FY13 Earnings Presentation May 15, 2013

Transcription

1 FY13 Earnings Presentation May 15, 2013

2 Yves Guillemot, President and Chief Executive Officer Alain Martinez, Chief Financial Officer Jean-Benoît Roquette, Head of Investor Relations Disclaimer This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such forward-looking data are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly compared with the actual results that will be published. The estimated financial 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 French Financial Markets Authority (l Autorité des marchés financiers)). 2

3 Summary FY13 : An outstanding performance in a challenging environment Sales up 18% EBIT up 79% Slightly positive FCF A broader sales base than 12 months ago Assassin s Creed Just Dance Far Cry Online Digital Watch_Dogs(e) Continued investment in long term development Excluding Free-to-Play investments, profitability and CF would have been significantly higher FY14 : 4 th year of regular progress Continue to benefit from : core games and online/digital strong growth New market shares gains Casual : below 20% of total sales Medium term : Nextgen finally there, will bring back strong growth Ubisoft to benefit disproportionally from it Key success factors : Quality Regular Releases Connectivity 3

4 Agenda : Current Gen key learnings FY13 performance FY14 & Next Gen Strategy 4

5 Current Gen key success factors : Quality & Regular Releases 1 brand in the top 5! 2 brands in the top 12! 2 of the 4 biggest new IPs! Cumulated WW sales (value) Xbox360 / PS3 / Wii / PC Publisher (8 years) 1 CALL OF DUTY ACTIVISION BLIZZARD F 2 MARIO NINTENDO F 3 FIFA SOCCER EA F 4 WII FIT* NINTENDO NB 5 ASSASSIN'S CREED UBISOFT NB 6 GUITAR HERO* ACTIVISION BLIZZARD NB 7 HALO MSFT F 8 MADDEN NFL EA F 9 THE SIMS EA F 10 NEED FOR SPEED EA F 11 BATTLEFIELD EA F 12 JUST DANCE UBISOFT NB 13 ROCK BAND EA NB 14 MARIO KART WII NINTENDO F 15 LEGO TELLTALE NB 16 GRAND THEFT AUTO TAKE-TWO F 17 WORLD OF WARCRAFT ACTIVISION BLIZZARD F 18 WWF/WWE THQ F 19 ELDER SCROLLS BETHESDA F 20 SONIC SEGA F *includes hardware Key learnings Franchises = Lg term visibility - Key factors of success : - Quality - Regular releases - Deep production capacity - Connectivity (Next Gen) - New cycles = opportunity to establish new brands Far Cry & Watchdogs strong contenders for the Next Gen top 20 Physical retail sales : NPD, GFK 5

6 Agenda : Current Gen key learnings FY13 performance FY14 & Next Gen Strategy 6

7 FY13 Ubisoft now presents non-ifrs information in its earnings releases as Group Management considers that Non-IFRS operating income and Non-IFRS net income which are measures that are not prepared strictly in accordance with IFRS are relevant indicators of the Group s operating and financial performance. Management uses them to run the Group s business as they are the best reflection of its recurring performance and exclude the majority of non-operating and non-recurring items. Non-IFRS operating income, Non-IFRS net income and Non-IFRS earnings per share are comparable to the following three previously-used indicators: Current operating income before stock-based compensation, Net Income before non-recurring items and stock-based compensation and Earnings per share before non-recurring items and stock-based compensation. 7

8 FY13 : An outstanding performance from core and online segments Sales : M, +18% Blockbusters* FY13 Core revenues : 928 M, +60% AC3 FC3 Ghost Recon FS Online revenues : 148M, +86% Digital distribution Free to Play DLCs 12% of total sales More than compensating for AC titles : 18 M units JD titles : 11 M units FC titles : 7 M units Casual revenues : 328 M, -32% 26% of total sales (vs 46% in FY12) Just Dance one of the strongest brand of the industry 8,5 million units of JD4 sold-in (drop limited to 14% in value) *Sell-in + digital units 8

9 FY13 : Driven by core games and online/digital In million Core Brands Casual Brands Total sales FY FY % -32% +18% In million Core & Casual Online/Digital FY12 80 FY % 9

10 FY13 Core Games : Major shares gains from significantly stronger offer on HD consoles Confirmation of the significant progression opportunity Ubisoft Core Games Sales PS2 + Xbox + Xbox360 + PS3 (sell-thru retail $ million) HD consoles market software sales Xbox360 + PS3 ($ million, retail) Assassin's Creed 3 + FarCry 3 + Ghost Recon Future Soldier Excludes Asia. NPD, GFK, Chart-Track, Nielsen 10

