Earnings Presentation

Transcription

1 Earnings Presentation

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 June 30, 2010 with the French Financial Markets Authority (l Autorité des marchés financiers)). 2

3 FY11 performance Long term Strategy : 3 strategic pillars FY12 line-up and guidance 3

4 FY11 sales and operating achievements Sales : M up 19% Assassin's Creed Brotherhood : > 7 million units sold-in Casual back on track : 435 M Dance sales : > 300 M Just Dance franchise : > 10 million units sold-in Michael Jackson The Experience : > 3 million units sold-in 3DS, Kinect & Move casual sales : > 80 M Third party leader on Kinect & 3DS Online and digital revenues : 38 M Better at managing communities, providing services, monetizing 4

5 FY11 financial progresses Current operating income up : 29.4 M Casual and Assassin's Creed Brotherhood very profitable Profitability impacted by other High-End titles and investment phase on online FY11 Improved net cash situation : 99 M Significantly improved operating cash-flows + one-time events Inventories and receivables at record low levels Year-End Capitalized R&D at 350 M vs 425 M in FY10. Year-end capitalized R&D = 320M with future commitments excluded. Ubisoft ends FY11 in a stronger financial and operating position 5

6 Financial performance : main moves vs guidance Guidance Actual million m m Sales Gross profit 653 (64%) 674 (65%) Solid sell-thru = higher ASPs R&D expenses (340) / (350) (364) Anticipated depreciation on a FY12 title SG&A expenses (285) / (295) (281) Good control of expenses Current operating income* Non Recurring Charge (62) (96) 23M charges on games amortization including a FY12 title + 11M on others Cash R&D (420) / (430) (400) Prudent assumptions on cash in February Cash R&D (400 M ) vs R&D charges (449 M ) Lower cash spending and higher amortization charges result in lower capitalized R&D at year end Operating cash flow > Includes 31 M of one time event in H2 But excludes the H1 22M sales of tax carry back receivables * Before stock-based compensation 6

7 P&L : Profitability million m % m % Sales 1 038,8 871,0 Cost of sales ( 365,2) 35,2 ( 358,1) 41,1 Gross profit 673,6 64,8 512,8 58,9 R&D expenses ( 363,5) 35,0 ( 309,4) 35,5 Selling expenses ( 212,9) 20,5 ( 196,1) 22,5 G & A expenses ( 67,9) 6,5 ( 66,9) 7,7 SG & A expenses ( 280,7) 27,0 ( 263,0) 30,2 Current operating income * 29,4 2,8 ( 59,6) -6,8 Gross margin up 161 M Impact Sales : 99 M, impact improved margin 62 M (product mix, back catalog and on line) 1 percentage points higher than expected : better ASPs due to better sell-throughs. R&D up 54 M : heavier high definition depreciation, greater royalties on licenses plus anticipated amortization of FY12 title. SG&A : variable marketing expenses at 160 M or 15.4% of sales (144 M and 16.5% in FY10) G&A : fixed structure costs at 120 M or 11.5% of sales (119 M and 13.7% in FY10) 7

8 P&L : Review of R&D expenses and investments million Depreciation of in-house games 240,9 201,0 Depreciation of external games and licences 61,2 86,4 Royalties 45,1 16,3 Others 16,4 5,8 Total Current R&D depreciation and royalties 363,5 309,4 Total Non Current R&D 85,4 Total R&D depreciation and royalties 448,9 309,4 Capitalized software-related production 287,5 260,8 Investment in external production and licenses (excluding future commitments) 51,5 70,7 Royalties 45,1 16,3 Others 16,4 5,8 Total development investment 400,4 353,5 Increase in current R&D expenses : Accelerated depreciation on underperforming HD titles + anticipated depreciation on a FY12 title + Royalties on dance outperformance + increased focus on online + dollar impact. One time non current charge of 85 M related to games cancelled or amortized following production reorg. Increase of total cash investment : + 47 M mostly linked to royalties (+29M ) and online (+10M ) expensed directly in the P&L Capitalized R&D : stands at year end at 350 M vs 422 M last year. Excluding future commitments = 320 M. 8

9 P&L million Current operating income* 29,4 ( 59,6) Fair Value Variation ( 1,4) ( 0,4) Stock-based compensation ( 12,6) ( 12,1) Other revenues (expenses) ( 97,4) ( 0,1) Operating income/(loss) ( 80,5) ( 72,1) Net financial income/(expense) ( 3,7) 4,8 Share of profit of associates 0,0 0,1 Net income tax 32,1 23,6 Net income ( 52,1) ( 43,7) Diluted earnings/(loss) per share ( ) ( 0,54) ( 0,45) Nbr of shares fully diluted Non recurring charges : 85 M R&D related, 12 M others including termination of Newstand figurines business in Spain and Italy Financial expenses : Interest charge: (5.0) M (including (3.6) M sell-off on tax credit sales) Gains on Gameloft shares sales : 5.7 M Foreign exchange : (4,3) M (5.2 M gain in FY10) Tax rate 44% excluding stock base compensation : benefit of R&D tax credit 9

