Core Insights - Ubisoft confirmed its full-year financial targets after third-quarter bookings exceeded forecasts, primarily driven by the success of its "Assassin's Creed" franchise [1] Financial Performance - Third-quarter bookings surpassed company expectations, indicating strong performance in the video game market [1] - The success of the "Assassin's Creed" franchise played a significant role in driving these bookings [1]

Core Insights - Ubisoft reported a solid third-quarter performance for fiscal 2025-26, with net bookings growing at a double-digit rate year-on-year, exceeding expectations, driven by strong franchise performance and partnerships [6][7]. Financial Performance - Net bookings for the first nine months of fiscal 2025-26 reached €1.1 billion, an increase of 18% year-on-year, primarily driven by the success of franchises like Assassin's Creed, The Division, Anno, and Avatar [2][29]. - Q3 net bookings totaled €338 million, up 12% year-on-year, outperforming guidance due to strong partnerships and the Assassin's Creed franchise [3][11]. - Digital net bookings for the first nine months were €941.7 million, up 20.1% year-on-year, representing 84.8% of total net bookings [3][29]. User Engagement - The company reported around 130 million active users across Console and PC, with December monthly active users (MAUs) at 38 million, reflecting a 3% increase year-on-year [4][11]. - The Assassin's Creed brand saw session days increase by 28% year-on-year, indicating strong player engagement [15]. Group Transformation - Ubisoft is progressing on its transformation strategy, which includes the establishment of five Creative Houses aimed at increasing focus and specialization within the organization [21]. - The company is also exploring options to extend its debt maturity while maintaining sufficient liquidity to address near-term obligations [5][10]. Upcoming Releases - The Q4 lineup includes the anticipated launch of Rainbow Six Mobile on February 23, 2026, which has already garnered over 18 million pre-registrations [17][30]. - The Division Resurgence is also set to release in Q4 FY2025-26, coinciding with the franchise's 10th anniversary celebrations [20]. Recent Developments - Ubisoft completed a strategic investment from Tencent, securing €1.16 billion, which will enhance the company's financial flexibility and support its transformation efforts [22]. - The company has also announced the acquisition of March of Giants, entering the MOBA genre, which aligns with its Games as a Service (GaaS) strategy [24].

Company Overview - Ubisoft is recognized as one of the leading game developers globally, known for successful franchises such as Assassin's Creed, Far Cry, Tom Clancy, Anno, and Just Dance [1] Investment Focus - The investment strategy highlighted focuses on acquiring companies with a significant margin of safety, specifically those trading below their intrinsic value [1]

Company Developments - Ericsson announced a 15 billion Swedish krona ($1.7 billion) buyback scheme and reported adjusted earnings before interest and taxes of 12.26 billion krona for Q4 2025, exceeding the forecast of 10.09 billion krona [6] - Ubisoft's shares fell by as much as 34% following a major restructuring and the cancellation of six games, with an expected operating loss of around 1 billion euros ($1.17 billion) for the financial year ending 2026, attributed to a 650 million euro write-down [8] Industry Insights - The mission critical and enterprise markets, where Ericsson is well positioned, are expected to grow, prompting plans to increase investments in defense during 2026 while optimizing cost bases to support margins and cash flow generation [7]

Core Viewpoint - Ubisoft's shares dropped 33% following the announcement of a major organizational restructuring and the cancellation of six games, indicating significant investor concern about the company's future performance [1]. Financial Impact - The company anticipates an operating loss of approximately 1 billion euros ($1.17 billion) for the financial year ending 2026, which includes a 650 million euro write-down due to the restructuring [1]. - The restructuring is expected to have a substantial effect on the Group's financial trajectory in the short term, particularly in fiscal years 2026 and 2027 [2]. Strategic Outlook - Yves Guillemot, Founder and CEO of Ubisoft, stated that the portfolio refocus aims to strengthen the Group and facilitate a return to sustainable growth and robust cash generation in the future [2].

