Home / Top News / UBISOFT REPORTS FULL-YEAR 2017-18 SALES AND EARNINGS FIGURES

UBISOFT REPORTS FULL-YEAR 2017-18 SALES AND EARNINGS FIGURES

UBISOFT REPORTS FULL-YEAR 2017-18
SALES AND EARNINGS FIGURES

Very solid performance for the fourth quarter and continued excellent execution across the board

2017-18: higher-THAN-EXPECTED PERFORMANCE AND new record-level PROFITABILITY

  • Total annual sales of €1,731.9 million, up 18.6% year on year, outstripping target of around €1,640.0 million.
  • Continued excellent execution across the board:
  • Far Cry® 5: Ubisoft’s second biggest release ever with USD 310 million total players spending in the release week[1]
     
  • Assassin’s Creed® Origins: record performance for an Assassin’s Creed game in a fourth fiscal quarter
     
  • Rainbow Six® Siege: more than 30 million registered players, record engagement in fourth-quarter 2017-18 and esports viewership up by approximately 300.0% for the Six Invitational[2]
     
  • The Division®: more than 20 million registered players
     
  • Ghost Recon® Wildlands: more than 10 million registered players
     
  • Record peak concurrent users for the Group in fourth-quarter 2017-18
     
  • Annual digital revenue up 37.8% to €1,004.7 million (representing 58.0% of total sales versus 50.0% for the previous fiscal year)
     
    • Sharp increase in PRI[3]: up 58.7% to €482.5 million (27.9% of total sales against 20.8% in 2016-17)
       
      • Mobile revenue up 66.2%
         
  • Annual back-catalog sales up 27.2% to €826.0 million (47.7% of total sales compared with 44.5% in 2016-17), confirming the increasingly recurring profile of the Group’s business.
     
  • Non-IFRS operating income up 26.2% to €300.1 million, exceeding target of €270.0 million.
     
    • Non-IFRS operating margin reaches a record high at 17.3% (16.3% in 2016-17)

TARGETS FOR 2018-19: THE GROUP IS STANDING BY ITS TARGETS FOR NON-iFRS OPERATING INCOME AND FREE CASH FLOW

Paris, May 17, 2018 – Today, Ubisoft released its sales and earnings figures for the fiscal year ended March 31, 2018.

Yves Guillemot, Co-Founder and Chief Executive Officer stated, “Ubisoft ended the fiscal year on a very positive note, with continued excellent execution across the board. The Group further strengthened its brands thanks to the quality of its games, strong live services and a deep commitment to player communities. During the fourth quarter, we reached a record of peak concurrent users thanks to record engagement levels and esports viewership for Rainbow Six Siege, the successful launch of Far Cry 5 – the second biggest launch in Ubisoft’s history – and continued strong performance by Assassin’s Creed Origins, Mario + Rabbids Kingdom Battle and our back-catalog titles. As a result, we have outperformed our financial targets, with record-high sales, digital and back-catalog revenues, and profitability.

In the short and medium term, Ubisoft has many growth opportunities to tap and expects further profitability increases. Our digital transformation is progressing at a faster pace than we anticipated. Our potential in the PC and mobile markets is massive, notably in China. Finally, we are continuing to develop and structure our esports offering, which represents a significant opportunity.

Over the longer term, new forms of gaming, enabled notably by streaming, will allow our brands to reach a much wider audience. Consequently, we are investing in our online services platform – which boasted 88 million unique active players[4] – as well as in artificial intelligence in order to better tailor the game experience to each player’s profile and therefore offer them ever-richer experiences.”

Note
Unless stated otherwise, all of the figures in this press release correspond to non-IFRS data, adjusted to exclude non-operating items. The Group presents these indicators – which are not prepared strictly in accordance with IFRS – as it considers that they are the best reflection of its operating and financial performance. The definitions of the non-IFRS indicators with a description of the applicable adjustments, as well as a reconciliation table between the IFRS consolidated income statement and the non-IFRS consolidated income statement are provided in an appendix to this press release.