10 P&L : Net income before non recurring elements and stock-based compensation million Net income ( 52,1) ( 43,7) Gameloft ( 3,9) 0,0 Goodwill Amortization 1,4 Non recurring charges (restructuration) 63,5 0,0 Stock-based compensation 12,6 12,1 Net income before non recurring elements and stock based compensation Diluted EPS before non recurring elements and stock based compensation 21,4 ( 31,6) 0,22 ( 0,33) 10

11 Cash flow statement million Opening cash position 41,3 154,2 Cash flows from operations 34,2 ( 56,7) Change in WCR 30,4 ( 33,2) Cash flows from operating activities 64,6 ( 89,9) Net investment in capital assets ( 22,0) ( 19,1) Net free cash flow 42,6 ( 109,0) Net acquisitions/disposals ( 4,7) ( 9,0) Proceeds from issue of capital and other financial flows 1,5 4,7 Tax credit sales 21,9 Effect of exchange rate fluctuations ( 3,4) 0,5 Decrease/(increase) in net debt 57,9 ( 112,8) Closing cash position 99,2 41,3 152 M improvement on net free cash flow : 91 M cash flow from operations improvement 63 M WCR improvement : Inventories (35.2 M ) and Account receivables (49.2 M ) at record low levels 11 M from Gameloft sales and 31 M sales of Canadian tax credits 3 M increase in Capex 22 M positive impact of one time sales of French Tax credit carryback 11

12 Agenda FY11 performance Long term Strategy : 3 strategic pillars FY12 line-up and guidance 12

13 Creator of content and services for the entertainment industry 2 million U. 5 million U. 7 million U. 7 million U. 8 million U. 14 million U. 15 million U. 17 million U. 20 million U. 23 million U. 18 million U. 22 million U. 23 million U. 29 million U. 31 million U. Ubisoft, a unique creator of content for casual players and passionate gamers Online brings a direct relationship with players. A major growing commitment to increase the value of our casual and gamers franchises. Figures are Creation to Date 13

14 Casual : A great market Keys to success Billion of players Early positioning, new interfaces Size opportunities, innovate Try at a limited cost with fast return A recurring and profitable business Ubisoft casual sales (in million ) New opportunities Kinect, 3DS, "Wii 2", Rocksmith, additional digital content and services 14

15 High-definition : a growing market Xbox th year : software up 15% in 2010 A growing market PS3 4 th year : software +28% in 2010 New growth expected for 2011 Release of "Wii 2" in 2012 Players more and more connected and interact socially Digital revenue opportunities Increased integration of digital services and content Growing incremental revenues Uplay strategy A challenging market Nextgen enters its 6th year Highly competitive and concentrated Solutions : The Assassin's Creed path Commit even more resources on top titles Efficient network of lead and associate studios Reach back blockbusters' profitable status 15

16 Online : Engage players with Uplay Ubisoft Content Console manufacturers & Retailers Player Ubisoft Additional Content Services Player Direct contact to 13 million registered users Uplay users play more, are more committed to our games : stronger brand loyalty 16

17 Online : Gaming everywhere with Uplay Uplay Console GET MORE FROM YOUR GAMES Uplay PC Uplay.com Uplay iphone Uplay Facebook Uplay rewards customers for playing our games Gamers connect to our brands everywhere and on whatever platforms Grows our franchises revenue potential 17

18 Online : a major commitment to the Free-to-Play market A large and growing market 2010 : $6 billion market (including Asia, excluding Facebook) 2014 : estimated $11 billion market Good progress First Free to Play titles in FY11 Heroes Kingdom and Settlers Online Strengthen commitment in FY12 Ambitious projects for our gamer and casual audiences 18

19 Strong commitment and investments in Ubisoft's 3 strategic pillars High Definition Casual Digital : future growth potential Long term investments in people, products and infrastructure Improved profitability expected in the future 19

20 Agenda FY11 performance Long term Strategy : 3 strategic pillars FY12 line-up and guidance 20

21 High-Definition : A favorable comparison to FY11 FY12 FY11 Assassin's Creed (fiscal Q3) Ghost Recon (fiscal Q4) Driver (Fiscal Q2) Rayman Origins (fiscal Q3) Call of Juarez (fiscal Q2) Assassin's Creed Splinter Cell Prince of Persia Ruse Shaun White Raving Rabbids (fiscal Q3) Hawx 2 Tintin (fiscal Q3) Others + Back-Catalog Raving Rabbids Others + Back-Catalog Slight growth expected 565 M 21

22 Casual : Capitalize on 5 years of successful experience FY12 Consolidate Dance revenues : New iterations of successful franchises Release them also on Kinect & Move Capitalize on Kinect, Move, 3DS Release new experiences : Rocksmith Slight decrease expected (435 M in FY11)

23 Online : continue to build our expertise and future potential FY12 Free to Play : Settlers Online Heroes Kingdom Imagine Town. Trackmania 2 ManiaPlanet Xbla/PSN : Clash of Heroes / Outland / Dust Strong growth expected (38 M in FY11) 23

24 FY12 guidance Sales : M to M FY12 Gross Margin : up 1 to 2 percentage points Better Back-Catalog margins and increased online revenues Current operating income : 40 M to 60 M Significantly stronger line-up expected for FY13 Sales and current income growth expected for FY13 24