(BFM Bourse) – The video game publisher published net bookings higher than its own forecasts in the third quarter. While analysts expected a downward revision of the outlook, the group confirms them and also announces the arrival of a highly anticipated Star Wars game for the next financial year.
Pessimism had very clearly won over the market, ahead of Ubisoft’s publication. At the close of Thursday evening, the video game publisher showed a drop of 14% since January 1, reflecting investors’ concerns.
Unenthusiastic coverage initiations from certain analysts and especially the fear that the group will lower its objectives for the 2023-2024 financial year have weighed on the stock in recent weeks.
At the end of January, Deutsche Bank, although buying the stock, estimated that a revision of the outlook was “probable” and even already integrated by the market, anticipating a 10% lowering of the operating profit target on the part of the society.
Revenues above forecasts
In the end it didn’t happen. On the occasion of the publication of its activity for the third quarter of the 2023-2024 financial year ending next March, the company reiterated its objective of a non-IFRS operating profit of 400 million euros for the entire fiscal year.
The market is unsurprisingly relieved: around 9 a.m., the stock rose 9.84% to 21.88 euros on the Paris Stock Exchange. The tone had already been set Thursday evening on Wall Street where Ubisoft’s ADR – certificates of deposit allowing American investors to bet on foreign groups – was catapulted after the publication, taking more than 10%.
Beyond the prospects, Ubisoft has exceeded its expectations. Over the last three months of 2023, the French group generated “net bookings” (the turnover restated for certain deferred income) of 626.2 million euros, down 14% year-on-year.
“Excluding mobile, which included revenue recognition linked to the Assassin’s Creed Jade licensing agreement last year, net bookings were up 43.1% year-on-year,” explains the company. Deutsche Bank anticipated significantly lower “net bookings”, of 603 million euros, while the group itself expected to achieve a figure of 610 million euros.
Soon Star Wars
The company’s revenues were supported by two AAA games released during the period, namely “Assassin’s Creed Mirage”, in early October, and “Avatar: Frontiers of Pandora”, based on the Avatar film license, in early December.
Describing the final three months of 2023 as “strong,” CEO Yves Guillemot said “the fourth quarter represents an opportunity to capitalize on this momentum, with the launch of Prince of Persia: The Lost Crown (released mid- January, Editor’s note), a game which illustrates Ubisoft’s ability to revive iconic brands, as well as the launch of Skull and Bones, scheduled for mid-February.
Most notably, the latest Prince of Persia made an impact last month, earning a Metacritic rating, a review aggregator, of 86. “This is a notable improvement over the 81 score obtained by the game Prince of Persia in 2008, which sold around 2.5 million copies”, underlined UBS which is counting on one million units for this opus.
Ubisoft also revealed some of the upcoming releases for the next financial year which will begin on April 1, 2024.
“We are now preparing for the very promising line-up of fiscal year 2025, including the launch of Star Wars Outlaws in 2024”, a highly anticipated game, rejoiced Yves Guillemot. “This release should represent a major event in the video game industry given the undeniable appeal of this legendary franchise which will arrive for the first time in an open world,” continued the manager. “We will also launch Assassin’s Creed codename Red, which will take place in the long-awaited universe of feudal Japan,” he also announced.
“While the stock has fallen about 30% in four months and short positions in the stock are likely high due to expectations of a material outlook cut, these higher-than-expected results should help restore “positive sentiment towards the stock – especially when we look at the impressive gaming pipeline for fiscal year 2025”, appreciates Deutsche Bank.
“The group made a big announcement with a “big” Assassin’s Creed for next year, a big game which will complete Stars Wars, an already 5-star line-up”, appreciates TP ICAP Midcap. “A new course is looming and our forecasts for the coming financial year will probably be revised upwards,” adds the research office which confirmed its buy opinion on the stock.
Julien Marion – ©2024 BFM Bourse