11 FY13 : Financial summary Gross margin up 5 percentage points 3 rd year of improvement Better ASPs for core titles (AC3, FC3, Ghost Recon FS) and Just Dance 4 + growing online sales FY13 Non-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 11

12 FY13 : Non-IFRS P&L million % % Sales 1 256, ,3 Gross profit 913,5 72,7 718,1 67,7 R&D expenses (428,2) 34,1 (348,4) 32,8 Selling expenses (304,0) 24,2 (238,4) 22,5 G & A expenses (81,0) 6,4 (75,3) 7,1 SG & A expenses (385,0) 30,6 (313,7) 29,6 Non-IFRS operating income 100,3 8,0 56,0 5,3 Net Financial Income (3,2) (6,0) Income Tax (27,9) (12,7) Non-IFRS Net Income 69,2 37,4 Non-IFRS Diluted EPS 0,71 0,39 Nbr of shares fully diluted 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% 12

13 FY13 : R&D million Depreciation of in-house games 315,1 206,1 Depreciation of external games and licences 28,7 64,4 Royalties 33,7 51,2 Non Capitalized R&D & others 50,8 26,7 Total R&D depreciation and royalties 428,2 348,4 Capitalized software-related production 337,8 301,8 Investment in external production and licenses (excluding future commitments) 36,6 48,1 Royalties 33,7 51,2 Others 50,8 26,7 Total development investment 458,9 427,8 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 effect 13

14 FY13 : IFRS / non-ifrs reconciliation In million of euros, except for per share data IFRS Adjustment Non-IFRS IFRS Adjustment Non-IFRS Sales 1 256, , , ,3 Total 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 0,0 Fair value variation (4,3) 4,3 0,0 0,0 0,0 0,0 Other operating income and expenses 0,0 0,0 0,0 0,0 0,0 0,0 Operating Income 87,9 12,4 100,3 45,6 10,4 56,0 Net 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 37,4 Diluted earnings per share 0,67 0,04 0,71 0,39 0,00 0,39 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 shares 14

15 FY13 : Cash flows and closing cash position million Opening cash position 84,6 99,2 Cash flows from operations 58,9 (27,0) Change in WCR (30,5) 35,2 Cash flows from operating activities 28,4 8,2 Net 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 13,7 Tax credit sales 0,0 0,0 Effect of exchange rate fluctuations 4,8 7,8 Decrease/(increase) in net debt 20,0 (14,6) Closing cash position 104,6 84,6 Significant improvement of cash flows from operation, reflecting greater operating results and reduced 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 15

16 Agenda : Current Gen key learnings FY13 performance FY14 & Next Gen Strategy 16

17 Next Gen : will lead to record sales for the industry A major graphical and animation leap Unprecedented sense of immersion : graphics, AI, immersion, emotion Very social, multi-screens Share your experience, esport like, streaming, instant-on demos We live in a world of self-expression. Everywhere, everyone is creative and wants to add value. Customization, or curating, is a huge growth area across all services and that holds true for games. People want to play in their own way, they want to define their own experience and they want to share the way they're playing. Yves Guillemot Data driven services, constantly evolving A tailored experience to players habits and needs Best VIP experience : Loyalty programs + connect a gamer across his games & platforms to his community (Uplay) Powerful entertainment hubs Broaden home penetration & bring casual gamers to the living room 17

18 FY14 : Continue to benefit from the strong momentum on online and core games Objectives Sales : M M Non-IFRS Operating Income : 110 M 125 M Positive Free Cash Flows Key drivers FY14 Quality & scope boosted again by Lead/Associate organization & stronger focus Bigger AAA line-up New IPs to capitalize on PS4 s launch Growing digital distribution Richer online offering : Free-to-Play mobile / tablets Impact New market shares gains on core and digital segments 18

19 FY14 : Driven by core games and online/digital In million Core Brands Casual Brands Total sales FY FY14 Significant growth Less than 20% of total sales In million Core & Casual Online/Digital FY FY / +70% growth 19

20 FY14 Core Games : Splinter Cell Blacklist, the perfect game for core and new fans Blacklist features the most ambitious multiplayer Splinter Cell has ever seen, " IGN, May 2013 Spies vs. Mercs is without a real rival in the multiplayer space today, " Joystiq, May 2013 Large scope, deep single / coop / multiplayer campaigns Your rules, your way Release date : August 20 th (Xbox360, PS3, WiiU, PC) Lead/Associate studios : Toronto Montreal - Shangai 20

