Ubisoft Reports 52% Drop in Q3 Net Bookings, in Line with Guidance

Ubisoft Entertainment, the French video game publisher, reported a significant drop in its net bookings for the third quarter of its fiscal year 2024-25. The company's net bookings for the three months ended December 31, 2024, stood at €626 million, a decrease of 52% year-over-year. This decline was in line with the company's guidance, which had previously warned investors about the potential challenges it faced in the current fiscal year.

The drop in net bookings can be attributed to several factors, including lower-than-expected holiday sales and game setbacks. Ubisoft had previously stated that Star Wars Outlaws, one of its major releases, underperformed commercially. Additionally, the high comparison base from the previous year, driven by the release of several major titles such as Assassin's Creed Odyssey and Rainbow Six Siege, may have contributed to the significant drop in net bookings.

Despite the decline in net bookings, Ubisoft confirmed its financial targets for the full year, expecting strong sales growth and non-IFRS operating income of approximately €400 million. The company also expects fourth-quarter net bookings to be "sharply up" and on track to deliver an annual record.



Ubisoft's cost reduction program has been a significant factor in the company's financial performance. The company has managed to reduce its fixed cost base by around €150 million in FY24, which is well on track to reach its goal of a €200 million annual cost reduction by FY26. This reduction has been achieved through tight control on recruitments, organizational simplification, and targeted restructurings. As a result, Ubisoft expects to exceed its cost reduction objective by the end of FY25, ahead of schedule, and plans to pursue its efforts in FY26, going beyond the initial target by a significant margin.

The cost reduction program has also led to a decrease in the company's total headcount by 1,700 workers since 2022. While this may seem counterintuitive, Ubisoft has stated that employee retention has continued to improve over the same period. This could be attributed to improved morale and affinity for the company, or simply workers holding on to jobs for dear life as Ubisoft and its competitors lay off thousands of workers.

For the remainder of the fiscal year, Ubisoft expects to continue its cost reduction program and exceed its initial target. The company is also focused on the upcoming launch of Assassin's Creed Shadows on March 20, with positive previews highlighting its immersive world, stunning graphics, and variety of gameplay brought by the dual-protagonist approach. Pre-orders are tracking solidly, in line with those of Assassin's Creed Odyssey, the second most successful entry of the franchise.

In addition to its cost reduction program, Ubisoft is continuing its strategic review process, which is ongoing and being overseen by an ad-hoc independent Board committee. The objective of this review is to unlock the best value from the company's assets for its stakeholders and to foster the best conditions to create great games in a fast-evolving market. This strategic review is expected to influence Ubisoft's long-term financial prospects and market position by driving growth and recurrence, gradually expanding operating income, and generating robust free cash flow.

In conclusion, Ubisoft's 52% drop in Q3 net bookings, while significant, was in line with the company's guidance. The drop can be attributed to lower-than-expected holiday sales and game setbacks, such as the underperformance of Star Wars Outlaws. Despite the decline, Ubisoft remains focused on its cost reduction program and the upcoming launch of Assassin's Creed Shadows. The company's strategic review process is also expected to contribute to its long-term financial prospects and market position.