Ubisoft Entertainment SA Outlook
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Ubisoft (EPA:UBI) will report its fiscal Q1:14 (ending June) sales on Thursday, July 18 after the close of the French Stock Exchange (8:30am PT), with a conference call at 9:15am PT (dial-in: 866-907-5924 or at www.ubisoftgroup.com/ir).
We expect Ubisoft to report Q1 sales at, or slightly below, guidance. Our published estimate calls for sales of €75 million (down 43% y-o-y), compared to guidance of €70 million (down 47%). According to NPD, Ubisoft’s Q1 U.S. salesthrough May were down 64% due to the release of a Tom Clancy game last year. Strong digital growth in Q1 likely offset Ubisoft’s catalog weakness. The company guided to FY:14 digital sales of €237 million, up from €148 million in FY:13.
We expect FY:14 guidance to remain largely intact. Ubisoft guided to FY:14 revenue of €1.42 – 1.45 billion and non-IFRS operating income of €110 – 125 million, compared to FY:13 results of €1.26 billion and €100 million. Guidance includes five major releases in FY:14, versus three in FY:13. These five include Assassin’s Creed IV: Black Flag, Tom Clancy’s Splinter Cell: Blacklist, Watch Dogs, The Crew, and one unannounced IP. We think a downward revision is unlikely, as we think that guidance contemplates that Black Flag will underperform its predecessor (sell-in of over 12.5 million units), and we are confident that delays are under control.