Income statement and key financial data

In € millions 2017-18 % 2016-17 %  
IFRS Sales 1,731.9   1,459.9    
IFRS Gross margin 1,435.1 82.9% 1,189.0 81.4%  
Non-IFRS R&D expenses (661.1) (38.2)% (521.7) (35.7)%  
  Non-IFRS selling expenses (335.9) (19.4)% (313.1) (21.4)%  
  Non-IFRS G&A expenses (138.0) (8.0)% (116.4) (8.0)%  
Total non-IFRS SG&A expenses (473.9) (27.4)% (429.5) (29.4)%  
Non-IFRS operating income 300.1 17.3% 237.7 16.3%  
IFRS operating income 222.3   175.8    
Non-IFRS diluted EPS (in €) 1.80   1.46    
IFRS diluted EPS (in €) 1.18   0.92    
Non-IFRS cash flows from operating activities* 169.9   149.1    
R&D investment expenditure** 720.2   610.5    
Net cash/(debt) position (548.1)   (80.4)    

* Based on the consolidated cash flow statement for comparison with other industry players (not audited)

** Including royalties but excluding future commitments

Sales

Full-year sales for 2017-18 came to €1,731.9 million, outstripping the Group’s target of around €1,640.0 million and up €18.6% (or 22.9% at constant exchange rates[5]) compared with the €1,459.9 million recorded for 2016-17.

Sales in the fourth quarter of 2017-18 – a period that saw the release of one major game, Far Cry 5 – totaled €540.7 million, exceeding the target of approximately €449.0 million. This fourth-quarter sales figure represents a 16.6% decrease (or 11.2% at constant exchange rates5) versus the €648.6 million recorded for the same period of 2016-17, when two major games were released (Ghost Recon Wildlands and For Honor®).

Main income statement items[6]

Gross margin rose to 82.9% of sales and €1,435.1 million in absolute value terms (compared with 81.4% and €1,189.0 million in 2016-17).

Non-IFRS operating income came in at €300.1 million, up 26.2% on the €237.7 million recorded for 2016-17.

Non-IFRS net income came in at €220.6 million, representing non-IFRS diluted earnings per share (“EPS”) of €1.80, compared with non-IFRS net income of €174.3 million and non-IFRS diluted EPS of €1.46 for 2016-17.

IFRS net income for 2017-18 came to €139.5 million, representing IFRS diluted EPS of €1.18 versus IFRS net income of €107.8 million and IFRS diluted EPS of €0.92 in 2016-17.

Main cash flow statement[7] and balance sheet items

Non-IFRS cash flows from operating activities represented a net inflow of €169.9 million against €149.1 million in 2016-17. This increase reflects higher non-IFRS cash flow from operations (€214.9 million versus €110.2 million in 2016-17) and a €45.0 million increase in non-IFRS working capital requirement (€38.9 million decrease in 2016-17).

At March 31, 2018, Ubisoft had net debt7 of €548.1 million versus €80.4 million one year earlier. This rise mainly reflects the purchases and binding purchase commitments of own shares for €411.5 million during the fiscal year and a €100 million deposit related to a total return swap with settlement at maturity for part of the share previously owned by Vivendi. As a reminder the Company free cash flow target stands at around €300.0 million in 2018-19.

Outlook

Full-year 2018-19

Ubisoft is standing by its 2018-19 targets for non-IFRS operating income and free cash flow. As announced on May 9, 2018, in line with the recommendations of the European regulators (ESMA) and the French Financial Markets Authority (AMF), Ubisoft is today introducing a new target for sales calculated in accordance with IFRS 15 as well as a new indicator called “Net Bookings” which corresponds to its sales figure as calculated prior to the Company’s application of IFRS 15 (see Press Release in appendices):
            

  • IFRS 15 sales of around €2,000.0 million[8]
     
  • Net bookings of approximately €2,050.0 million compared with the previous target of €2,100.0 million, calculated based on:
     
    • The release of three new AAA games (The Crew® 2, The Division® 2 and an unannounced franchise title) representing 19 million units (vs the four AAA releases and 23 million units previously announced). In line with previous practices and in view of the acceleration of our digital transformation, growth in back-catalog sales and excellent momentum of recent releases, Ubisoft has decided to give itself more time to develop Skull & BonesTM to offer players an even more engaging experience. Skull & Bones is now scheduled for release in 2019-20.
       
