Good day, and thank you for standing by. Welcome to the Ubisoft Q1 Full Year 2025 Sales Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Yves Guillemot, Ubisoft's CEO. Please go ahead, sir.
Thank you. Welcome, everyone, and thank you for joining the call today. In a selective market, we delivered a solid start to the year with net bookings above target, reaffirming that we are on the right track. The quarter notably saw the launch of XDefiant, that is off to an encouraging start as we continue to grow the audience at a steady pace and plan a quarterly road map of content that will allow us to firmly establish the game over time. We also held Ubisoft Forward, that is always a key event for our teams and players during which we showcased content that is very much aligned with our strategic focus on our 2 key verticals, Open World Adventures and GaaS-native experiences. The gameplay for our 2 highly anticipated upcoming premium titles, Star Wars Outlaws and Assassin's Creed Shadows was not only praised by players and critics alike, but also highlighted the cutting-edge capabilities of our game engines. Assassin's Creed Shadows is clearly the most ambitious Assassin's Creed game yet. For Star Wars Outlaws, we are currently holding the biggest preview event ever held at Ubisoft for press and content creators, showcasing the extent of the games [ open world ]. We also presented a strong pipeline of content that will continue feeding our Live titles.
As we progress through financial year '25, all our efforts are focused on successfully launching this promising new releases and positioning them as long-lasting value drivers for Ubisoft while continuing the transformation of our organization. We are excited about the future and confident in the sustained progress of our turnaround throughout the year.
I will now hand the call to Frédérick. Frédérick?
Yes. Thank you, Yves, and hello, everybody. Q1 net bookings stood at EUR 290 million, up 8% year-on-year, reflecting the XDefiant precision, strong activity growth for Rainbow Six Siege and the contribution of last year's launches that more than offset Steam releases and strong promotions in Q1 of last year. Overall, this quarter's outperformance was notably driven by XDefiant and the Assassin's Creed franchise. This quarter reported strong session days growth of 15% across console and PC, mostly driven by Games-as-a-Service. MAUs stood at EUR 38 million, up 7% year-on-year. As we mentioned, XDefiant that launch on May 21 is off to an encouraging start, outperforming expectations, thanks to acquisition and strong average revenue per session day. The game topped viewership charts during its launch week and acquired more than 10 million players within its first 2-weeks. Players praised the thrilling fast-paced game-play and the map variety. 2 additional game modes have been added since launch. Team Death Match by popular demand and Capture The Flag. Beyond Q1, the release of Season 1, early July marked the start of the quarterly road map of content for the game that will bring additional factions inspired by iconic Ubisoft franchises, maps, weapons and game modes as well as progressively deploy new engagement features.
Turning now to the back-catalog. Bookings stood at EUR 249 million this quarter, up 2%. Our sustained live services performance on console and PC led the PRI portion of back-catalog to grow a strong 17% year-on-year. Indeed, Rainbow Six Siege kick off the year with a strong performance, driven by year-on-year growth in activity, with notably 34% growth in session days and 18% growth in session days per player as well as progression in monetization. This quarter saw Year 9 Season 1 on become the highest grossing season in Siege's history as well as the full release of the marketplace that continue to see a sustained level of transactions.
Elsewhere in the catalog, the Assassin's Creed and The Crew brands reported growth driven by last year's launches contribution. Assassin's Creed overperformed, benefiting from the Assassin's Creed Shadows result that drove sales through the catalog. As said earlier, this year's back-catalog growth reflect the fact that the comparison base last year was impacted by Steam releases and a broader promotional program.
Total digital net bookings reached EUR 257 million, up 7% year-on-year and represented 89% of our total net bookings. PRI stood at EUR 159 million, up 25% year-on-year and represented 55% of our total net bookings. Mobile amounted to EUR 28 million, stable versus last year. In June, we held our Ubisoft Forward conference live from Los Angeles and showcased content aligned with our strategic focus on 2 core verticals: Open World Adventures and GaaS-native experiences. These key events had a very strong impact on presentment for our 2 upcoming premium launches.
