLIZZARD F2 MARIO NINTENDO F3 FIFA SOCCER EA F4 WII FIT* NINTENDO NB5 ASSASSINS CREED UBISOFT NB6 GUITAR HERO* ACTIVISION BLIZZARD NB7 HALO MSFT F8 MADDEN NFL EA F9 THE SIMS EA F10 NEED FOR SPEED EA F11 BATTLEFIELD EA F12 JUST DANCE UBISOFT NB13 ROCK BAND EA NB14 MARIO KART WII NINTENDO F15 LEGO TELLTALE NB16 GRAND THEFT AUTO TAKE-TWO F17 WORLD OF WARCRAFT ACTIVISION BLIZZARD F18 WWF/WWE THQ F19 ELDER SCROLLS BETHESDA F20 SONIC SEGA F1 brandin the top 5 !2 brandsin the top 12 !2 of the 4biggest new IPs !*includes hardwareKey learningsFranchises=Lg term visibility- Key factors of success :- Quality- Regular releases- Deep productioncapacity- Connectivity (Next Gen)- New cycles = opportunity toestablish new brandsFar Cry & Watchdogsstrong contenders for the Next Gen top 20
    • 2005-2012 : Current Gen key learningsFY13 performanceFY14 & Next GenStrategy6Agenda
    • FY137Ubisoft now presents non-IFRS information in its earnings releases as Group Managementconsiders that “Non-IFRS operating income” and “Non-IFRS net income” – which aremeasures that are not prepared strictly in accordance with IFRS – are relevant indicators ofthe Group’s operating and financial performance. Management uses them to run the Group’sbusiness as they are the best reflection of its recurring performance and exclude the majorityof non-operating and non-recurring items. “Non-IFRS operating income”, “Non-IFRS netincome” and “Non-IFRS earnings per share” are comparable to the following threepreviously-used indicators: “Current operating income before stock-based compensation”,“Net Income before non-recurring items and stock-based compensation” and “Earnings pershare before non-recurring items and stock-based compensation”.
    • FY13Sales : 1 256 M€, +18%Core revenues : 928 M€, +60%AC3 − FC3 − Ghost Recon FSOnline revenues : 148M€, +86%Digital distribution − Free to Play − DLCs12% of total salesMore than compensating forCasual revenues : 328 M€, -32%26% of total sales (vs 46% in FY12)Just Dance one of the strongest brand of the industry8,5 million units of JD4 sold-in (drop limited to 14% in value)8FY13 : An outstanding performance from core and online segmentsBlockbusters*AC titles : 18 M unitsJD titles : 11 M unitsFC titles : 7 M units*Sell-in + digital units
    • 9FY13 : Driven by core games and online/digitalIn million € Core Brands Casual Brands Total salesFY12 578 483 1 061FY13 928 328 1 256+60% -32% +18%In million €Core & CasualOnline/DigitalFY12 80FY13 148+86%
    • FY13 Core Games : Major shares gains from significantly stronger offer on HD consoles10Ubisoft Core Games SalesPS2 + Xbox + Xbox360 + PS3(sell-thru retail $ million)HD consoles market software salesXbox360 + PS3($ million, retail)Confirmation of the significant progression opportunityAssassins Creed 3 + FarCry 3 + Ghost Recon Future SoldierExcludes Asia. NPD, GFK, Chart-Track, Nielsen02004006008001 0001 2002007 2008 2009 2010 2011 201202 0004 0006 0008 00010 00012 00014 0002007 2008 2009 2010 2011 2012
    • 11FY13 : Financial summaryFY13Gross margin up 5 percentage points3rd year of improvementBetter ASPs for core titles (AC3, FC3, Ghost Recon FS) and Just Dance 4+ growing online salesNon-IFRS Operating Income : 100 M€, + 79%> guidance provided 12 months ago (70-90 M€)Solid net cash situation : 105 M€Better than expected cash-flows generation,with slightly positive Free-Cash flows
