fy16 earnings presentation...fy16 earnings presentation may 12, 2016 this statement may contain...
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FY16 Earnings presentation May 12, 2016
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, 2015 with the French Financial Markets Authority (l’Autorité des marchés financiers)).
D I S C L A I M E R
Yves Guillemot, President and Chief Executive Officer
Alain Martinez, Chief Financial Officer
Jean-Benoît Roquette, SVP Investor Relations
3
KEY TAKEAWAYS
STRONG SHAREHOLDER VALUE CREATION TO BE EXPECTED FOR THE COMING YEARS
EXECUTING ON THE STRATEGY
EXPANDING & STRENGTHENING PORTFOLIO OF OWNED FRANCHISES
DELIVERING STRONG MULTIPLAYER GAMES THAT DRIVE ENGAGEMENT HIGHER
GROWING DIGITAL REVENUES THAT BOOTS PROFITABILITY
IMPRESSIVE ENGAGEMENT & PLAYER RECURRING INVESTMENT METRICS
AGENDA
4
EXECUTING ON THE STRATEGY
FY16 PERFORMANCE
FY17 TARGETS
5
20 YEARS OF STRONG VALUE CREATION
Source: FactSet as of May 9, 2016
IPO as of July 1, 1996
TOTAL SHAREHOLDER RETURN SINCE IPO (rebased to 100)
20-year 5-year 3-year 2-year 1-year
Ubisoft 1,287% 302% 209% 86% 55%
NASDAQ 297% 67% 39% 17% (5%)
CAC40 104% 8% 10% (3%) (15%)
Euro Stoxx Media 18% 43% 31% 12% (11%)
6
INTERNALIZATION OF PRODUCTION
KEY SUCCESS FACTOR: A TRUE INDUSTRIAL ORGANIZATION
WE DIFFERENTIATE THROUGH:
LESS RELIANCE ON BIG M&A
COST-CONSCIOUS PRODUCTION ORGANISATION
2/3 OF TEAMS IN COMPETITIVE COSTS COUNTRIES
OWNERSHIP OF BRANDS & CREATION OF SUCCESSFUL NEW IP
+
7
KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL
AN INCREASINGLY
RESOURCE INTENSIVE
INDUSTRY
MULTI-STUDIO ORGANISATION
IS KEY TO SUCCEED
FY08 FY15
7 % 33%
OPEN WORLDS’ SHARE OF TOTAL MARKET*
*NPD, GFK, value, physical sales
DEVELOP BIG MULTI PROJECTS SIMULTANOUSLY
IMPROVE PRODUCTIVITY
KNOWLEDGE, EXPERTISE & TECHNOLOGIES SHARING
SOURCE OF GREAT INNOVATION
STRONG POST LAUNCH OPERATIONS
+
8
ONLY UBISOFT CAN REGULARLY DELIVER OPEN WORLDS
WE LEARNED TO MASTER THIS COMPLEX MODEL SIGNIFICANT EDGE
KEY SUCCESS FACTOR: A UNIQUE COLLABORATION MODEL
9
A STRATEGY THAT DELIVERS
1/ STRENGTHEN PORTFOLIO OF OWNED FRANCHISES
x 3 audience of
x 2 audience of
Sources: NPD, GFK Chart Track, Internal estimates
10
2/ STRONG EXECUTION IN BRINGING PERFORMING MULTIPLAYER TITLES
A STRATEGY THAT DELIVERS
3/ SIGNIFICANTLY HIGHER ENGAGEMENT METRICS
MUCH STRONGER DIGITAL RECURRING REVENUE