    • Digital revenue is expected to represent around 65% of net bookings (compared with approximately 60% previously) and PRI should represent around 30% of net bookings (versus the previous target of over 25%).
       
    • Back-catalog sales are forecasted to represent approximately 50% of net bookings (versus the previous target of over 45%).
       
  • Non-IFRS operating income (based on net bookings) of around €440.0 million.
     
  • Free cash flow of approximately €300.0 million.

First-quarter 2018-19

For first-quarter 2018-19, the Group expects IFRS 15 sales to amount to around €350.0 million8 and net bookings to total approximately €350.0 million (compared with €202.0 million for the same period of 2017-18).

                   
Recent significant events

Sale of Vivendi’s entire stake in Ubisoft, with the transaction structured as follows:

  • New long-term investors in Ubisoft, with Ontario Teachers’ Pension Plan and Tencent acquiring 3,787,878 and 5,591,469 Ubisoft shares respectively.
  • Share buybacks by Ubisoft: Ubisoft has undertaken to buy back 7,590,909 of its own shares from Vivendi through a structured transaction taking the form of (i) a forward sale of Ubisoft shares by Vivendi to Crédit Agricole Corporate and Investment Bank (CACIB), and (ii) a mechanism involving Ubisoft’s forward buyback of its own shares from CACIB, enabling Ubisoft to defer its buybacks over the period from 2018 to 2021.
  • Purchase of Ubisoft shares by Guillemot Brothers SE: Guillemot Brothers SE has undertaken to purchase 3,030,303 Ubisoft shares.
  • An accelerated private placement of 13,376,620 Ubisoft shares among qualified investors.

Signature of a strategic partnership agreement with Tencent: Ubisoft has signed a strategic partnership agreement with Tencent which will increase Ubisoft games’ exposure and engagement in China and enable the Company to reach millions of new players on mobile and PC.

Acquisition of 1492 Studio, a game development studio specialized in the development of free-to-play episodic and interactive stories on mobile.

Acquisition of Blue Mammoth Games, a game development studio specialized in free-to-play multi-player games on PC and the PS4.

Announcement of new studios openings in India, Ukraine and Canada: The Mumbai and Odessa studios will be focused on jointly developing AAA games and post-release game support. The Winnipeg studio will play a strategic role in jointly developing AAA titles and will be dedicated to developing tools and technology.

Contact

Investor Relations
Jean-Benoît Roquette
SVP Investor Relations
+ 33 1 48 18 52 39
[email protected]

Press Relations
Michael Burk
Senior Director of Corporate Public Relations
+ 33 1 48 18 24 03
[email protected]

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 and approved by the Board of Directors on 05/17/18 and have not been audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft Registration Document filed on July 21, 2017 with the French Financial Markets Authority (l’Autorité des Marchés Financiers)).

About Ubisoft
Ubisoft is a leading creator, publisher and distributor of interactive entertainment and services, with a rich portfolio of world-renowned brands, including Assassin’s Creed, Just Dance, Watch_Dogs, Tom Clancy’s video game series, Rayman and Far Cry. The teams throughout Ubisoft’s worldwide network of studios and business offices are committed to delivering original and memorable gaming experiences across all popular platforms, including consoles, mobile phones, tablets and PCs. For the 2017-18 fiscal year Ubisoft generated sales of €1,732 million. To learn more, please visit www.ubisoftgroup.com

© 2018 Ubisoft Entertainment. All Rights Reserved. Ubisoft and the Ubisoft logo are registered trademarks in the US and/or other countries.

