Core Viewpoint - Ubisoft, a major player in the European gaming industry, has announced a significant restructuring plan, leading to a sharp decline in its stock price by over 35% due to disappointing financial performance and a downward revision of its earnings guidance for the fiscal year 2025-2026 [1][3][11]. Group 1: Financial Performance - For the fiscal year 2024-2025, Ubisoft reported a revenue decline of 20.5%, amounting to €1.85 billion, with an operating loss of €15.1 million [1][10]. - The company anticipates a net booking of approximately €1.5 billion for the fiscal year 2025-2026, which is a reduction of €330 million from previous guidance [5][11]. - Ubisoft expects a non-IFRS operating profit of around -€1 billion for the fiscal year 2025-2026, including a one-time impairment of approximately €650 million [5][11]. Group 2: Restructuring and Game Development - Ubisoft has initiated a large-scale restructuring plan that includes the cancellation of six games and the postponement of seven others, with the most notable cancellation being the remake of "Prince of Persia: The Sands of Time" [1][5][6]. - The postponed games are expected to be released in the next fiscal year, 2027 [7]. - The restructuring will also involve the closure of studios and layoffs, with over 150 employees affected [8]. Group 3: Strategic Changes - The company is shifting its strategic focus towards developing open-world games and online service games, marking a significant change in its operational direction [8]. - Ubisoft plans to implement a new operational model centered around five "creative workshops," each dedicated to specific creative areas for product development and market strategy [8]. - Cost-cutting measures are being accelerated, with a target to reduce fixed costs by at least €100 million compared to the fiscal year 2024-2025, aiming to achieve this goal a year earlier than planned [10].

Financial Data and Key Metrics Changes - The company reported product sales for Q4 2025 at $7.6 million, a decrease of 1.6% compared to Q4 2024, with domestic sales growing 8.7% to $7 million [11][12] - Full-year product sales for 2025 totaled $27.6 million, reflecting a 4.3% increase compared to 2024 [12] - The company experienced a significant decline in international sales, particularly in Canada, which dropped 52.6% year-over-year in Q4 [12] Business Line Data and Key Metrics Changes - The First Defense product line saw a notable shift towards Tri-Shield, indicating a migration from Dual-Force products and attracting new dairy and beef customers [12] - Manufacturing output for the key bottleneck process, lyophilization, increased by more than 15% in 2025, with expectations for similar growth in 2026 [8][17] Market Data and Key Metrics Changes - The newborn calf market has evolved, with calf values increasing significantly, now worth approximately $1,300 on day one of life compared to roughly $200 in 2003, raising the economic stakes for early-life calf health [7] - The total addressable market for scour protection is estimated to be around $900 million worldwide [7] Company Strategy and Development Direction - The company is shifting its strategic focus to First Defense, pausing investment in Re-Tain due to an Incomplete Letter from the FDA regarding its new animal drug application [4][6] - The strategy includes expanding the sales team by 50% and creating two new U.S. sales territories to drive growth [16] - The company aims to repurpose manufacturing assets from Re-Tain to support First Defense, enhancing operational efficiency [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed high confidence in the future sales and profit growth potential of the First Defense business, justifying the strategic shift [5][6] - The company is focused on operational excellence to ensure consistent supply and quality of products, with plans to optimize manufacturing processes [16][17] Other Important Information - A non-cash impairment write-down of approximately $2.9 million is expected due to the shift in strategy regarding Re-Tain [14] - An estimated write-down of $600,000 was taken for inventory deemed unsuitable for requirements [15] Q&A Session Summary Question: Impact of regional pathogens on foreign sales development - Management acknowledged the complexity of international sales and the need for expertise in launching products in different markets, highlighting the importance of hiring experienced personnel [20] Question: Explanation for contract manufacturer's failure to comply with FDA requirements - Management declined to provide details but confirmed that the Incomplete Letter was solely due to issues with the contract manufacturer [22][23] Question: Realism of securing a strategic partner for Re-Tain - Management expressed confidence in the product's capabilities and the need to find the best go-to-market strategy post-investigational studies [27] Question: Timeline for hiring new sales team members - Management confirmed that hiring processes for new sales team members are underway, with expectations to complete them within the current quarter [31] Question: Future cash needs and potential share dilution - Management indicated that various funding options are available, including operating cash flow, loans, and capital raises, but declined to comment on specific plans [33] Question: Clarity on self-imposed milk discard period for Re-Tain - Management explained that the discard period is necessary to avoid impacting cheese manufacturing processes, but it remains less than competitors' requirements [44][45] Question: Explanation for exceeding sales expectations - Management attributed the sales exceeding expectations to effective management practices and a strong commercial team, despite complexities from previous backorder situations [49][50]