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1. Company Snapshot

1.a. Company Description

Ubisoft Entertainment SA produce, publishes, and distributes video games for consoles, PC, smartphones, and tablets in both physical and digital formats in Europe, North America, and internationally.The company designs and develops software, including scenarios, animation, gameplay, layouts, and game rules, as well as develops design tools and game engines.It is also involved in the development in the area of online and mobile gaming; and film business.


The company was incorporated in 1986 and is headquartered in Saint-Mandé, France.

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1.b. Last Insights on UBI

Negative drivers behind Ubisoft Entertainment SA's recent 3-month performance include a lower-than-expected Q1 2025-26 sales, with IFRS 15 sales declining by 3.9% year-over-year. The company's net bookings also fell short of expectations, reaching €281.6m, with a significant portion of the shortfall attributed to a lower-than-expected performance for Tom Clancy's Rainbow Six Siege. Additionally, a glitch with prepaid cards temporarily inflated virtual currency wallets for Rainbow Six Siege, further impacting sales.

1.c. Company Highlights

2. Ubisoft's H1 FY2026 Earnings: A Strong Recovery in Sight?

Ubisoft's H1 Fiscal Year 2026 earnings report revealed a significant improvement in financial performance, with net bookings reaching EUR 772 million, up 20% year-on-year. The company's non-IFRS EBIT returned to positive at EUR 27 million, driven by a gross margin expansion of more than 3.5 percentage points year-on-year. The earnings per share (EPS) came in at -0.4329, beating estimates of -0.79603. The company's Q2 net bookings stood at EUR 491 million, above guidance and up 39% year-on-year, driven by stronger-than-expected partnerships and a strong performance from the Assassin's Creed franchise.

Publication Date: Nov -24

📋 Highlights
  • Strong H1 Net Bookings:: H1 2026 net bookings rose 20% to EUR 772M, with Q2 up 39% to EUR 491M, exceeding guidance.
  • Positive Non-IFRS EBIT:: Returned to EUR 27M profit, driven by 3.5+ p.p. gross margin improvement and lower R&D/SG&A costs.
  • Tencent Strategic Deal:: EUR 1.16B cash infusion from Tencent to deleverage, targeting net debt near zero by year-end.
  • Q4 Game Launches:: Key titles like Prince of Persia remake, Rainbow Six Mobile, and Division Resurgence expected to boost Q4 revenue.
  • Free Cash Flow Outlook:: Negative EUR 251M FCF in H1, but expects return to positive FCF in fiscal 2027.

Operational Highlights

The Assassin's Creed franchise exceeded expectations, with Assassin's Creed Shadows performing strongly, and The Division 2 continuing to perform well. Rainbow Six Siege attracted new players, although it faced challenges due to cheating. The company's successful game releases and upcoming titles, including Anno 1800 and Prince of Persia: The Sands of Time remake, are expected to drive growth in the coming quarters. A new expansion, Avatar: Frontiers of Pandora - From The Ashes, is set to launch on December 19, alongside a free update introducing a third-person mode on December 5.

Financial Outlook

The company expects to maintain a consolidated non-IFRS net debt position of around 0 by the end of the year, following the strategic transaction with Tencent, which will bring in EUR 1.16 billion of cash. For the full year, net bookings are expected to be stable year-on-year, with non-IFRS operating income around breakeven and negative free cash flow. The company expects to return to positive non-IFRS operating income and free cash flow generation in fiscal '27. Analysts estimate next year's revenue growth at -4.7%.

Valuation and Debt

Ubisoft's current valuation metrics indicate a Price-to-Sales Ratio of 0.49 and an EV/EBITDA ratio of 23.14. The company's Net Debt / EBITDA ratio stands at 12.97, highlighting the significant debt burden. However, with the expected deleveraging following the Tencent transaction, the company's financial position is expected to improve. As per the management, "the group will be able to deleverage as planned" following the strategic transaction.

Conclusion on Future Prospects

With a strong lineup of upcoming titles and a expected return to positive non-IFRS operating income and free cash flow generation in fiscal '27, Ubisoft's prospects appear promising. However, the high Net Debt / EBITDA ratio and the anticipated revenue decline of 4.7% next year are concerns that investors should consider.

3. NewsRoom

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Ubisoft (UBSFY) Stock Jumps 5% After Tencent Invests Billion's in Vantage Studios

Nov -24

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Ubisoft Entertainment (UBSFF) (Half Year 2026) Earnings Call Highlights: Strong Partnerships ...