APPENDICES

Breakdown of sales by geographic region
         
  % Sales % Sales % Sales % Sales
  Q4 2017/18 Q4 2016/17 12 months 2017/18 12 months 2016/17
Europe 35% 36% 37% 38%
North America 45% 48% 47% 47%
Rest of the World 20% 16% 16% 15%
TOTAL 100% 100% 100% 100%

   

 

 

 

 

 

 

     
Breakdown of sales by platform

 

         
  Q4 2017/18 Q4 2016/17 12 months 2017/18 12 months 2016/17
PLAYSTATION®4 43% 46% 42% 41%
XBOX One 23% 30% 23% 27%
PC 21% 17% 18% 18%
NINTENDO SWITCHTM 5% 7%
XBOX 360, PS®3, Wii(TM), Wii U(TM) 1% 2% 2% 7%
Others* 7% 5% 8% 7%
TOTAL 100% 100%   100%   100%
*Mobile, ancillaries.        
         
         
         
         
         

Title release schedule 1st quarter
(April – June 2018)

PACKAGED & DIGITAL

 

   
FAR CRY® 3 CLASSIC EDITION  

PlayStation®4, Xbox One(TM)

 

 

MARIO + RABBIDS® KINGDOM BATTLE GOLD EDITION (retail only)  

 

 

nintendo Switch(TM)

 

SOUTH PARKTM THE FRACTURED BUT WHOLETM  

nintendo Switch(TM)

 

THE CREW® 2  

PlayStation®4, Xbox One(TM), PC

 

         

                                                                                                          

Digital ONLY

 

   
FAR CRYTM 5 – HOURS OF DARKNESS  

PlayStation®4, Xbox One(TM), PC

 

FOR HONOR® SEASON 6 HERO’S MARCH  

PlayStation®4, Xbox One(TM), PC

 

 

MARIO + RABBIDS® KINGDOM BATTLE – DONKEY KONG ADVENTURE

 

 

nintendo Switch(TM)

 

MIGHT & MAGIC® : ELEMENTAL GUARDIANS  

Google play, App store

 

TOM CLANCY’S RAINBOW SIX® SIEGE OPERATION PARA BELLUM  

PlayStation®4, Xbox One(TM), PC

 

                  

Audit procedures were carried out and audit reports are currently being issued

Consolidated income statement (IFRS, audited)

In thousands of euros   03.31.18   03.31.17
   
   
         
Sales   1 731 894   1 459 874
Cost of sales   -296 820   -270 887
Gross Margin   1 435 074   1 188 987
Research and Development costs   -690 592   -548 735
Marketing costs   -339 274   -316 806
General and Administrative costs   -144 649   -122 538
Current operating income   260 559   200 907
Non-current expenses and income   -38 241   -25 094
Operating income   222 317   175 813
Net borrowing costs   -15 909   -10 816
Net foreign exchange gains/losses   -5 747   -2 288
Other financial income   8 312   2 348
Other financial expenses   -56   -5 449
Net financial income   -13 400   -16 205
Share in profit of associates   -224   -338
Income tax   -69 241   -51 457
Profit for the period   139 452   107 813
Earnings per share        
Basic earnings per share (in €)   1,26   0,98
Diluted earnings per share (in €)   1,18   0,92
Weighted average number of shares in issue   110 399 832   109 887 358
Diluted weighted average number of shares in issue   122 443 961   119 676 950
 

 

       

Definitions of Non-IFRS Financial Indicators

Net Bookings: corresponds to the prior sales standard.

Non-IFRS operating income corresponds to operating income less the following items:

  • Stock-based compensation expense arising on free share plans, group savings plans and stock options.
  • Depreciation of acquired intangible assets with indefinite useful lives.
  • Non-operating income and expenses resulting from restructuring operations within the Group.

                         
Non-IFRS operating margin corresponds to the ratio between the Non-IFRS operating income and sales. This ratio reflects the economic performance.

Non-IFRS net income corresponds to net income less the following items:

  • The above-described deductions used to calculate non-IFRS operating income.
  • Income and expenses arising on revaluations, carried out after the measurement period, of the potential variable compensation granted in relation to business combinations.
  • OCEANE bond interest expense recognized in accordance with IAS39
  • The tax impacts on these adjustments.

