Ubisoft Shares Slump After Games Underperform in Lackluster Holiday Season

By Mauro Orru

Shares of Ubisoft Entertainment SA, the maker of the Assassin’s Creed videogame series, plunged Thursday after the French company said its “Mario + Rabbids: Sparks of Hope” and “Just Dance 2023” games underperformed during the holiday season as people spend less time at home than during the pandemic and grapple with higher prices for everyday goods.

At 0815 GMT, Ubisoft shares traded 21% lower at EUR18.84.

Ubisoft said in a statement late Wednesday that the disappointing performance of two of its key games meant it would no longer meet its net bookings target of roughly 830 million euros ($892.8 million) for the fiscal third quarter that runs from October through December, typically the most significant period in terms of revenue in the industry because of the holidays.

Ubisoft lowered the target to about EUR725 million. Analysts at Citi wrote in a note to investors that Ubisoft’s new target falls short of their EUR850 million forecast and Visible Alpha consensus of EUR832.5 million.

“We are clearly disappointed by our recent performance. We are facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending,” Chief Executive Yves Guillemot said.

The global videogame industry boomed when player engagement jumped at the height of the coronavirus pandemic as users spent more time at home due to lockdowns. However, major games publishers issued sober outlooks recently as the effects of the pandemic fade and inflation and recession worries persist.

Shares of Frontier Developments PLC plunged earlier this week after the company lowered its revenue forecasts for fiscal 2023 and 2024 due to the underperformance of “F1 Manager 2022” during the festive period.

Ubisoft also postponed the launch of “Skull and Bones” to the fiscal year ending March 2024, citing the need for more time to showcase a much more polished product. The game was due for release in March this year.

The pushback to the next fiscal year, combined with the challenging economic environment, prompted Ubisoft to revise its targets for the current fiscal year. Net bookings should be down more than 10% year-on-year against a prior forecast of more than 10% growth. The company also expects a non-IFRS operating loss of EUR500 million against a previous forecast of EUR400 million profit.

Ubisoft anticipates a return to operating profitability in fiscal 2024 with non-IFRS operating profit of roughly EUR400 million. Still, the figure is below Citi analysts’ EUR553 million forecast and Visible Alpha consensus of EUR482 million.

“Our decisive reaction and our additional cost optimization measures should help us navigate the current challenging economic environment and ensure a leaner organization for the years to come,” said Chief Financial Officer Frederic Duguet.

Write to Mauro Orru at [email protected]; @MauroOrru94


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