Ubisoft explores ‘strategic options’ as it reports lackluster September quarter results

Yves Guillemot, CEO of Ubisoft, said the French video game publisher is exploring its strategic options as it reported lackluster results for the first half of the year.

For the second fiscal quarter, Ubisoft report its net bookings were €352.3 million ($382 million), in line with revised guidance but lower than previous expectations. The company said lower-than-expected results for Star Wars: Outlaws were to blame. In the first half, net bookings were €642.3 million ($697 million), down 22% from a year ago. The net loss was $1.94 a diluted share.

During the past year, Ubisoft reduced its overall employment from 19,410 to 18,666, reducing staff by 744 positions. As for the options, Ubisoft didn’t say but it is reportedly exploring plans to take the company private. The company’s recent struggles are emblematic of the tough time the game industry has seen as demand has changed in the wake of the pandemic. Ubisoft also needs to execute on delivering great content for gamers even as it tries to rein in its costs.

In a statement, Guillemot said, “Despite recent setbacks, we are continuing to deeply transform Ubisoft in order to restore the level of creativity and innovation that built Ubisoft’s success while delivering stronger execution and predictability. Even if our first-half performance fell short of our initial expectations, the double-digit growth of our back catalog excluding partnerships reaffirms the quality, uniqueness and value embedded in our brand portfolio and the strength of our live services. This highlights our potential to deliver more recurring revenue, sustainable growth, and long-term value for our stakeholders.”

In addition to weaker Star Wars results, Guillemot said

He said that Ubisoft must redouble its focus on execution and reinforce a player-centric mindset in everything it does.

“For example, we are improving the quality of Star Wars Outlaws, including actively addressing player feedback through title updates as we get ready for the Steam launch, the first story pack, and the upcoming holiday season,” Guillemot said. “We are also taking the additional time to ensure that the upcoming very ambitious opus in our flagship franchise, Assassin’s Creed Shadows, is a highly polished, exceptional experience on day one and that it resonates strongly with players.”

Ubisoft delayed the launch of Assassin’s Creed: Shadows, pushing it out of the holiday season into the next year.

“Over the past semester, we also further advanced our cost reduction plan thanks to strict control on recruitments, targeted restructurings and lower external spend,” Guillemot said. “This is the fruit of a group-wide effort, and I would like to thank the teams as we are transforming the company into a more efficient and agile organization. Over the first semester, we have already achieved more than €200 million ($217 million) savings versus two years ago on an annualized basis. There still remains work to be done to support robust cash-flow generation in the future.”

Guillemot added that the executive committee review, aimed at improving Ubisoft’s execution focused on a player-centric and gameplay-first approach, is progressing. This notably includes actions aimed at tackling the dynamics behind the polarized comments around Ubisoft so as to protect the Group’s reputation and maximize our game’s sales potential, he said.

“We remain committed to making decisions in the best interests of all of our stakeholders. In this context, as we have already indicated, the Company is also reviewing all its strategic options,” Guillemot said.

Results for the first half ended September 30

In the first half, Ubisoft said console and PC games saw playtime increase 9% in the first half ended September 30, and session days were up 6% from a year ago.

This was driven by by Rainbow Six: Siege playtime and session days both up double-digit year-on-year. Monthly active users were 37 million, up 3% year-on-year, and included close to 3 million new accounts per month. Excluding partnerships, back-catalog net bookings were up 12% year-on-year.

In the last 12 months, Ubisoft attracted 138 million unique players across console and the PC, up 4% year-on-year. The Assassin’s Creed franchise and Rainbow Six Siege both benefited from strong audiences, with more than 30 million unique active users each.

While it is perceived as having too many people and a low market value ($1.75 billion today), Ubisoft said it has a lot going for it. Over the past decade, the Assassin’s Creed franchise has generated around €4 billion ($4.3 billion), Rainbow Six Siege has generated over €3.5 billion ($3.8 billion) and Far Cry has topped around €2 billion ($2.17 billion). Including The Division, Ghost Recon and Just Dance, Ubisoft has six brands that have surpassed €1 billion ($1.09 billion) in consumer spending.

For the fiscal year, Ubisoft expects net bookings of around €1.95 billion ($2.11 billion) and around break-even non-FIRS operating income and free cash flow.