Group 1 - Shares in Ubisoft experienced a significant decline following the announcement of a major reorganization and the cancellation of six games [1]

Group 1: Market Reactions - US stock futures rose as President Trump called off threatened tariffs on European allies, leading to a 0.8% gain in Nasdaq 100 futures, a 0.6% increase in S&P 500 futures, and a 0.3% rise in Dow Jones Industrial Average futures [1][2]. Group 2: Company Earnings and Developments - Intel is set to report quarterly results, with a focus on AI spending and a global memory shortage as it attempts a turnaround [4]. - Alibaba plans an IPO for its chipmaking unit T-Head, causing a rise in its shares during premarket trading [5]. - Moderna's stock rose 5% after reporting positive results from a skin cancer vaccine trial [7]. - GameStop shares increased by 3% as CEO Ryan Cohen raised his stake and decided to close some US stores [7]. - Ubisoft's stock fell by 33% following a reorganization and the cancellation of six games, indicating potential challenges in the wider video game market [8]. Group 3: Economic Indicators - A delayed report on the Federal Reserve's preferred inflation gauge, the PCE price index, is anticipated, which could influence expectations for interest-rate cuts [5].

Ubisoft Strategic Update Call Summary Company Overview - **Company**: Ubisoft - **Industry**: Video Game Development Key Points Organizational and Operational Reset - Ubisoft announced a major organizational, operational, and portfolio reset aimed at reclaiming creative leadership and restoring sustainable growth and cash generation [2][5] - The reset is structured around three core pillars: 1. A new operating model with five specialized creative houses 2. A refocused portfolio with a revised three-year roadmap 3. Accelerated cost reduction initiatives to improve structural efficiency [2][4] New Operating Model - The new model will consist of five creative houses, each responsible for specific game genres and brands, enhancing accountability and decision-making speed [6][8] - Each creative house will have full financial ownership and accountability for its economic performance, focusing on long-term value creation [10][8] - The first creative house, Vantage Studios, aims to scale established franchises like Assassin's Creed and Far Cry into annual billion-dollar brands [9] - Other creative houses will focus on competitive shooters, live experiences, immersive fantasy worlds, and casual games [9] Portfolio Refocus - Ubisoft will discontinue six games that do not meet new quality expectations, including the Prince of Persia: The Sands of Time Remake and four unannounced titles [15] - Additional development time will be allocated to seven games to ensure quality benchmarks are met, delaying one unannounced title from fiscal year 2026 to 2027 [15] Cost Reduction Initiatives - The current cost reduction program aims for at least €100 million in fixed cost savings by March 2026, with a new target to reduce fixed costs by an additional €200 million over the next two years [17] - Total fixed cost reductions are expected to reach around €500 million by fiscal year 2023, bringing fixed costs to approximately €1.25 billion by March 2028 [17] Financial Guidance - Net bookings for fiscal year 2026 are expected to be around €1.5 billion, reflecting a €330 million gross margin reduction due to changes in the release pipeline [18] - Non-IFRS EBIT is projected at around €1 billion, influenced by transformation-related decisions leading to a one-off accelerated depreciation of approximately €650 million [18] - Free cash flow is anticipated to be between €400 million and €500 million, with non-IFRS net debt expected to be between €150 million and €250 million by year-end fiscal year 2026 [19] Market Position and Future Outlook - The reset is expected to have significant short-term financial impacts, particularly in fiscal years 2026 and 2027, but aims to position Ubisoft for sustainable growth and robust cash generation in the long term [20][21] - The company is committed to returning to positive free cash flow within the next three years, with a focus on exceptional content quality [27][24] Additional Insights - The competitive landscape in the AAA gaming market is becoming increasingly selective, with rising development costs and challenges in creating new brands [2][4] - Ubisoft's strategy includes a focus on partnerships, with no fundamental changes in approach, but rather a realignment with the new organizational structure [31] This summary encapsulates the key points from Ubisoft's strategic update call, highlighting the company's efforts to adapt to market challenges and position itself for future growth.

MAJOR ORGANIZATIONAL, OPERATIONAL AND PORTFOLIO RESET TO RECLAIM CREATIVE LEADERSHIP AND RESTORE SUSTAINABLE GROWTH JANUARY 21, 2026 DISCLAIMER Yves Guillemot, Chairman and Chief Executive Officer In this context Ubisoft announces a major reset to reclaim its creative leadership, regain agility, drive a sharp rebound, and renew with sustainable growth and robust cash generation. This will be delivered through three main pillars: 3 → A new operating model; → A refocused portfolio with a meaningfully revised ...

Core Insights - The company is undergoing a significant structural overhaul to revive its financial performance and operational efficiency [1] - Several games are being discontinued or postponed as part of this restructuring effort [1] - The company is closing some studios and adjusting its financial targets to align with the new strategy [1] Company Actions - The company announced the discontinuation and postponement of multiple game titles [1] - It is closing certain studios as part of the restructuring process [1] - Financial targets are being cut to reflect the new operational strategy [1]