Non-IFRS diluted EPS corresponds to Non-IFRS net income divided by the weighted average number of shares after the exercise of dilutive instruments rights.

The adjusted cash flow statement includes:

  • Non-IFRS cash flow from operations which includes:
    • The costs of internal development and licenses development (presented under cash flows from investing activities in the IFRS cash flow statement) as these costs form an integral part of the Group’s operations.
    • Current and deferred taxes.
  • Non-IFRS change in working capital requirement which includes movements in deferred taxes, thus cancelling out the deferred tax income or expense presented in Non-IFRS cash flow from operations.
  • Non-IFRS cash flows from operating activities which includes the costs of internal development and licenses development (presented under cash flows from investing activities in the IFRS cash flow statement and included in Non-IFRS cash flow from operations in the adjusted cash flow statement).
  • Non-IFRS cash used by investing activities which excludes the costs of internal development and the licenses development that are presented under Non-IFRS cash flow from operations.

Free cash flow corresponds to cash flows from operating activities after cash inflows/outflows arising on the disposal/acquisition of other intangible assets and property, plant and equipment.

Free cash flow before WCR corresponds to cash flow from operations after cash inflows/outflows arising on the disposal/acquisition of other intangible assets and property, plant and equipment.

Net cash (debt) position corresponds to investments and cash and cash equivalents less financial liabilities excluding derivatives.

Reconciliation of IFRS Net income and non-IFRS Net income

In million of euros,
 except for per share data
2017-18 2016-17
IFRS Adjustments Non-IFRS IFRS Adjustments Non-IFRS
Sales  1 731,9    1 731,9  1 459,9    1 459,9
Total Operating expenses  

(1 509,6)

 77,8 (1 431,8) (1 284,1) 61,9 (1 222,2)
Stock-based compensation (39,6)  39,6  0 (36,8) 36,8 0,0
Non-current expenses and income (38,2)  

38,2

0 (25,1) 25,1 0,0
Operating Income  222,3  77,8  300,1 175,8 61,9 237,7
Net Financial income (13,4)  7,7 (5,7) (16,2) 7,2 (9,0)
Share in profit of associates (0,2)  – (0,2) (0.3) (0.3)
Income tax (69,2) (4,4) (73,6) (51,4) (2,6) (54,0)
Net Income  139,5  81,1  220,6 107,8 66,5 174,3
Diluted earnings per share  1,18  0,62  1,80 0,92 0,54 1,46

Consolidated balance sheet (IFRS, audited)

     
ASSETS Net Net
In thousands of euros 03.31.18 03.31.17
Goodwill   259 462    180 735 
Other intangible assets   782 402    736 465 
Property, plant and equipment   114 116    106 375 
Investments in associates -289  -68 
Other financial assets   106 895    5 478 
Deferred tax assets   84 181    88 831 
Non-current assets   1 346 767    1 117 815 
Inventory   20 264    25 359 
Trade receivables   435 573    405 557 
Other receivables   208 778    146 467 
Other current financial assets   8 320    1 131 
Current tax assets   38 481    32 967 
Cash and cash equivalents   746 939    852 699 
Current assets   1 458 356    1 464 180 
Total assets   2 805 122    2 581 995 
         
LIABILITIES AND EQUITY Net Net
In thousands of euros 03.31.18 03.31.17
Capital   8 652    8 752 
Premiums   234 123    280 975 
Consolidated reserves   507 102    736 276 
Consolidated earnings   139 452    107 813 
Total equity   889 330    1 133 816 
Provisions   3 074    4 246 
Employee benefit   10 289    9 079 
Long-term borrowings   933 629    640 705 
Deferred tax liabilities   96 047    72 773 
Non-current liabilities   1 043 039    726 803 
Short-term borrowings   361 538    293 403 
Trade payables   176 613    178 282 
Other liabilities   321 935    219 817 
Current tax liabilities   12 667    29 872 
Current liabilities   872 753    721 376 
Total liabilities   1 915 792    1 448 179 
Total liabilities and equity   2 805 122    2 581 995 

