Funny summer for Ubisoft. For once, this video game publisher is more in the headlines for moral issues than for his performances or his new titles. Faced with “inappropriate” and “toxic” behavior incriminating senior leaders of the group, key in the creative process, the firm chaired by Yves Guillemot had to reorganize. Clearly, the officials targeted by the allegations have left. Ubisoft would have done well without this bad publicity. But by showing great responsiveness, the group was able to cut short a scandal that risked lasting damage to its reputation, which would undoubtedly have had consequences on its sales. Of all the possible solutions, therefore, the least bad was chosen. It remains for the entity to ensure the continuity of the development of its games, while the drastic decision taken by the world giant of “entertainment” is potentially a source of destabilization for the studios of the group. Before this affair, some observers were also skeptical about the ambitions of the leaders to launch five big budget games for the 2020-2021 fiscal year, which will end on March 31 of next year. On this subject, Ubisoft wanted to be reassuring a few days ago by confirming its forecasts and its launch schedule. On the earnings side, non-IFRS operating profit is still expected in a range of between 400 and 600 million euros.
A good start to the year, better than the guidance
The other major news for the publisher is to be found in the first quarter activity point. This publication brought a lot of good news, including a good level of income overall, at 410 million euros against an initial estimate of 335 million. This performance was driven by the depth of the catalog. The bulk of the “net bookings”, corresponding to net sales excluding deferred revenue, were achieved by older games, in particular the Assassin’s Creed, Rainbow Six Siege and Just Dance franchises, to name just three. Ubisoft is not deviating from its short-term caution, however, expecting a second quarter down 16% to 290 million euros, given an unfavorable base effect. Still, the stakes are mostly at the end of the year, with the expected fallout from the launches of potential bestsellers like Watch Dogs Legion, Far Cry 6 or Assassin’s Creed Valhala. To this attractive line-up is added the rise of Hyper Scape, the “free-to-play” game (free download) recently launched and whose success augurs additional revenues not taken into account in the forecasts. financial. In a context of transition for the video game industry (arrival of new consoles), Ubisoft’s prospects are thus more than honorable. As for the French publisher’s stock market trajectory, it bears the stigma of the unfortunate episodes of sexual harassment that have punctuated its news and the lack of visibility on the release dates of strategic games. Still, the title is now quite widely discounted compared to its peers. It capitalizes 20 times the net profit expected next year, compared to an average of 26 for the Americans Take Two, Activision and Electronic Arts.
Our advice: After a winning round trip in the “speculator’s corner” (with a 16% capital gain), we are again buyers of Ubisoft, at 67 euros. Isin code: FR0000054470.
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