FY15 Earnings presentation

May 12th, 2015

Yves Guillemot, President and Chief Executive Officer

Alain Martinez, Chief Financial Officer

Jean-Benot Roquette, SVP Investor Relations

D I S C L A I M E R
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 26, 2014 with the French Financial Markets Authority (lAutorit des marchs financiers)).

SUMMARY
Players at the heart of our games and brands success
Teams strong execution on all strategic priorities
- Strong portfolio of entertainment brands

- Systemic open worlds

- Growing communities & engagement

- Digital

FY16: Record operating income target

Beyond: Financial performance driven by
Ever more engaged communities / High potential live services / Market growth
2 years 100 M share buyback program

Videogames increasingly the dominant form of Entertainment

3

AGENDA

FY15 performance
FY16 targets

OPEN WORLDS TAKE A BIGGER SHARE

BEST SELLERS 2014 (value)
1

COD : Advanced Warfare

FIFA 15

GTA V

Destiny

Watch Dogs

AC Unity + Rogue

2008

2014

Far Cry 4

16%

30%

Super Smash Bros.

Madden NFL 15

10

FIFA 14

OPEN WORLDS SHARE

OF TOTAL MARKET

Players growing appetite for Freedom

5
Physical retail sales : NPD, GFK

UBISOFTS STRATEGY HAS DELIVERED HANDSOMELY

BEST SELLERS 2014 (value)
1

COD : Advanced Warfare

FIFA 15

GTA V

Destiny

Watch Dogs

AC Unity + Rogue

Far Cry 4

Super Smash Bros.

Madden NFL 15

10

FIFA 14

GROWING COMMUNITY
& ENGAGEMENT
Community + 54%
Rewards collection +100%

XBOX ONE & PS4

52% of FY15 revenues

Physical retail sales : NPD, GFK

Early move on newgen

+ growing communities
+ growing digital capabilities
+ massive systemic open worlds

FY15 PERFORMANCE

Sales : 1,464 M (+42% at cstt FX)

Outstanding new releases :

Assassins Creed (U+R) - Watch Dogs - Far Cry 4 - the Crew
> 30 M units collectively

FY15

Just Dance
BIGGEST MUSIC VIDEOGAME BRAND EVER

Back-catalog : 233 M (flat yoy), 16% total revenues

Assassins Creed - Far Cry - Rocksmith - Rayman South Park: The Stick of Truth

FY15 PERFORMANCE

Digital strong momentum : 26% of total rev (vs 19%)

FY15

383 M

+97%

113

+31%

Other Digital revenues *

Full game Digital distribution

195 M
87

269

+149%

108

FY14

FY15

*mostly extra contents for console, PC & mobile

8

FY15 : FINANCIAL SUMMARY

Record gross margin at 77%

top franchises momentum + digital revenues impact

FY15

Record non-IFRS Operating profit : 171 M (target of 165 M)

Record Free Cash flow: 176 M

Net cash situation: 211 M

FY15 : NON-IFRS P&L

million, except for per share data

2014-2015

2013-2014
%

Sales
Gross profit

1 463,8
1 126,7

77,0

721,8

71,7

R&D expenses

(573,5)

(39,2)

(426,1)

(42,3)

Selling expenses

(284,1)

(19,4)

(279,3)

(27,7)

G & A expenses

(98,4)

(6,7)

(82,0)

(8,1)

SG & A expenses
Non IFRS Current operating income

1 007,1

TO BE UPDATED
(382,5)

(26,1)

(361,3)

(35,9)

170,7

11,7

(65,6)

(6,5)

(4,5)

(5,8)

Income Tax

(53,5)

22,1

Non IFRS Net Income

Non IFRS Diluted earnings per share
Nbr of shares fully diluted

112,7
1,00
113,3

(49,3)
(0,46)
107,3

Net Financial Income

Gross margin up 405 M, at record 77% level (+5 points yoy)

Strong line-up performance + favorable mix (PS4, XboxOne)
Growing digital footprint
R&D up 148 M, down 3 points
SG&A up 21 M, down 10 percentage points
variable marketing expenses marginally up to 206 M & down to 14% of sales (204 M and 20% in FY14). Positive impacts
from marketing efficiencies + Watchdogs marketing expenses in FY14
fixed structure costs up to 176 M and down to 12% of sales (157 M and 16% in FY14)
Non-IFRS Income tax rate at 32%.

10

FY15 : R&D
million

2014-15

2013-14

423,8

313,0

Depreciation of external software-related production and licenses

34,1

44,4

Royalties

23,0

21,4

Non Capitalized R&D & others

92,6

47,3

Total R&D depreciation and royalties

573,5

426,1

Capitalized in-house software-related production

389,7

373,8

32,0

37,2

Royalties

23,0

21,4

Non Capitalized R&D & others

92,6

47,3

537,3

479,7

Depreciation of in-house software-related production

Capitalized external software-related production and licenses

(excluding future commitments)

Total development investment

101 M total depreciation increase : mostly more games

45 M increase in Non Capitalized R&D & others : highlights growing post launch operations & bonuses
11 M Capitalized R&D increase : less than 3% increase

11

FY15 : IFRS / NON-IFRS RECONCILIATION

2014-15
million,
except for per share data

Sales

IFRS

Adjustment

1 463,8

2013-14
Non-IFRS

IFRS

1 463,8

1 007,1

Adjustment

Non-IFRS

1 007,1

(1 324,4)

31,3

(1 293,1)

(1 105,0)

32,3

(1 072,7)

(9,6)

9,6

0,0

(9,7)

9,7

0,0

(21,7)

21,7

0,0

(22,6)

22,6

0,0

139,4

31,3

170,7

(97,9)

32,3

(65,6)

0,7

(5,2)

(4,5)

10,3

(16,1)