Frédérick Duguet, Chief Financial Officer, said in a statement, “Our Q2 net bookings are in line with our revised guidance. We are reaffirming our full-year objectives, with net bookings expected to reach approximately €1.95bn as well as around break-even non-IFRS EBIT and free cash flow. This outlook reflects robust free cash flow generation in the second half of the year. In addition, we continue exploring the sale of non-core assets as part of our broader strategy to focus on our two core verticals, Open World Adventures and GAAS-native experiences, as well as enhance financial flexibility.”

In a conference call with analysts, Duguet said the company continues to focus on cost reductions and said that staff has been reduced by 2,000 in the two years.

In a challenging FPS environment, Rainbow Six: Siege delivered a solid performance despite a strong comparable base, leading to playtime and session days growing double digit year-on-year over the first semester.

The Rainbow Six: Siege Year 9 Season 3 Battle Pass achieved the second-best ever conversion rate and the newly introduced operator, Skopós, was highly appreciated by the community notably thanks to its innovative gameplay, contributing to Sessions Days per Player slightly up in Q2.

Adoption for the recently introduced membership service grew solidly this quarter, and the marketplace continued to establish itself within the game’s ecosystem, engaging a significant number of players. The team continues to broaden engagement services by launching the Siege Cup beta on PC, a new competitive format.

Other Live titles across the portfolio of games demonstrated strong engagement and activity. The Crew franchise attracted over eight million active players this quarter and saw strong growth in engagement thanks to the announcements made during The Crew showcase as well as promotion initiatives for The Crew 2.

Players were introduced to the extensive content of Year 2 coming on November 6, and the addition of the new island of Maui accessible to all players for free, on top of the final season of content for Year 1 for The Crew Motorfest: Riders Republic benefitted from its inclusion in the Xbox Game Pass, generating a strong uplift to Session Days and profitability, and has now surpassed 10 million players.

For its part the Ghost Recon franchise also delivered a strong performance, growing both in terms of activity and net bookings over the first half, Ubisoft said.

New releases

This quarter saw the release of Star Wars: Outlaws, which Ubisoft admitted underperformed sales expectations.

Ubisoft said the open world action-adventure game achieved solid reviews and user scores across first party and the Epic Games Store.

Teams are fully mobilized on implementing changes to enhance game mechanics and overall polish. Since launch, the team has delivered three title updates focused on quality-of-life features and bug fixing, notably improvements in stealth mechanics, NPC AI and save features.

This has produced initial tangible results, with a meaningful community sentiment improvement. The most significant update yet will be released on November 21 with the fourth title update that will include further improvements to combat and stealth, and will launch alongside the release on Steam as well as the first story pack, Wild Card, with fan-favorite Lando Calrissian from the original trilogy.

This should engage a large audience during the holiday season and position the game as a strong long-term performer, Ubisoft said.

Cost reduction plan

Ubisoft said the cost reduction plan, that has the objective of protecting our production and creation capacity while being more selective in our investments and simplifying the organization, is well on track.

With the continued tight control on recruitments as well as targeted restructurings, the total number of employees worldwide stood at 18,666 at the end of September 2024, compared to 19,410 at the end of September 2023. This represents a decrease of more than 2,000 over 24 months.

The H1 FY2024-25 fixed cost base[1] stood at around €770 million ($836 million), down €46 million ($49.9 million) and 6% year-on-year. This represents a €106 million ($115 million) reduction versus H1 FY23 meaning that on an annualized basis, we have already achieved more than €200 million ($217 million) savings, including a favorable foreign exchange impact. There remains work ahead of us to support robust cash-flow generation.

Ubisoft said that its retention has continued to improve significantly over the period and is now close to the historical-best levels observed during the 2010-2020 decade that was the foundation for Ubisoft’s success. Additionally, hundreds of former Ubisoft employees have rejoined the company, notably at senior levels, bringing significant expertise and know-how that strengthens the triple-A core teams. This makes sense in the context of Ubisoft replacing employees who left even as it tries to reduce the overall workforce.

“We have a big pipeline of products to come over the next years,” Guillemot said. “We must redouble our focus on execution and reinforce the player-centric mindset in everything we do.”

Looking at FYQ3, Ubisoft said it expects net bookings of approximately €380 million ($412 million), which will represent the annual increase of around 39%. That includes solid expected sales from Star Wars: Outlaws. And it expects a record fourth fiscal quarter (ended March 31, 2025) by the year versus last year with net bookings of around €900 ($978 million), thanks to the launch of Assassin’s Creed: Shadows. Analysts asked if Ubisoft plans to sell any of its franchises but the company declined to answer except to say it would sell assets that are not part of its overall strategy.

Ubisoft has about €930 million ($1 billion) in cash.