Star Wars Outlaws is set to bring an immersive open world experience for the first time to the franchise. The gameplay showcased during the Ubisoft Forward event notably highlighted the visual quality enabled by the Snowdrop engine. More recently, Ubisoft held an in-person preview event for present content creators with extended hands-on gameplay showcasing the Open World across multiple planets. This, combined with the virtual previews we are currently holding is, as I mentioned, the biggest preview event for press and content creators ever held at Ubisoft. The game has gone gold and is set to release on August 30. The IGN first series this month features [indiscernible] or close noting that August 30 is right around the corner, a short wait for many players for whom an Open World game set in a galaxy far, far away has been a long-held dream. I [ can ] feel a similar passion for Star Wars coming out of each person I spoke to at Massive and for them, I can help but get the sense that the dream is a shared one.
Assassin's Creed Shadows is the next flagship title in the franchise is set to release on November 15 and is the most ambitious Assassin's Creed yet. It comes with dual protagonist, a step-changing innovation for the franchise offering 2 completely different and complementary playstyles as well as different perspectives to the story, providing a deeper immersion and enhanced gameplay variety. The game will also come with the all new generation of the Anvil engine technology that enable the creation of the dynamic world of feudal Japan, including the shifting seasons and weather system that will impact gameplay.
Following the games review, Game Informer commented, "Shadows is an exciting entry in the sporting Assassin's Creed series. It's finally bringing players to feudal Japan, something the fan base has wanted for years and years."
Turning to the full year lineup. To be noted that Rainbow Six Mobile and The Division Resurgence are no longer expected in fiscal year '25 in the context of a demanding yet very large and rewarding market. Our teams are taking the necessary time to ensure that these AAA mobile experiences deliver on expectations and set them up for long-term success. On Rainbow Six Mobile, the teams are building on the recent progress over the last 18 months from Rainbow Six Siege to improve the games onboarding, monetization and immersive technical experience. On The Division Resurgence, the team is stressing the games engagement and preparing for live operability.
Today, we confirm our fiscal year '25 guidance. We continue to expect solid net booking growth, a slight non-IFRS operating income growth and growing non-IFRS cash flow from operations leading to positive free cash flow. Looking at Q2, we expect net bookings of around EUR 500 million that will notably reflect the first month of sales for Star Wars Outlaws. As you know, last year's Q2 outperformance was notably driven by higher-than-expected partnerships for around EUR 100 million and included significant Assassin's Creed Mirage per shipments. Excluding these elements, Q2 of this year is expected to grow strongly.
We are now ready to take your questions.
[Operator Instructions] And your first question comes from the line of Nicolas Langlet from BNP Paribas.
Yes. I've got 3 questions, please. First on XDefiant. Is it fair to say that most of the EUR 41 million new game booking is mostly related to XDefiant or there were other games you would highlight. And still on XDefiant, can you tell us how the engagement has evolved since the release of the Season 1 a couple of weeks ago?
Secondly, on back-catalog. So I'm surprised to see that back-catalog is only up 2% despite the strong metrics on [ Six Siege ]. You mentioned the steam release and promotion, but Q1 last year had EUR 250 million was not that high. So anything else you would point? And looking at the full year on back-catalog, what are you expecting? Is it stable, declining year-on-year? Any indication would be a pull? And finally, on the Activision Blizzard's training deal, you mentioned in the past, the addition of Activision game into the Ubisoft subscription offer. Any update to share? Or are you still expecting this to happen this year?
Nicolas, so I think you have more than 3 questions. On the first one, I think your EUR 41 million is the difference between total net booking in the first quarter minus back-catalog, actually, there are other elements such as i3D.net, films and television and other consumer product businesses. So what we can say is for XDefiant is that it accounted for the majority of the growth of the quarter versus last year.
