(AOF) – The biggest decline in the SBF120 index, Ubisoft collapsed by 16.83% to 9.50 euros the day after issuing a warning on its 2024-2025 financial year results. Following the poor start of Star Wars Outlaws – a poor performance that has weighed on the stock in recent weeks – the video game publisher has postponed the release of Assassin’s Creed Shadows, the group’s flagship franchise. The new targets also take into account the weak sales of XDefiant.
Deutsche Bank downgrades
Among analysts’ reactions, Deutsche Bank downgraded its recommendation from Buy to Hold, given a larger-than-expected cut to the group’s guidance, further game delays and a loss of confidence in the pipeline for fiscal 2026. Neutral on Ubisoft, JPMorgan lowered its price target from €21 to €11.
The video game publisher now anticipates net bookings – the equivalent of turnover – of around 1.95 billion euros, as well as adjusted operating profit and free cash flow close to breakeven.
It had previously forecast solid growth in net bookings, given that they had amounted to €2.32 billion in the previous financial year. A slight increase in adjusted operating income was also anticipated compared to €401.4 million in the previous financial year. Ubisoft also anticipated an increase in adjusted self-financing capacity leading to positive free cash flow.
Assassin’s Creed Shadows delayed to February 2025
Assassin’s Creed Shadows will now be released on February 14, 2025, down from November 15. “Although the game is complete, lessons learned from the release of Star Wars Outlaws have led us to spend more time polishing the title,” the video game publisher explained. The polish will cost €20 million, JPMorgan said.
Regarding Star Wars Outlaws, the video game publisher indicates that its development teams “are currently fully mobilized to rapidly deploy a series of updates aimed at refining and improving the player experience.” It states as a goal “to engage a wider audience during the holiday season in order to position Star Wars Outlaws as a successful game in the long term.” The game will be available on Steam on November 21.
“(…) We are continuing our strategy, focusing on two key segments – Open World Adventure games and native Games-as-a-Service experiences – aiming for growth, recurrence and generation of robust free cash flow” said CEO and co-founder, Yves Guillemot.
He added that “the executive committee, under the supervision of the board of directors, is launching a review aimed at further improving our execution, particularly within the framework of this player-centric approach (…)”.
“Similar comments following the lackluster release of Avatar Frontiers of Pandora/Mario+Rabbids: Sparks of Hope feel like déjà vu,” Deutsche Bank notes. According to the analyst, Ubisoft may need to consider more significant strategic measures to turn things around. “This could include, for example, closing underperforming studios and cancelling unhappy projects as soon as possible,” he adds.
TP Icap Midcap underlines that “the group wants to be reassuring for the moment on its financial structure with nearly 850 million euros of availability at the end of September, after repayment of the 250 million convertible bonds 09/24”. The analyst adds that the financial structure seems under control with a free cash flow expected to be balanced for this year. “For the future, salvation will come from Assassin’s Creed or not at all”, he warns.
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