    •  Gross margin up over 5 percentage point and +195 M€ on +195 M€ sales Better ASPs on core games (AC3, FC3, GRFS) & JD4 + continued online sales momentum R&D up 80 M€, + 1 percentage point SG&A up 71 M€, + 1 percentage point variable marketing expenses up at 229 M€ or 18% of sales (177 M€ and 17% in FY12). End of cycle impact. fixed structure costs at 156 M€ or 12.4% of sales (137 M€ and 12,9% in FY12), due mostly to higher online related costs. Income tax rate of 28,7%FY13 : Non-IFRS P&L122012-13 2011-12€ million % %Sales 1 256,2 1 061,3Gross profit 913,5 72,7 718,1 67,7R&D expenses (428,2) 34,1 (348,4) 32,8Selling expenses (304,0) 24,2 (238,4) 22,5G & A expenses (81,0) 6,4 (75,3) 7,1SG & A expenses (385,0) 30,6 (313,7) 29,6Non-IFRS operating income 100,3 8,0 56,0 5,3Net Financial Income (3,2) (6,0)Income Tax (27,9) (12,7)Non-IFRS Net Income 69,2 37,4Non-IFRS Diluted EPS 0,71 0,39Nbr of shares fully diluted 97 316 95 632
    •  Depreciation up : 73 M€ = bigger games Royalties down : 18 M€ = lower casual sales Increased Non-Capitalized R&D : 24 M€ = FTP operating charges + accounting changes (bonuses & idle time) 7,7% increase in internal and external capitalized investment, 45% of it from exchange effect13FY13 : R&D€ million 2012-13 2011-12Depreciation of in-house games 315,1 206,1Depreciation of external games and licences 28,7 64,4Royalties 33,7 51,2Non Capitalized R&D & others 50,8 26,7Total R&D depreciation and royalties 428,2 348,4Capitalized software-related production 337,8 301,8Investment in external production and licenses36,6 48,1(excluding future commitments)Royalties 33,7 51,2Others 50,8 26,7Total development investment 458,9 427,8
    • FY13 IFRS income• Includes: 8,1M€ stock base compensation charges + 4,3 M€ goodwill amortization, both non cash• Excludes: 7,2M€ profit on the sale of Gameloft shares14FY13 : IFRS / non-IFRS reconciliationIn million of euros,except for per share data2012-13 2011-12IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRSSales 1 256,2 1 256,2 1 061,3 1 061,3Total Operating expenses (1 168,3) 12,4 (1 155,9) (1 015,7) 10,4 (1 005,3)Stock-based compensation (8,1) 8,1 0,0 (10,4) 10,4 0,0Fair value variation (4,3) 4,3 0,0 0,0 0,0 0,0Other operating income and expenses 0,0 0,0 0,0 0,0 0,0 0,0Operating Income 87,9 12,4 100,3 45,6 10,4 56,0Net Financial income 4,0 (7,2) (3,2) 2,5 (8,5) (6,0)Income tax (27,1) (0,8) (27,9) (10,8) (1,9) (12,7)Net Income 64,8 4,4 69,2 37,3 0,0 37,4Diluted earnings per share 0,67 0,04 0,71 0,39 0,00 0,39
    • FY13 : Cash flows and closing cash position15 Significant improvement of cash flows from operation, reflecting greater operating results andreduced gap between R&D investments and R&D charges (31 M€ vs 79 M€ in FY12) WCR increase partly due to lower factoring (25 M€ less vs FY12) and difference in starting points(Accounts Receivables at -13 M€ end of March 2012 vs +49 M€ at end of March 2011) Solid financial position, with net cash of 105 M€ + total long term financing means of 310 M€€ million 2012-13 2011-12Opening cash position 84,6 99,2Cash flows from operations 58,9 (27,0)Change in WCR (30,5) 35,2Cash flows from operating activities 28,4 8,2Net investment in capital assets (25,0) (25,5)Net free cash flow 3,4 (17,3)Net acquisitions/disposals (4,9) (17,5)Proceeds from issue of capital and other financial flows 6,0 (1,3)Disposal of Gameloft Shares 10,7 13,7Tax credit sales 0,0 0,0Effect of exchange rate fluctuations 4,8 7,8Decrease/(increase) in net debt 20,0 (14,6)Closing cash position 104,6 84,6
