Ubisoft Entertainment (UBI) Trading Update summary

Strategic and operational updates

• Q2 performance missed expectations, prompting a renewed focus on player-centric, gameplay-first strategies and long-term brand value.

• Assassin's Creed Shadows delayed to February 14, 2025, for additional polish and to leverage learnings from recent launches.

• The traditional season pass model is being dropped; all players access the game simultaneously, with pre-orders receiving the first expansion free.

• Star Wars Outlaws launched softer than expected but received solid ratings; updates are being rolled out to address player feedback and improve quality, with a Steam launch set for November 21.

• Executive committee is launching a review to enhance execution, efficiency, and accelerate the strategic shift toward open world and GaaS-native experiences.

Financial guidance and outlook

• FY25 net bookings are now expected at €1.95 billion, with break-even non-IFRS operating income and free cash flow.

• Q2 net bookings are forecasted between €350 million and €370 million, mainly due to Star Wars Outlaws underperformance.

• Cost reduction initiatives are ongoing, with headcount decreasing and a solid balance sheet maintained.

• Cash and cash equivalents projected above €850 million at September 2024, after repaying a €250 million convertible bond.

• Accelerated depreciation is being considered for underperforming games, following standard closing processes.

Transformation and risk management

• Transformation focuses on open world adventures and GaaS-native experiences to drive growth and recurring revenue.

• Organizational simplification and divestiture of non-core assets are part of ongoing cost reduction and transformation plans.

• Debt covenants require net debt/equity ≤ 0.8 and net debt/EBITDA ≤ 1.5; current plans remain within these boundaries.

• No additional debt is anticipated, with a healthy debt maturity profile and positive free cash flow expected in H2.

• High trade receivables at FY24-end are expected to reduce working capital needs and support free cash flow.