21 FY14 Core Games : Assassin's Creed 4 Black Flag, another major entry in the franchise An open-word naval adventure done by the kind of international mega-team that makes Assassin's Creed games? Sure. That's exciting enough. Kotaku, March 2013 Yet another production prowess New hero (Edward Kenway), new setting (Golden Age of Piracy) Release date : Oct. 29 th (PS4, Xbox360, PS3, WiiU, PC) Lead/Associate studios : Montreal Annecy Singapore Quebec City Sofia - Kiev 21

22 FY14 Core Games : Watch_Dogs, a highly expected new creation Watch Dogs can end up being one of 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 Builds on Ubisoft s strengths : IP creation open world massive production values CVG s readers second most anticipated game of 2013! Release date : November 19 th (PS4, Xbox360, PS3, WiiU, PC) Lead/Associate studios : Montreal Newcastle Paris Bucharest - 22 Quebec City

23 FY14 Core Games : And also + 1 AAA franchise + 1 AAA new creation

24 FY14 Digital/Online : Broader distribution and stronger line-up Digital distribution PC Free-to-Play, esport Mobile & Console Digital (Paymium & Free to Play) + DLCs from consoles & PC games 24

25 FY14 Casual : Managing the transition Casual < 20% total FY14 sales Great business : 7 very profitable years for Ubisoft Committed and adaptative approach Next generation to bring back casual gamers to living room 25

26 Financial performance : FY14, 4 th year of regular progress Sales ( million) * Packaged Non-IFRS Op. Income ( million) * FY10 FY11 FY12 FY13 FY14e *Mid-point Digital FY10 FY11 FY12 FY13 FY14e % Gross Margin 64.8% 67.7% 72.7% 73.7% FY10 FY11 FY12 FY13 FY14e 26

27 Agenda : Current Gen key learnings FY13 performance FY14 & Next Gen Strategy 27

28 Long term opportunities for our core and casual brands Ubisoft Core brands A highly committed, growing audience Ubisoft Casual Brands > 1 billion people On consoles On PC, mobile, tablet (Free to Play model) Value added for player Social interactions Multi-screens gaming Item based model Direct relation with player = knowledge (through analytics) Drive players acquisition Ubisoft s benefits Increase players engagement & therefore monetization Expand to new territories (Asia, Turkey ) and to new platforms (mobile, tablet) Grow ARPU and each brand s profitability 28

29 Conclusion "We believe that our major production capacity, strong of a network of 26 international studios and over developers, now optimized with our lead and associate organization, will allow us to come with an enhanced pipeline of increasingly high quality franchises and new IPs. We will be able to release our franchises more and more regularly, providing solid visibility on our future revenue and profitability streams. All that, combined with the online expertise and know-how that we have been growing steadily internally make us believe that we will benefit disproportionally from the arrival of the new generation and from the continued growth of the online market" Yves Guillemot, Ubisoft CEO 29

30 Agenda Appendices 30

31 Calendar 2012 : Focus on bigger games is paying off 2012 best performers EMEA + North America (units) Publisher 2 titles in the top 5 After only 1 month of sale 1 CALL OF DUTY: BLACK OPS 2 ACTIVISION BLIZZARD 2 FIFA SOCCER 13 EA 3 ASSASSIN S CREED III UBISOFT 4 HALO 4 MICROSOFT 5 JUST DANCE 4 UBISOFT 6 MADDEN NFL 13 EA 7 CALL OF DUTY: MODERN WARFARE 3 ACTIVISION BLIZZARD 8 BORDERLANDS 2 TAKE 2 9 FIFA SOCCER 12 EA 10 BATTLEFIELD 3 EA 11 THE ELDER SCROLLS V: SKYRIM BETHESDA 12 DIABLO 3 ACTIVISION BLIZZARD 13 MASS EFFECT 3 EA 14 NBA 2K13 TAKE 2 15 JUST DANCE 3 UBISOFT 16 NEW SUPER MARIO BROS. 2 NINTENDO 17 FAR CRY 3 UBISOFT 4 titles in the top 17 NPD, GFK, Chart-Track, Nielsen 31

32 Calendar 2012 : New market shares gains Rank 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% NPD, GFK, Chart-Track, Nielsen 32

33 FY14 : Next Gen at last! years without a new console : Core gamers are starving! 2005 Xbox + PS2 Market software sales ( billion) +60% 2011 Xbox360 + PS3 Long term opportunities Players even more connected = Bring social benefits & online services = A growing ARPU + New HD consoles cycle = Better graphics, more power = Core gamers love it Ubisoft is ready for this Excludes Asia. NPD, GFK, Chart-Track, Nielsen 33