Ubisoft's Bumpy Start

Ubisoft Entertainment's shares plummeted following the release of disappointing guidance for the current quarter, signaling a sluggish start to the new fiscal year despite a strong finish in fiscal 2024.

The stock price of Ubisoft dropped by 15% to EUR19.86 at 0830 GMT, marking a 22% decline over the past year.

For the fiscal first quarter ending in June, the French videogame company anticipates net bookings of approximately 275 million euros ($299.3 million). This projection fell short of analyst expectations, with Citi analysts expressing disappointment as the Visible Alpha consensus was higher at EUR361 million.

The subdued forecast contrasts sharply with Ubisoft's robust performance in the closing quarter of fiscal 2024, characterized by significant growth in franchises like Assassin’s Creed and Rainbow Six. During this period, net bookings soared to EUR872.7 million, more than doubling from the previous year and surpassing the Visible Alpha consensus of EUR782.4 million.

Ubisoft announced the discontinuation of development on “The Division Heartland” to prioritize larger projects like “XDefiant” and “Rainbow Six” for the upcoming fiscal year, which will also introduce titles such as “Assassin’s Creed Shadows” and “Star Wars Outlaws”, alongside “Rainbow Six Mobile”, “The Division Resurgence”, and “XDefiant”.

Looking ahead, Ubisoft anticipates solid net bookings growth and a slight increase in non-IFRS operating profit for the new fiscal year. However, UBS analysts noted that the projected operating profit growth falls somewhat below the Visible Alpha consensus of 18%.