Ubisoft shares plummet 20% on sharp net bookings drop, disappointing outlook

Investing.com -- Ubisoft Entertainment (EPA:UBIP) reported lower-than-expected earnings for fiscal year 2024-25 as net bookings declined 20.5% year-over-year, reflecting weaker partnerships and intense industry competition, and issued a disappointing outlook for the fiscal 2025-2026. 

The video game publisher posted an adjusted loss per share of €0.56, wider than analysts’ estimates of a €0.47 loss.

The company’s shares plummeted more than 20% in Paris trading Thursday. 

Net bookings for the full year came in at €1.85 billion, slightly below the company’s target and down from €2.32 billion in the previous year. Sales fell 17.5% to €1.90 billion, though marginally beating expectations of €1.89 billion. Ubisoft reported an operating loss of €82.6 million compared to a profit of €313.6 million a year earlier.

Despite the challenging year, CEO Yves Guillemot highlighted some positives, stating: "Assassin’s Creed Shadows reaffirmed the power of the Assassin’s Creed brand, with a highly favorable community response from long-time fans and new players alike."

The company generated positive free cash flow of €128 million, ahead of its target. However, Ubisoft expects approximately breakeven non-IFRS operating income and negative free cash flow in fiscal 2025-26 as it continues its transformation efforts.

Ubisoft issued a weak outlook for 2025-2026, citing additional game delays.

The company expects flat net bookings year-on-year, break-even adjusted EBIT, and over €100 million in negative free cash flow—all significantly below consensus estimates.

Q1 guidance was also soft, with projected net bookings of €310 million, 13% below expectations, despite strong interest in Assassin’s Creed Shadows.

"It’s clear that Tencent (HK:0700)’s €1.16bn cash injection into the group (to acquire a 25% stake in the new subsidiary) has eased pressure on the balance sheet, perhaps making the decision to delay games easier," Deutsche Bank (ETR:DBKGn) analyst George Brown commented. 

"However, it is clear that further efforts need to be made to reduce poor profitability, notably with regards to headcount," he added.

Brown highlights that Ubisoft employs around 18,000 people—two to three times more than U.S. peers—despite generating significantly lower revenue. "In the meantime, investors have little to be excited for with regards to the pipeline in FY-26 with no major games announced," he said. 

Luke Juricic contributed to this report.