Consolidated cash flow statement for comparison with other industry players (non audited)

In thousands of euros 03.31.18 03.31.17
Cash flows from non-IFRS operating activities    
Consolidated earnings 139 452   107 813
+/- Share in profit of associates 224   338
+/- Net depreciation on internal & external games & movies 462 207   407 816
+/- Other depreciation on fixed assets 81 824   66 819 
+/- Net Provisions 4 052   -2 563
+/- Cost of share-based payments 39 558   36 836
+/- Gains / losses on disposals 308   408
+/- Other income and expenses calculated 8 578   -10 655
+/- Cost of internal development and license development -521 290   -496 588
CASH FLOW FROM NON-IFRS OPERATION   214 914   110 223
Inventory 229   -5 381
Trade receivables -61 544   31 934
Other assets -78 567   3 113
Trade payables 15 243   -45 082
Other liabilities   79 591   54 315
 +/- Change in working capital from non-IFRS operating activities -45 048   38 899
TOTAL CASH FLOW GENERATED BY NON-IFRS OPERATING ACTIVITIES 169 865 149 122
– Payments for the acquisition of intangible assets and property, plant and equipment -59 366   -62 914
+ Proceeds from the disposal of intangible assets and property, plant and equipment 20   603
+/- Other cash flows from investing activities -131 493   -44 374
+ Repayment of loans and other financial assets 29 790   43 322
+/- Changes in scope (1) -77 589   -105 642
CASH USED BY NON-IFRS INVESTING ACTIVITIES -238 638 -169 005
Cash flows from financing activities    
+ New borrowings 894 598   669 147
+ New finance leases 5 054   1 416
– Repayment of finance leases -1 672   -898
– Repayment of borrowings -487 677   -214 663
+ Proceeds from shareholders in capital increases 48 951   9 465
+/- Sales / purchases of own shares -411 498   -67 844
CASH GENERATED (USED) BY FINANCING ACTIVITIES 47 756   396 623
Net change in cash and cash equivalents -21 017   376 740
Cash and cash equivalents at the beginning of the fiscal year 632 314   255 688
Foreign exchange gains/losses -27 943   -114
Cash and cash equivalents at the end of the fiscal year(1)   583 354   632 314
(1) Including cash in companies acquired and disposed of 4 738   26 421
 

 

RECONCILIATION OF NET CASH POSITION

   
  Cash and cash equivalents at the end of the period 583 354 632 314
  Bank borrowings and from the restatement of finance leases -1 005 431 -646 752
  Commercial papers -126 000 -66 000
  NET CASH POSITION -548 077 -80 438

Consolidated cash flow statement IFRS (audited)

In thousands of euros 03.31.18 03.31.17
Cash flows from operating activities adjusted    
Consolidated earnings 139 452 107 813
+/- Share in profit of associates 224 338
+/- Net Depreciation 544 031 474 635
+/- Net Provisions 4 052 -2 563
+/- Cost of share-based payments 39 558 36 836
+/- Gains / losses on disposals 308 408
+/- Other income and expenses calculated 8 578 -10 655
+/- Tax Expense 69 241 51 457
TOTAL CASH FLOW FROM OPERATIONS 805 445 658 269
Inventory 229 -5 381
Trade receivables -61 544 31 934
Other assets -87 590 11 854
Trade payables 15 243 -45 082
Other liabilities 52 832 30 256
 +/- Change in working capital from operating activities adjusted -80 830 23 582
 +/- Payable tax expense  -33 460 -36 140
TOTAL CASH FLOW GENERATED BY OPERATING ACTIVITIES 691 155 645 711
– Payments for the acquisition of internal & external games -521 290 -496 588
– Payments for the acquisition of intangible assets and property, plant and equipment -59 366 -62 914
+ Proceeds from the disposal of intangible assets and property, plant and equipment 20 603
+/- Other cash flows from investing activities -131 493 -44 374
+ Repayment of loans and other financial assets 29 790 43 322
+/- Changes in scope (1) -77 589 -105 642
CASH USED BY INVESTING ACTIVITIES ADJUSTED -759 928 -665 594
Cash flows from financing activities    
+ New borrowings 894 598 669 147
+ New finance leases 5 054 1 416
– Repayment of finance leases -1 672 -898
– Repayment of borrowings -487 677 -214 663
+ Proceeds from shareholders in capital increases 48 951 9 465
+/- Sales / purchases of own shares -411 498 -67 844
CASH GENERATED (USED) BY FINANCING ACTIVITIES 47 756 396 623
Net change in cash and cash equivalents -21 017 376 740
Cash and cash equivalents at the beginning of the fiscal year 632 314 255 688
Foreign exchange gains/losses -27 943 -114
Cash and cash equivalents at the end of the fiscal year(1) 583 354 632 314
(1) Including cash in companies acquired and disposed of 4 738 26 421