PROFITABILITY BOOSTER
11
REVENUES: 2.2BN€, +60%
FY19 NON-IFRS OPERATING INCOME MARGIN: 20%
FREE CASH FLOW: ~300M€
3 YEARS PLAN: WELL POSITIONED
AGENDA
12
EXECUTING ON THE STRATEGY
FY16 PERFORMANCE
FY17 TARGETS
13
FY16 SALES: 1 394 M€ (- 11% at cstt FX), excludes 34 M€ of digital deferred revenues
Higher than revised target of 1 360 M€
FY16
AMONG TOP 5 BEST SELLERS OF CALENDAR Q1 2016 :
THE DIVISION: BIGGEST LAUNCH OF NEW IP
Record engagement:
9.5 M registered users
3h currently played on average per day by active players
Record digital revenues
FAR CRY PRIMAL: BEST EVER SALES for a game released in February
RAINBOW SIX SIEGE: HIGH PLAYER ENGAGEMENT
Average DAUs at 60% of peak DAUs (remarkable performance vs industry standards)
FY16 PERFORMANCE: SALES
14
FY16
FY16 PERFORMANCE: DIGITAL
FY15 FY16
383 M€
Full game Digital distribution
Recurring Player investment*
269
113
*includes in-game items, DLCs/season pass, subscription and advertising
+ 34 447 M€
315
132 + 16%
+ 17%
Deferred revenues
+ 47%
15
FY16
FY16 PERFORMANCE: DIGITAL
74%
68% 74%
FY15
9%
Physical
Digital Distribution
Player recurring investment*
DIGITAL 26% OF TOTAL REVENUES
FY16
DIGITAL 32% OF TOTAL REVENUES
23%
8%
18%
12% with deferred revenues
RECORD THE DIVISION SEASON PASS ATTACH RATE AT 20%
THE CREW’S LIFETIME PLAYER RECURRING INVESTMENT
= 27% OF TOTAL REVENUES
* Includes ingame items, DLCs/season pass, subscription & advertising
16
FY16
STRONG PERFORMANCE OF BACKCATALOG AT 355 M€
25% OF TOTAL REVENUES
A MORE RECURRING MODEL
FY16 PERFORMANCE: BACKCATALOG
17
FY16
GROSS MARGIN: 78%
Positive digital impact & strength of franchises
FY16 PERFORMANCE: EARNINGS
NET DEBT: (42) M€
POSITIVE FREE CASH FLOW BEFORE WCR: 62 M€
NON-IFRS OPERATING INCOME: 169 M€
Higher than revised target of 150 M€
Gross margin down 38 M€, but up 1 percentage point at 78%
Positive Digital impact and strength of franchises
R&D down 73 M€ : lower number of AAA releases (4 vs 5) and 2 titles released in Q4
SG&A up 37 M€
variable marketing expenses up to 217 M€ (206 M€ in FY15). FY15 benefited from Watch Dogs’ exp. incurred in FY14
fixed structure costs up to 202 M€ (177 M€ in FY15). 50% of increase due to constrained expenses
Low tax rate at 19%
Due to upcoming amendments to income tax rate in France on temporary differences. 28% expected going forward.
