Ubisoft’s shares have dropped 5.72% to 11.625 euros due to a grim revenue forecast, with stock values down nearly 50% over the past year. The company has delayed the release of Assassin’s Creed Shadows to March 2025 and lowered its net bookings forecast for Q3 2024-25. Despite disappointing sales and paused projects, Ubisoft aims for slightly reduced net bookings of 1.9 billion euros for the fiscal year while planning significant cost cuts. Concerns remain about cash flow and debt repayment challenges.
Ubisoft Faces Significant Decline Amid Revenue Warning
Ubisoft has experienced a notable drop of 5.72%, with shares now priced at 11.625 euros, following a concerning revenue forecast. The beleaguered video game publisher has enlisted top advisors to explore various strategic and capital options in a bid to rejuvenate its business. Over the past year, Ubisoft’s stock has plummeted by nearly 50%, beset by a series of negative developments, including disappointing earnings, delays in game releases, and underperformance of titles like Star Wars Outlaws.
Despite these challenges, speculation regarding a potential buyout by its primary shareholders—Tencent and the Guillemot family—has provided a glimmer of hope for investors.
Strategic Moves Amid Game Delays
In its latest strategy update, Ubisoft announced yet another delay for its flagship title, Assassin’s Creed Shadows, now set to launch just before the conclusion of the 2024/2025 fiscal year on March 20. This postponement comes after the game was previously rescheduled from November 15, 2024, to February 14, 2025, as the company aims to better incorporate player feedback and enhance the game’s launch conditions.
Additionally, Ubisoft revised its net bookings forecast for the third quarter of the 2024-25 fiscal year down to approximately 300 million euros, a decline from its earlier target of 380 million euros, which was also lower than market expectations of 385 million euros. The company reported disappointing sales during the holiday season, particularly for Star Wars Outlaws, and has paused the development of its free-to-play shooter, XDefiant.
According to TP Icap Midcap, the disappointing third quarter and the delay of AC Shadows could have prompted a more severe warning regarding the current year’s financial outlook. However, Ubisoft’s recent partnerships are expected to mitigate the impact by monetizing rights acquired from Activision last year.
Looking ahead, Ubisoft forecasts net bookings of around 1.9 billion euros for the 2024-2025 fiscal year, slightly lower than the previously expected 1.95 billion euros. The company remains optimistic about achieving adjusted operating profit and free cash flow close to breakeven for the fiscal year, primarily through a more profitable revenue mix and enhanced cost reduction strategies. The plan includes cutting more than 200 million euros from its fixed cost base by the 2025-26 fiscal year, relative to the 2022-23 fiscal year.
Nonetheless, UBS has raised concerns about the lack of free cash flow generation amidst a challenging debt repayment landscape, highlighting the continued difficulties facing the company.