                     

APPLICATION OF IFRS 15*
Impact on Financial Communications

Paris, May 9, 2018 – As from fiscal 2018-19, Ubisoft will apply IFRS 15 (the new revenue recognition standard) for the first time. The main impacts that this new standard will have on the recognition of the Group’s sales and on its financial communications are presented below.

Accounting impacts of IFRS 15

The main impact of IFRS 15 for Ubisoft concerns the recognition of sales of games with a service component, i.e. “Live Services” games, which give players access to online services. Under IFRS 15, all of these services – which are accessible at no extra cost for users – constitute a distinct obligation for which the consideration received on the initial delivery of the original game must be recognized in revenue over the estimated period of time that the players use the service.
Under the currently-applicable revenue recognition standard (IAS 18**), the service component is not separated out and the full amount of the revenue received for the game is recognized when the game is delivered. Consequently, the application of IFRS 15 will result in a portion of the revenue generated on these games being deferred beyond their initial delivery date.

Impacts on financial communications

The Group will apply IFRS 15’s revenue recognition rules for the first time as from fiscal 2018-19.
In addition to its financial statements prepared in accordance with IFRSs as adopted by the European Union, Ubisoft will continue to report alternative performance indicators (non-IFRS), with the same level of detail as previously. In order to enable meaningful comparisons with prior-period sales figures, Ubisoft will introduce a new alternative performance indicator in its financial communications called “Net bookings”. This indicator is used by Ubisoft to oversee and measure its business and commercial performance.

Timeline

As recommended by the European regulators (ESMA) and the French Financial Markets Authority (AMF), Ubisoft will issue sales figures that are compliant with IFRS 15 as from the press release on its first-quarter 2018-19 sales.

When it publishes its full-year results for fiscal 2017-18 on May 17, 2018, Ubisoft will report on the following targets:

  • 2018-19 sales in IFRS 15 format
  • Net Bookings for 2018-19
  • Non-IFRS operating income for 2018-19
  • Free Cash Flow for 2018-19

* International Financial Reporting Standard 15 – equivalent to US GAAP ISC 606
** International Accounting Standards

[1] Ubisoft estimate, based on observed sales price for main game sell through WW and first parties’ estimates for PRI

[2] Viewership for the Six Invitational – the annual esports final event for Rainbow Six Siege (held in February 2018) – versus viewership for the February 2017 final.

[3] Player Recurring Investment includes sales of digital items, DLC, seasonal passes, subscriptions and advertising.

[4] On consoles and PC in fiscal 2017-18

[5] Sales at constant exchange rates are calculated by applying to the data for the period under review the average exchange rates used for the same period of the previous fiscal year

[6] For further information on income statement movements and cash flows see the slideshow published on the Ubisoft website.

[7] Based on the consolidated cash flow statement for comparison with other industry players (not audited)

[8] Based on our analysis to date of IFRS 15 (unaudited)

Attachment

  • Ubisoft – FY18.pdf
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