FY16: NON-IFRS P&L
18
TO BE UPDATED
€ million, except for per share data 2015-16 2014-15 restated*
% %
Sales 1 394,0 1 463,8
Gross profit 1 088,9 78,1 1 126,7 77,0
R&D expenses (500,3) (35,9) (573,5) (39,2)
Selling expenses (304,5) (21,8) (284,1) (19,4)
G & A expenses (115,1) (8,3) (98,6) (6,7)
SG & A expenses (419,6) (30,1) (382,7) (26,1)
Non IFRS Current operating income 169,0 12,1 170,5 11,6
Net Financial Income (10,4) (4,4)
Income Tax (29,7) (53,4)
Non IFRS Net Income 129,0 112,6
Non IFRS Diluted earnings per share 1,13 1,00
Nbr of shares fully diluted 114 198 113 298
55 M€ total depreciation decrease : Fewer big titles (4 vs 5 including AC Rogue) & 2 titles released end of year
7 M€ decrease in royalties : Mostly related to integration of Ivory Tower studio
68 M€ Capitalized R&D increase : 22% topline increase expected in FY17 + material movie impact
19
FY16: R&D
€ million 2015-16 2014-15 restated
Depreciation of in-house software-related production 374,2 423,8
Depreciation of external software-related production and licenses 28,8 34,1
Royalties 15,6 23,0
Non Capitalized R&D & others 81,7 92,6
Total R&D depreciation and royalties 500,3 573,5
Capitalized in-house software-related production 464,6 389,7
Capitalized external software-related production and licenses 24,9 32,0
(excluding future commitments)
Royalties 15,6 23,0
Non Capitalized R&D & others 81,7 92,6
Total development investment 586,8 537,3
20
FY16: IFRS / NON-IFRS RECONCILIATION
€ million,
except for per share data
2015-16 2014-15 restated*
IFRS Adjustment Non IFRS IFRS Adjustment Non IFRS
Sales 1 394,0 1 394,0 1 463,8 1 463,8
Total Operating expenses (1 257,2) 32,3 (1 225,0) (1 324,6) 31,3 (1 293,3)
Stock-based compensation (12,9) 12,9 0,0 (9,6) 9,6 0,0
Non-current operating income
and expenses (19,3) 19,3 (0,0) (21,7) 21,7 0,0
Operating Income 136,8 32,3 169,0 139,1 31,3 170,5
Net Financial income (13,7) 3,3 (10,4) 0,7 (5,2) (4,4)
Income tax (29,7) 0,0 (29,7) (53,0) (0,4) (53,4)
Net Income 93,4 35,6 129,0 86,8 25,7 112,6
Diluted earnings per share 0,82 0,31 1,13 0,77 0,23 1,00
Non-current operating income : 19 M€ related to goodwill depreciation
Net Financial income : 3 M€ related to additional earn-out
21
69 M€ decrease in CF from Operation : gap between Cash and P&L R&D
253 M€ increase in WCR : late releases of FarCry Primal and The Division
62 M€ Free-Cash-Flows before WCR
79 M€ share-buyback
€ million 2015-16 2014-15 restated*
Opening cash position 211,3 (12,7)
Cash flows from operations 104,5 173,5
Change in WCR (253,3) 58,9
Cash flows from operating activities (148,8) 232,4
Net investment in capital assets (42,7) (56,5)
Net free cash flow (191,5) 175,9
Net acquisitions/disposals 0,4 (3,2)
Proceeds from issue of capital and other financial flows 22,2 17,9
Net acquisitions/disposals of own shares (77,3) 0,6
Effect of exchange rate fluctuations (6,8) 32,9
Decrease/(increase) in net debt (253,0) 224,1
Closing cash position (41,7) 211,3
FY16: CASH FLOWS & CLOSING CASH POSITION
* Restated for IFRIC21 impacts
AGENDA
22
EXECUTING ON THE STRATEGY
FY16 PERFORMANCE
FY17 TARGETS
23
SALES: ~1 700 M€
NON IFRS OPERATING INCOME: ~230 M€
STRONG FREE CASH FLOWS
FY17
FY17 TARGETS
Q1 REVENUE TARGET: ~ 125 M€
NEW RELEASES GROWTH WITH 5 BIG GAMES VS 4 IN FY16:
STRONG INCREASE IN BACK CATALOG: ~ 30% OF TOTAL REVENUES
SIGNIFICANT GROWTH OF EXTRA CONTENT REVENUES
DIGITAL REVENUE > 35%
+ NEW AAA IP
BEST EVER
VIDEO GAME FRANCHISE
MOVIE ADAPTATION
SIGNIFICANT FAN ACQUISITION
AROUND THE BRAND
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ASSASSIN’S CREED MOVIE
GOALS
A P P E N D I C E S
A MORE DEPENDABLE AND PROFITABLE INDUSTRY
26
Xbox 360/PS3 transition
Xbox One/PS4 transition
RISING BARRIERS TO ENTRY
DIGITALIZATION IMPACT
X