â€¢ Record Sales for Third Quarter: â‚¬250 Million ($305.7 million U.S.)
â€¢ Ranks 4th Independent Publisher Worldwide in 2005, Excluding Japan
â€¢ Outlook for Fiscal Year 2005-2006 Revised
PARIS â€“ JANUARY 26, 2006 â€“ Today, Ubisoft Entertainment, one of the worldâ€™s largest video game publishers, reported sales for the third quarter ended December 31, 2005.
Record Sales for Third Quarter: â‚¬250 Million ($305.7 Million U.S.)
In line with the Ubisoft Groupâ€™s target, sales for the third quarter of 2005/2006 totaled a record 250 million euros ($305.7 million U.S.), up 35 percent year-on-year.
This outstanding level of sales mainly reflects the successful launch of titles in December 2005, such as Peter Jacksonâ€™s King Kong: The Official Game of the Movie and Prince of PersiaÂ® The Two Thronesâ„¢.
Overall, including the other titles in the catalogue, nine-month sales increased 29 percent, reaching 403 million euros.
This strong growth also reflects the positive market response to the new titles for next-generation portable consoles, which accounted for 15 percent of sales year-to-date.
â€œ2005 was another successful year. We gained additional market share and further strengthened the Ubisoft brand: Prince of PersiaÂ® is increasingly recognized as the reference for action/adventure games and Peter Jacksonâ€™s King Kong: The Official Game of the Movie set new standards of quality, making Ubisoft a must-have partner for license holders. With years of continuous progress behind us, we ranked third independent publisher in Europe in 2005 and fifth in North America . Ubisoft is now established as one of the major players in our industry with highly valuable assets,â€ said Yves Guillemot, chief executive officer of Ubisoft Entertainment.
New Gains in Key World Markets
Ubisoft Group continued to gain market share in key regions thanks to the success of titles launched throughout calendar year 2005.
Those gains are particularly substantial in North America where, all platforms combined, Ubisoftâ€™s 2005 ranking improved as follows:
â€¢ 5th independent publisher in the United States , with the second-strongest growth among the top 10 independent publishers: sell-through rose 23 percent, compared with an overall industry software revenue decline of 4 percent. As a result, Ubisoftâ€™s market share improved to 4.5 percent in 2005, compared with 3.5 percent in 2004.
â€¢ 4th independent publisher in Canada .
In other Western countries where Ubisoftâ€™s sell-through grew 15 percent , 2005 rankings also improved substantially as follows:
â€¢ 2nd independent publisher in France and Germany .
â€¢ 3rd independent publisher in Italy .
â€¢ 4th independent publisher in the UK and Australia .
By combining sell-through in these regions, Ubisoft ranks 4th largest independent publisher worldwide in 2005, excluding Japan, reaching its target stated in 2000.
The comparable rankings for 2004 were: 2nd independent publisher in Germany, 3rd in France and in Italy, 4th in Canada, 6th in the UK, and 7th in the US and Australia.
Outlook for Fiscal Year 2005-2006 Revised
For the fourth quarter ending March 31, 2006, Ubisoft now anticipates revenues of approximately 130 million euros ($158.9 million U.S.). Therefore, for the fiscal year 2005/2006, Ubisoft expects net revenues close to 530 million euros ($648 million U.S.) and positive current operating income, before stock-based compensation. This compares with the guidance previously provided of, respectively, 600 million euros ($733.6 million U.S.) and 52.5 million euros ($64.2 million U.S.).
This update can be attributed to the following factors:
- The weakness of the video game software market in the U.S. and in Europe. While Ubisoft had anticipated this evolution and clearly outperformed its competitors, the negative market trend accelerated since the end of December 2005.
- With four million units already in place, lower than initially anticipated reorders of Peter Jacksonâ€™s King Kong: The Official Game of the Movie are expected for the fourth quarter ending March 31, 2006;
- The rescheduling from the fourth quarter of fiscal year 2005/2006 to the first-half of 2006/2007 of the launch of Tom Clancyâ€™s Splinter CellÂ®: Double Agent.
Guillemot, added â€œWith close to 8,000 units sold per million Euro box office , the game Peter Jacksonâ€™s King Kong: The Official Game of the Movie largely exceeded sell-through of the two other Hollywood license-based games released during the quarter, demonstrating Ubisoftâ€™s superior marketing and distribution capabilities. However, with the softness in the market recorded over the past few weeks, we now expect a lower level of reorders for the end of the fiscal year.â€
In addition, the rescheduling to September 2006 of the launch of Tom Clancyâ€™s Splinter Cell Double AgentTM will allow the release of the title on all platforms simultaneously, including the Microsoft XboxÂ® 360 which should have a much larger installed base by that time. This will also enable Ubisoft to maintain the highest quality for which Tom Clancyâ€™s Splinter CellÂ® is recognized. This rescheduling will ensure the best return from the coming release as well as from future sequels of this brand.
Ubisoft is disappointed that our full year results should come below our initial guidance. Nevertheless, we are very proud that Ubisoft has clearly gained ground in 2005, in a challenging environment due to the arrival of next-generation home consoles. These gains were achieved while making major investments in these new platforms in order to leverage the Ubisoftâ€™s strengths for future profitable growth. The market transition will continue in the short term. However, with its portfolio of stellar brands and widely recognized development talents, Ubisoft is uniquely positioned to take advantage of the long term positive prospects of the video game industry.
(in million euros) 2005-2006 2004-2005 2005-2006 vs. 2004-2005 Currency adjusted change (%)
First quarter 43 61 -29% -29%
Second quarter 110 67 +64% +62%
Third quarter 250 185 +35% +31%
Nine months 403 313 +29% +28%
NB: the fiscal year ends on March 31.
2005-2006 Financial Calendar
Fourth quarter sales Week of April 24, 2006
Annual results Week of June 12, 2006
Note that these are tentative dates and are subject to change.
Disclaimer: This statement may contain financial data evaluated, information on future projects and transactions and future economic results/performance. Such valuations are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly with the actual results that shall be published. The financial data evaluated have been presented to the board of directors and have not been audited by the Auditors. [Additional information is specified in the last Ubisoft Background Paper filed on September 14, 2005 with the financial markets authority].
Ubisoft is a leading producer, publisher and distributor of interactive entertainment products worldwide and has grown considerably through its strong and diversified lineup of products and partnerships. Ubisoft has offices in 21 countries and sales in more than 50 countries around the globe. It is committed to delivering high-quality, cutting-edge video game titles to consumers. Ubisoft generated revenue of 538 million Euros for the 2004â€“2005 fiscal year, an increase of 8 percent over the previous fiscal year at constant exchange rates. To learn more, please visit www.ubisoftgroup.com.