    • 2005-2012 : Current Gen key learningsFY13 performanceFY14 & Next GenStrategy16Agenda
    • A major graphical and animation leapUnprecedented sense of immersion : graphics, AI, immersion, emotionVery social, multi-screensShare your experience, eSport like, streaming, instant-on demosData driven services, constantly evolvingA tailored experience to players’ habits and needsBest VIP experience : Loyalty programs + connect a gamer across hisgames & platforms to his community (Uplay)Powerful entertainment hubsBroaden home penetration & bring casual gamers to the living room17“We live in a world of self-expression.Everywhere, everyone is creative andwants to add value. Customization, orcurating, is a huge growth area acrossall services and that holds true forgames. People want to play in their ownway, they want to define their ownexperience and they want to share theway theyre playing.” Yves GuillemotNext Gen : will lead to record sales for the industry
    • FY14ObjectivesSales : 1 420 M€ − 1 450 M€Non-IFRS Operating Income : 110 M€ − 125 M€Positive Free Cash FlowsKey driversQuality & scope boosted again by Lead/Associate organization & stronger focusBigger AAA line-upNew IPs to capitalize on PS4’s launchGrowing digital distributionRicher online offering : Free-to-Play − mobile / tabletsImpactNew market shares gains on core and digital segments18FY14 : Continue to benefit from the strong momentum on online and core games
    • 19FY14 : Driven by core games and online/digitalIn million € Core Brands Casual Brands Total salesFY13 928 328 1 256FY14 Significant growthLess than 20%of total sales1 420 − 1 450In million €Core & CasualOnline/DigitalFY13 148FY14 +50 / +70% growth
    • Large scope, deep single / coop / multiplayer campaignsYour rules, your wayRelease date : August 20th (Xbox360, PS3, WiiU, PC)Lead/Associate studios : Toronto – Montreal - ShangaiFY14 Core Games : Splinter Cell Blacklist, the perfect game for core and new fans20“Blacklist featuresthe most ambitious multiplayerSplinter Cell has ever seen, "IGN, May 2013“Spies vs. Mercs is without a real rivalin the multiplayer space today, "Joystiq, May 2013
    • Yet another production prowessNew hero (Edward Kenway), new setting (Golden Age of Piracy)Release date : Oct. 29th (PS4, Xbox360, PS3, WiiU, PC)Lead/Associate studios : Montreal – Annecy – Singapore – Quebec City– Sofia - KievFY14 Core Games : Assassins Creed 4 Black Flag, another major entry in the franchise21“An open-word naval adventure doneby the kind of international mega-teamthat makes Assassins Creed games?Sure. Thats exciting enough.”Kotaku, March 2013
    • Builds on Ubisoft’s strengths : IP creation − open world − massiveproduction valuesCVG’s readers second most anticipated game of 2013 !Release date : November 19th (PS4, Xbox360, PS3, WiiU, PC)Lead/Associate studios : Montreal – Newcastle – Paris – Bucharest -Quebec CityFY14 Core Games : Watch_Dogs, a highly expected new creation22“Watch Dogs can end up being oneof the biggest games on any system"IGN, May 2013“From a visual perspective,the engine is stunning and fluid.The detailing on vehicles, houses,and pedestrians is impressive”GameInformer, May 2013
    • + 1 AAA franchise+ 1 AAA new creationFY14 Core Games : And also23+ +