Nov -24

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Ubisoft (ENXTPA:UBI) Valuation in Focus After Trading Resumes and Debt Issues Resolved

Nov -22

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SIGNATURE BY GUILLEMOT BROTHERS LIMITED OF A NEW EXTENSION TO AN AGREEMENT FOR UBISOFT ENTERTAINMENT SA SHARES PURCHASE

Nov -21

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UBISOFT ANNOUNCES THE COMPLETION OF TENCENT’S STRATEGIC INVESTMENT IN VANTAGE STUDIOS

Nov -21

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Ubisoft Shares Climb After Partnerships Lift Sales

Nov -21

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Ubisoft Requests Stock Trading Resumption as It Logs Higher Sales

Nov -21

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Ubisoft reports first-half 2025-26 earnings figures

Nov -21

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.85%)

6. Segments

Publishing

Expected Growth: 8%

Ubisoft Entertainment SA's 8% growth in publishing is driven by increasing demand for immersive gaming experiences, successful franchises like Assassin's Creed and Far Cry, strategic partnerships, and expansion into emerging markets. Additionally, the company's focus on digital distribution, esports, and online services contributes to its growth momentum.

Edition/Production

Expected Growth: 10%

Ubisoft Entertainment SA's Edition/Production segment growth is driven by increasing demand for AAA games, successful franchises like Assassin's Creed and Far Cry, and expansion into emerging markets. Additionally, the company's focus on digital distribution, esports, and online services contributes to its growth. Furthermore, strategic partnerships and acquisitions, such as the purchase of Ivory Tower, enhance the company's production capabilities and intellectual property portfolio.

7. Detailed Products

Assassin's Creed

An action-adventure game series that follows the centuries-old struggle between Assassins and Templars.

Far Cry

A first-person shooter series that takes players to exotic locations, fighting against corrupt regimes and factions.

Just Dance

A dance game series that allows players to dance along with popular songs and characters.

Tom Clancy's Ghost Recon

A tactical third-person shooter series that follows an elite special operations team.

Tom Clancy's Rainbow Six Siege

A tactical first-person shooter series that focuses on competitive multiplayer and counter-terrorism.

Prince of Persia

A platformer series that follows the adventures of the Prince of Persia.

Rabbids

A series of party games and spin-offs featuring the Rabbids characters.

Ubisoft Connect

A gaming platform that allows players to access Ubisoft games, rewards, and services.

Ubisoft Escape Games

A series of escape room games that challenge players to solve puzzles and escape.

8. Ubisoft Entertainment SA's Porter Forces

Forces Ranking

Threat Of Substitutes

Ubisoft Entertainment SA faces moderate threat from substitutes, as gamers have alternative options for entertainment, such as movies, music, and outdoor activities. However, the company's strong brand recognition and loyal customer base mitigate this threat.

Bargaining Power Of Customers

Ubisoft Entertainment SA has a large customer base, but individual customers have limited bargaining power due to the company's diversified product offerings and strong brand recognition.

Bargaining Power Of Suppliers

Ubisoft Entertainment SA has a diverse supplier base, and no single supplier has significant bargaining power. The company's strong financial position and long-term contracts with suppliers also reduce the bargaining power of suppliers.

Threat Of New Entrants

The video game industry has high barriers to entry, including significant capital requirements, complex technology, and established brand recognition. These barriers make it difficult for new entrants to compete with Ubisoft Entertainment SA.

Intensity Of Rivalry

The video game industry is highly competitive, with several established players, including Electronic Arts, Activision Blizzard, and Take-Two Interactive. Ubisoft Entertainment SA faces intense competition in terms of game quality, pricing, and marketing.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.22%
Debt Cost 3.95%
Equity Weight 42.78%
Equity Cost 3.85%
WACC 3.90%
Leverage 133.74%

11. Quality Control: Ubisoft Entertainment SA passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Softcat

A-Score: 5.2/10

Value: 2.0

Growth: 5.8

Quality: 8.0

Yield: 3.1

Momentum: 5.0

Volatility: 7.0

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CD Projekt

A-Score: 5.1/10

Value: 0.0

Growth: 7.6

Quality: 8.4

Yield: 1.2

Momentum: 10.0

Volatility: 3.7

1-Year Total Return ->

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Playtika

A-Score: 4.5/10

Value: 8.4

Growth: 3.7

Quality: 5.2

Yield: 8.1

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

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Embracer Group

A-Score: 4.3/10

Value: 7.5

Growth: 9.9

Quality: 7.9

Yield: 0.0

Momentum: 0.0

Volatility: 0.3

1-Year Total Return ->

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Keywords Studios

A-Score: 3.8/10

Value: 1.5

Growth: 7.9

Quality: 4.8

Yield: 3.1

Momentum: 5.0

Volatility: 0.3

1-Year Total Return ->

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Stock-Card
Ubisoft

A-Score: 3.4/10

Value: 7.8

Growth: 3.1

Quality: 2.7

Yield: 0.0

Momentum: 5.5

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.32$

Current Price

6.32$

Potential

-0.00%

Expected Cash-Flows