Ubisoft Meets Lowered Third-Quarter Guidance; Fiscal-Year 2024 Slate Appears To Be Overstuffed

Ubisoft UBI met fiscal third-quarter expectations as net bookings of EUR 726 million came in line with the recently revised and lowered guidance. Ubisoft only reports revenue for its fiscal first and third quarters. The firm announced that its fiscal 2024 slate includes three AAA titles, two major mobile games, and two new live service titles, including the oft-delayed Skull and Bones. We are maintaining our EUR 35 fair value estimate.

Net bookings were down 3% versus a year ago as catalog titles fell 27% due in part to Rainbow Six being on Xbox Game Pass last year. Player recurring revenue more than doubled to EUR 419 million, due to mobile licensing. Both Assassin’s Creed and Rainbow Six Siege posted strong engagement growth, boding well for new versions of both franchises.

Ubisoft has struggled when trying to expand its slate from three to four or more AAA games, as seen in both fiscal 2020 and 2021. However, the firm failed in fiscal 2023 when trying to release three AAA titles and two major live service games. Thus, the plan to release three AAA titles, two mobile games, and two new live service titles may be too ambitious for Ubisoft, and we would not be surprised if management was forced to delay yet another game. The live service/free-to-play game landscape is super competitive on both console/PC and mobile platforms, with many games unable to find or hold on to an audience and being shut down. Over 15 titles have been either canceled or halted in development since the start of the year, including the mobile versions of major franchises such as Apex Legends and Battlefield. Ubisoft may not have the bandwidth or financial resources it needs to properly market and support these new live service/F2P games, making delays more likely.