Ubisoft Entertainment (UBI) Q2 25/26 earnings summary

Executive summary

• H1 net bookings reached €772.4m, up 20.3% year-over-year, with Q2 net bookings of €490.8m, exceeding expectations and guidance; growth was driven by strong partnerships, digital and back-catalog sales, and robust performance from key franchises like Assassin's Creed and The Division 2.

• The imminent closing of a strategic Tencent transaction will bring in €1.16bn in cash, strengthening the balance sheet, enabling deleveraging, and supporting transformation and IP growth.

• The company is transitioning to a new operating model based on creative houses, with full details to be unveiled in January 2026.

• Player recurring investment rose 52% year-over-year, making up a significant portion of net bookings.

• Back-catalog performance was strong, contributing up to 96% of net bookings.

Financial highlights

• Non-IFRS operating income returned to positive at €27.1m, a significant improvement from a €252.1m loss last year; non-IFRS net loss narrowed to €37.0m from €208.1m.

• Gross margin based on net bookings improved to 89.6% from 85.9% year-over-year.

• SG&A expenses decreased by €47m year-over-year, with variable marketing expenses down to 10.5% of net bookings.

• Free cash flow was negative €251m, mainly due to no new releases and changes in working capital.

• Non-IFRS net debt stood at €1.15bn; cash and cash equivalents were €668m at end-September 2025.

Outlook and guidance

• Full-year net bookings expected to be stable year-over-year; non-IFRS operating income around breakeven; negative free cash flow anticipated due to ongoing transformation.

• Q3 net bookings expected at approximately €305m.

• Post-Tencent transaction, non-IFRS net debt is expected to be around zero, with cash and equivalents at €1.5bn by March 2026.

• Positive non-IFRS operating income and free cash flow are expected to return in FY2027.