    • FY14 Digital/Online : Broader distribution and stronger line-up24Digital distributionPC Free-to-Play, eSportMobile & Console Digital(Paymium & Free to Play)+ DLCs from consoles & PC games……
    • FY14 Casual : Managing the transition25Casual < 20% total FY14 salesGreat business : 7 very profitable years for UbisoftCommitted and adaptative approachNext generation to bring back casual gamers to living room
    • Financial performance : FY14, 4th year of regular progress26Sales(€ million)Non-IFRS Op. Income(€ million)FY10 FY11 FY12 FY13 FY14e-602956100110-125FY10 FY11 FY12 FY13 FY14e8711 039 1 0611 2561 420-14508521 001 9831 1081 193**Mid-point20 38 78 148 237*PackagedDigitalGross MarginFY10 FY11 FY12 FY13 FY14e58.9%64.8% 67.7%72.7% 73.7%
    • 2005-2012 : Current Gen key learningsFY13 performanceFY14 & Next GenStrategy27Agenda
    • 28Long term opportunities for our core and casual brandsUbisoft Core brands Ubisoft Casual BrandsA highly committed, growing audience > 1 billion peopleOn consolesOn PC, mobile, tablet (Free to Play model)Social interactionsValueaddedfor playerMulti-screens gamingItem based modelGrow ARPU and each brand’s profitabilityUbisoft’sbenefitsDrive players acquisitionIncrease players engagement & therefore monetizationExpand to new territories (Asia, Turkey…) and to new platforms (mobile, tablet)Direct relation with player = knowledge (through analytics)
    • Conclusion29"We believe that our major production capacity, strong of a network of 26 international studios andover 7 000 developers, now optimized with our lead and associate organization, will allow us tocome with an enhanced pipeline of increasingly high quality franchises and new IPs. We will beable to release our franchises more and more regularly, providing solid visibility on our futurerevenue and profitability streams. All that, combined with the online expertise and know-how thatwe have been growing steadily internally make us believe that we will benefit disproportionallyfrom the arrival of the new generation and from the continued growth of the online market" YvesGuillemot, Ubisoft CEO
    • Agenda30Appendices
    • 31Calendar 2012 : Focus on bigger games is paying off2012 best performersEMEA + North America (units)Publisher1 CALL OF DUTY: BLACK OPS 2 ACTIVISION BLIZZARD2 FIFA SOCCER 13 EA3 ASSASSIN’S CREED III UBISOFT4 HALO 4 MICROSOFT5 JUST DANCE 4 UBISOFT6 MADDEN NFL 13 EA7 CALL OF DUTY: MODERN WARFARE 3 ACTIVISION BLIZZARD8 BORDERLANDS 2 TAKE 29 FIFA SOCCER 12 EA10 BATTLEFIELD 3 EA11 THE ELDER SCROLLS V: SKYRIM BETHESDA12 DIABLO 3 ACTIVISION BLIZZARD13 MASS EFFECT 3 EA14 NBA 2K13 TAKE 215 JUST DANCE 3 UBISOFT16 NEW SUPER MARIO BROS. 2 NINTENDO17 FAR CRY 3 UBISOFT2 titles in the top 5After only1 month of sale4 titles in the top 17NPD, GFK, Chart-Track, Nielsen
    • 32Calendar 2012 : New market shares gainsRank Publisher M.S. M.S.1 Activision Blizzard 19,5% 15,7%2 EA 18,4% 19,7%3 Ubisoft 11,2% 8,8%4 Nintendo 10,8% 12,4%5 Take 2 6,4% 4,8%6 Microsoft 5,0% 4,8%7 Sony 3,5% 5,3%8 THQ 3,3% 4,9%9 WB 3,3% 3,7%10 Capcom 2,4% 1,1%2012 2011NPD, GFK, Chart-Track, Nielsen
    • 02468101214162005Xbox + PS22011Xbox360 + PS3Ubisoft is ready for thisPlayers even more connected=Bring social benefits & online services=A growing ARPU+New HD consoles cycle=Better graphics, more power=Core gamers love itFY14 : Next Gen at last!33Market software sales(€ billion)+60%8 years without a new console :Core gamers are starving!Long term opportunitiesExcludes Asia. NPD, GFK, Chart-Track, Nielsen