Ubisoft (video games) plunges in Paris, warning on 2025-26 financial year accounts
A write-down of around EUR 650 million, which was also affected by the discontinuation of the development of six new products, weighed heavily
(Il Sole 24 Ore Radiocor) - Ubisoft plummeted on the Paris Stock Exchange after launching a warning on its 2025-26 financial year accounts, as part of a drastic portfolio review and a new operating organisation. The French video game specialist's share price fell more than 36%. The French company announced that it expects a net booking (sales of games, add-on content and subscriptions) of around EUR 1.5 billion for the financial year while previously aiming for a stable trend from 2024-2025.
The deflection, amounting to about 19%, "will result in a reduction in gross margin of about EUR 330 million compared to guidance". The warning 'is mainly due to changes in the launch pipeline for the current quarter, the decision to postpone negotiations for certain partnerships in the context of a review of the group's operating model'. Against this backdrop, the company expects Ebit to be around€ -1 billion, whereas it previously estimated it close to break-even.
Weighing heavily is the write-down of approximately EUR 650 million, mainly due to the interruption of development of six games, 'which do not meet the new criteria of higher quality, as well as the more selective criteria in the group's portfolio'. The stop affects Prince of Persia, the remake The Sands of Time and four other titles that had not been disclosed. In addition, the group will 'allow more time for the development of seven other titles' that were planned for 2026 and will instead slip to 2027. In addition to the 'refocusing of the portfolio', Ubisoft also announced a new operating model and 'an acceleration of cost-cutting initiatives to downsize the organisation and improve structural efficiency'. The already announced fixed cost savings of at least 100 million will be achieved by next March, one year ahead of schedule. Another 200 million of cuts are planned for the next two years and will bring the savings to 500 million compared to 2022-23.
Ubisoft has withdrawn its forecasts for the fiscal year 2026-2027 and will publish new forecasts in May. Analysts at Oddo BHF call this "a big reset" and estimate that it will take at least three years before the new organisation allows the group to regain the ability to regularly launch successful games, returning to sustainable growth and solid cash flow generation. The experts note that the price of Ubisoft shares is at itslowest point (-92% in five years) and confirm the 'Underperform' rating, reducing the price target from EUR 9 to EUR 5. For TP Icap Midcap, 'the prospect of a return to cash generation seems distant and the financial structure is likely to weaken again in the short term'.
