Ubisoft FY16 Earnings Presentation

Key insights

7 takeaways

01
Ubisoft achieved 1,394 million euros in total revenue for FY16, exceeding revised targets despite an 11% decline in constant currency.See it on page 14
02
Digital distribution and recurring player investment grew to 32% of total revenue, up from 26% in the previous year, driven by in-game items, DLC, and season passes.See it on page 15
03
The launch of 'The Division' was a primary performance driver, setting records for both player engagement and digital revenue.See it on page 10
04
The company reported a non-IFRS operating income of 169 million euros and maintained a strong gross margin of 78%.See it on page 17
05
Operational efficiency is supported by a multi-studio model where two-thirds of the workforce is located in competitive-cost regions.See it on page 7
06
For the upcoming fiscal year, Ubisoft targets 1,700 million euros in sales and 230 million euros in operating income, with digital revenue expected to exceed 35% of total sales.See it on page 23
07
Future growth strategy includes a release schedule of five major titles and the expansion of intellectual property into multimedia, such as the 'Assassin’s Creed' film.See it on page 3

Summary

The Ubisoft fiscal year 2016 earnings presentation outlines a strategic focus on expanding owned franchises, increasing digital revenue, and leveraging multi-studio production capabilities to maintain a competitive edge in the open-world market. The company emphasizes a shift toward recurring player investment models, utilizing in-game items, downloadable content, and season passes to drive profitability. By internalizing production and maintaining a cost-conscious organizational structure, the firm aims to sustain long-term shareholder value while reducing reliance on large-scale mergers and acquisitions.

Financial performance for the period reflects a total revenue of 1,394 million euros, exceeding revised targets despite an 11% decline in constant currency. Key performance drivers included the successful launch of new intellectual properties, most notably The Division, which achieved record engagement levels and digital revenue. Digital distribution and recurring player investment grew to represent 32% of total revenues, up from 26% in the previous year. The company reported a non-IFRS operating income of 169 million euros and a gross margin of 78%, bolstered by the strength of its back-catalog and digital growth.

The operational strategy relies on an increasingly integrated multi-studio model, allowing for simultaneous development of complex, large-scale projects. With 2/3 of its workforce located in competitive-cost regions, the company optimizes productivity and knowledge sharing. Looking ahead, the firm projects continued growth for the upcoming fiscal year, targeting 1,700 million euros in sales and 230 million euros in operating income. This outlook is supported by a robust release schedule of five major titles and an anticipated increase in digital revenue contribution to over 35% of total sales, alongside the expansion of its brand presence through multimedia ventures like the Assassin’s Creed film adaptation.