Ubisoft First-Half 2009-10 Results

Key insights

6 takeaways

01
Ubisoft reported a sharp revenue decline to €166 million for the first half of the 2009-10 fiscal year, down from €344.5 million in the same period the previous year.See it on page 1
02
The company shifted from a €24 million net profit in the first half of 2008-09 to a net loss of €52 million for the period ending September 30, 2009.See it on page 2
03
Current operating losses reached €77.7 million, driven by a significant drop in gross profit from €199.6 million to €69.1 million due to lower sales volume and back-catalog margins.See it on page 2
04
Despite cost-cutting measures that reduced R&D expenses by €14.5 million and SG&A expenses by €5.4 million, the company ended the period with a net debt position of €67.3 million.See it on page 3
05
Management maintained its full-year 2009-10 guidance, targeting annual sales of approximately €1,040 million and an operating income margin of at least 7%.See it on page 3
06
The company is pivoting toward high-impact titles, evidenced by Assassin’s Creed II, which recorded a 32% increase in first-week sales compared to its predecessor.See it on page 1

Summary

Ubisoft’s financial results for the first half of the 2009-10 fiscal year, ending September 30, 2009, reflect a period of significant contraction and strategic transition. The company reported sales of €166 million, a sharp decline from the €344.5 million recorded during the same period in the previous year. This downturn resulted in a current operating loss of €77.7 million, aligning with internal guidance, compared to an operating income of €33 million in the first half of 2008-09. The net loss for the period reached €52 million, contrasting with a net profit of €24 million in the prior year.

The decline in performance is attributed to a substantial reduction in gross profit, which fell to €69.1 million from €199.6 million, driven by lower sales volume and negative margins on back-catalog titles. While the company reduced research and development expenses by €14.5 million and selling, general, and administrative expenses by €5.4 million, these cost-saving measures were insufficient to offset the revenue shortfall. Cash flow from operating activities was negative at €212.9 million, contributing to a net debt position of €67.3 million by the end of the period.

Despite these financial challenges, the company maintains a positive outlook based on the performance of its core franchises. Initial sales data for Assassin’s Creed II indicated a 32% increase in first-week performance, supporting the strategic pivot toward developing larger, high-impact titles. Management confirmed its financial targets for the full 2009-10 fiscal year, projecting annual sales of approximately €1,040 million and an operating income margin of at least 7%. The company continues to operate globally, maintaining offices in 28 countries and distributing products across 55 nations.