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Ubisoft Q1 2019 – Record First Quarter Reported


The first quarter of the 2018-2019 financial year has been good for the French developer and publisher. Indeed, Ubisoft (EPA:UBI) have reported that Q1, ending June 30th, has been the best first quarter in the company's history.

Sales for the company reached €400 million in the first quarter, with net bookings of €381.5m. This is almost double, an 88.8% increase to be exact, on last years results. Ubisoft's target for the quarter was roughly €350m. This has been fuelled particularly by the 'games as a service' practice the company is following.

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CEO Yves Guillemot stated:

We had a record first quarter, which exceeded our expectations. This performance was fueled by steady growth for our back-catalog and an excellent momentum for PRI (player recurring investment), once again confirming the increasingly recurring profile of our business and the ever-greater success of our digital transformation.

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PRI, as Yves Guillemot mentioned, includes the sales of digital items, DLC, season passes, subscriptions and advertising. This has been a core driver in Ubisoft's growth, particularly when titles like Rainbow Six: Siege and For Honor have a user base in the tens of millions, a large number who pay for the additional seasons when released.

Indeed, as a result of this, sales from the back catalogue and digital sales rose dramatically. The back catalogue is the core feature, having risen 74.7% over last year, generating €332.6m. The back catalogue also accounted for 87.2% of net bookings, though this is down from last years 94.3%. Digital sales were up 76.7% to €287m and made up 75.2% of total net bookings, lower than last year's 80.4%.

The fall in share for both the back catalogue and digital highlights a strong showing from the current catalogue of titles, namely Far Cry 5 which released at the very end of the last financial year.

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Ubisoft has also seen a fairly clear division in sales by platform and region. By region, North America saw a decline of 5%, but still brought in 45% of total sales. Europe generated 35% with the rest of the world bringing in the remaining 20%.

One vindicating factor for me, as a PC gamer first and foremost, is the role of the PC in sales. The PC has grown in sales, from 21% last year to 24% this year. The largest fall came from the PlayStation 4, which fell from 44% last year to 38% this year. Mobile sales remain consistent, generating 8% of total sales for the company.

Q2 and Onwards - Looking Forwards

Understandably, Ubisoft is optimistic for the coming quarter and for the financial year as a whole. The second quarter, in particular, is hopeful to be a strong one as a result of further back catalogue sales. In addition to this are in-store shipments of Assassin's Creed Odyssey.

Second quarter sales are expected to be between €345 and €350m, with bookings of €345m. This would be a large increase on last years €264.2 million of bookings. Ubisoft has also stood by yearly targets of sales of roughly €2 billion, with bookings of around €2.05bn. Operating income from this would be around €440m.

This is certainly a feasible target for the company, particularly so with the number of upcoming titles. As well as the aforementioned Assassin's Creed Odyssey, Ubisoft also have The Division 2, Starlink: Battle for Atlas. Potentially, Beyond Good and Evil 2 could also feature within the current financial year, though likely not.

Regardless, Ubisoft has a strong back catalogue of titles they are performing well with, especially as they continue to release new content for titles like Rainbow Six: Siege and For Honor. In addition to this, games like South Park: The Stick of Truth will be re-released on the Nintendo Switch, further helping with sales. The future is certainly looking bright for Ubisoft.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.