This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Ubisoft has revealed that it has seen its best ever results for the year ending 31st March 2021. For those who have been following the games industry, this shouldn't come as much of a surprise for anybody who has followed my coverage of the industry, the companies within it, or for anybody who looks at what has happened worldwide in the past twelve months and come to the obvious realisation that people trapped inside due to a pandemic will spend money on video games.
Unsurprisingly, people did spend money on video games. Ubisoft has realised this with a fantastic year, generating net bookings of €2.24 billion, a massive annual increase of 46.1%. Operating income comes in at €473.3 million, a 21.1% YoY increase. Simply put, Ubisoft has made more money than ever before and also put even more money into R&D, boosting their future possibilities. This figure is €784.9m, a €104m increase from the previous year.
Before we talk about these results and Ubisoft further, let's look at what Yves Guillemot, the CEO and co-founder, had to say:
Our teams demonstrated incredible resilience during a challenging year, delivering amazing games and experiences. We also relied on a deep and diversified back-catalog which, again, outperformed our expectations and represented for the third consecutive year more than 50% of our total net bookings, progressively cementing therecurring profile of our business. Our assets have never been so strong.
Alongside these successes, we have pursued the transformation of our organization that we had initiated 18 months ago to ensure Ubisoft is positioned to meaningfully grow audience and recurring revenues over the coming years. We have also implemented profound changes to ensure the continued development of an inclusive working environment where our talents can thrive and deliver the game experiences that players will love and share.
Ubisoft: Working in the Pandemic and Driving the Past
There's no doubt that working from home has been a challenge for game developers, as it has for a large swathe of the world across a multitude of roles. Within gaming, many delays and the release of games that should have no doubt been delayed further are proof enough that the lack of in-room contact between departments and the reliance on infrastructure like internet connections have made the work difficult.
Reliance on the back catalogue is also an undeniable fact. However, this one has been shared amongst the industry. More people have finally gotten to buying and playing older titles they were interested in or simply exploring a medium introduced to them during the pandemic. Ubisoft, throughout the year, has seen €1.288b in net bookings come from the back catalogue, a 15.5% YoY increase and 57.5% of all net bookings in the year.
Several titles and franchises from Ubisoft's back catalogue have seen a large boost over the previous year. Assassin's Creed, for example, has seen a record annual performance with yearly revenue up 50% on the prior record set in the 2012-13 fiscal year. Rainbox Six, particularly as a result of Rainbox Six: Siege, is one of the top ten most-played premium console or free-to-play video games during 2020, and The Division has reached 40 million unique players, with the franchise to see two new titles, one a Free to Play PC and console title, and one a mobile release.
Planning for the Future - More to Come
As mentioned, Ubisoft has seen more investment in future production than ever before. We are keenly aware of what some of these titles are going to be. Ubisoft has already announced and delayed a fair number of titles, such as Beyond Good and Evil 2, Skull & Bones and Avatar. We also know that Ubisoft has partnered up with Disney to create a Star Wars title, with other titles in the pipeline.
Some of these titles, as has been confirmed, will be free-to-play games. While some people have misconstrued this to mean that Ubisoft will move away from "AAA" releases, the fact is that more free-to-play and casual titles will be released alongside the "AAA" releases, diversifying the publisher's line-up and further expanding their reach. For premium titles, we know Far Cry 6 and Rainbow Six Quarantine are coming. An Assassin's Creed is to be expected further down the line, potentially in the FY beginning April 1st 2022, due to WFH and COVID reasons.
Either way, the future for Ubisoft is a bright one, and the company expects results to match this. Net bookings for the three months ending are targetted at €320m, with a full year of net bookings being in single-digit growth based primarily on their back catalogue and the new line-up of titles, including the free-to-play entries like The Division Heartland. Operating income predictions for the year ending March 31st 2022, are between €420 and €500m, a range that implies a slight YoY decrease but likely accounting for even more R&D over time.