(5,8)

(53,1)

(0,4)

(53,5)

22,1

0,0

22,1

Net Income

87,0

25,7

112,7

(65,5)

16,2

(49,3)

Diluted earnings per share

0,77

0,23

1,00

(0,61)

0,15

(0,46)

Total Operating expenses

Stock-based compensation
Non current operating income
and expenses
Operating Income
Net Financial income
Income tax

IFRS Non-Current expenses and income : (21,7) M

Goodwill and brands depreciation
IFRS Net financial income : 0,7 M
Includes : 5,2 M (non-cash) from adjustment of earn-out liabilities
12

FY15 : CASH FLOWS & CLOSING CASH POSITION

million

2014-2015

2013-2014

Opening cash position

(12,7)

104,5

Cash flows from operations

173,6

(79,3)

58,8

(40,8)

Cash flows from operating activities

232,4

(120,1)

Net investment in capital assets

(56,1)

(42,9)

Net free cash flow

176,3

(163,0)

Net acquisitions/disposals

(3,5)

(9,7)

Proceeds from issue of capital and other financial flows

18,4

65,7

0,0

6,0

32,9

(16,3)

Decrease/(increase) in net debt

224,0

(117,3)

Closing cash position

211,3

(12,7)

Change in WCR

Disposal of Gameloft Shares

Effect of exchange rate fluctuations

Sharp improvement of Cash flows from Operations : +253 M

Reflection of the strong top and bottom lines performance
Sharp WCR improvement : + 100 M
No big titles released since early December vs South Park in Q4 FY14

13

AGENDA

FY15 performance
FY16 targets

14

FY16 : TARGETS CONFIRMED

TARGETS
Sales: Stable

Non-IFRS Operating Income : minimum 200 M

KEY DRIVERS
New releases down yoy

FY16

AC Syndicate - R6 Siege Just Dance - The Division + 1 AAA title

Digital (~30% of total rev) & back catalogue growth
Favorable FX

Higher GM and lower R&D as a % of sales

Negative FCF
Positive gap between cash R&D and P&L R&D
WCR impact from The Division + AAA title in Q4
Assassins Creed movie investment
15

UBISOFT FINANCIAL PERFORMANCE

Industry Soft. Sales
15.7

excl. Digital ( billion)

14.5
12.2

10.8

1 464

Sales ( million)

1 039

1 256

1 007

1 061

9.5
378

2010

2011

2012

2013

2014

2015e

64.8%

78

148

FY11

FY12

FY13

FY14

72.7%

71.7%

FY15

FY16e

Digital
200e

Non-IFRS Op.
Income ( million)

Gross Margin
67.7%

38

193

171

77%
100
29
FY11

FY11

FY12

FY13

FY14

FY15e

FY16e

56

FY12

FY13

FY14
-66

FY15

FY16e
16

FY16 : ASSASSINS CREED SYNDICATE

New setting: Birth of organized crime in London

at the height of the Industrial Revolution
Play Evie and Jacob Frye
Single player only
Release: October 23rd (Xbox One & PS4) / Fall 2015 (PC)
17

FY16 : RAINBOW 6 SIEGE

Communitys positive reception to the Closed Alpha

Deep replayability potential

procedural destruction
Best E3 PC game

Rainbow Six

was our favorite game at E3

+ asymmetrical assault gameplay

+ operators class system

PC Game
Gamer,
of May
the show
14

Release : FY Q3 (Xbox One, PS4 & PC)

18

FY16 : THE DIVISION

Highly anticipated open-world MMO RPG

The Snowdrop engine: amazing graphics
Most anticipated titles

Release : FY Q4 (Xbox One, PS4 & PC)

19

FY16 : DIGITAL LIVE SERVICES

LIVE SERVICES
CONSOLE / PC

MOBILE

FY15

New
for

FY16
more to be announced

20

APPENDICES

PAST 10 YEARS KEY SUCCESS FACTORS

Cumulated Retail Sales (Value)
(Xbox360, PS3, Wii, WiiU, Xbox One, PS4 + PC)

KEY LEARNINGS

Publishers

2005 - 2014 (10 years)

CALL OF DUTY
MARIO
FIFA SOCCER

ACTIVISION BLIZZARD
NINTENDO
EA

F
F
F

GTA

TAKE-TWO

5
7

ASSASSIN'S CREED
WII FIT*
MADDEN NFL

THE SIMS

15

GUITAR HERO*
BATTLEFIELD
HALO
NEED FOR SPEED
JUST DANCE
LEGO
NBA 2K

UBISOFT
NINTENDO
EA
EA
ACTIVISION
EA
MICROSOFT
EA
UBISOFT
WARNER
TAKE-TWO

NB
NB
F
F
NB
F
F
F
NB
NB
F

16

Warcraft

ACTIVISION BLIZZARD

17
18

SONIC
ROCK BAND*

SEGA
EA

F
NB

19

ELDER SCROLL

BETHESDA

20

SKYLANDERS

ACTIVISION BLIZZARD

NB

1
2

AC THE 5TH
BIGGEST BRAND !

10

2 OF THE 4
BIGGEST NEW IPS !

11
12
13
14

*includes hardware

F: Franchise

NB: New Brands

FRANCHISES
=
LG TERM VISIBILITY

KEY FACTORS OF SUCCESS

Strong communities
Quality
Regular Releases
Deep Production
Capacity
NEW CYCLES
=
OPPORTUNITY
FOR NEW BRANDS

Far Cry Watch Dogs The Division Rainbow 6

strong contenders for Next-Gen top 20

22
Physical retail sales : NPD, GFK

UBISOFTS STOCK much more liquid than it may appear

Volume Fragmentation

As of May, 11th

Euronext 35% of total liquidity

Average volume over 1 year at 963 000 shares

23