In terms of engagement since the beginning of the first season, so we continue tracking. And we think that as we are at the beginning of this year 1 road map, we will continue increasing acquisition and engagement with a variety of additional content, so including factions, maps, weapons, games and will be adding progressively stronger engagement systems and features. So we have something that we believe can be a good contender in a big market that is competitive, but that will bring recurring revenues over time.
In terms of catalog, yes, we've been seeing that the Rainbow Six metrics have been really strong, plus 34% in session days. And as I mentioned, that led PRI on console and PC for the back-catalog to grow 17%. So the fact that back-catalog is not growing more is due to the fact that Mobile was flat, but also due to the fact that, as I mentioned, in the comparable base last year, we had a strong impact from 3-year releases on Steam and also a stronger promotional programs. So that has a growth rate affected the sales of base game. But what is good is to see that PRI that is really beneficial to the evolution of our business model growth at a strong rate on back-catalog. So plus 17% across console and PC and Rainbow is in really good shape. And so it should continue. It will continue growing throughout the year. despite a stronger comparison base. In terms of back-catalog, so overall, we expect back-catalog for the full year to be down. But when we exclude the impact of B2B partnership, back-catalog is expected to grow this year and again, driven by Rainbow Six Siege as well as the contribution of last year's launches that should grow Assassin's Creed as well as the Crew excluding the impact of new release. And Activision -- on the Activision streaming side, what we can say is that the first games will come on Ubisoft+ by the end of this fiscal year.
And the question comes from the line of Nick Dempsey from Barclays.
So when I look at the guidance for Q2, can you hear me?
Yes, go ahead.
When I look at the guidance for Q2, and if I assume something similar for back-catalog in Q2 as Q1, kind of getting to EUR 200 million to EUR 230 million, that sort of range for the new release Star Wars Outlaws. I'm getting that, when I look at the $70 price and then assuming what you might get from [ ahead ], I'm getting to around 5 million units, something in that sort of bracket. First of all, where can I be going wrong with that thinking? And secondly, are you just being pretty conservative in your guidance? Because I guess given the interest in that game, we might have thought it would be more than 5 million units.
Second question, if partnership deals were to land in the second quarter, would you know about that by now and therefore, would you be including that annual guidance? Or is it plausible that you could land the partnership deal and that could come into Q2, but you just haven't included it in your guidance because it isn't confirmed yet.
And then the third question, when I look at the second half, Clearly, I think we're going to need a heavy contribution from Assassin's Creed. But could it be that those revenues will in fact be boosted by multiple hundreds of millions of partnership deals, that kind of range to get us over the line?
So on the first question, yes. What we can say is that we -- I can't comment on the very numbers you're quoting, but what we have factored in is a strong launch for Star Wars Outlaws. That reflects the fact that indeed, it's among the most awaited game of the industry this year and reflecting a really strong positive community sentiment and also the fact that we are coming with the biggest marketing campaign ever for -- so far for Ubisoft game. So that's what we've been factoring in the second quarter.
And in terms of your point on partnership for Q2. I think what we have -- we have factored some partnership in second quarter, but in a very limited way. So to a much lower extent than last year, and we should not expect significantly more in this quarter. On the second half, yes, as we mentioned, we expect the Shadows to be the most ambitious title of the series. We also anticipate that Star Wars, that is usually a very strong brand around Christmas and should do very well through the busy season with a strong impact also from post-launch content for both games.
And also, we expect further growth of Rainbow Six Siege as well as a strong impact of Shadows on the back-catalog of Assassin's Creed, plus the contribution of XDefiant. And in terms of partnership, we expect some contribution in the second half indeed but to a lower extent than last year.
Okay. And when you talk about it being the most ambitious, are you hoping for it to be the best selling Assassin's Creed game? Is that how I can read those -- that commentary?
At this stage, we can say that we expect AC to be among the high sellers of the company so far.
We will now take the next question from Sebastian Patulea from Jefferies.
I've got 3 questions and a follow-up, please. So recently, video game remakes have proven very successful for some of your peers and they are lower risk compared to new game titles. And based on numerous media articles, Ubisoft has a lot of remakes in the works. Can you please discuss what's the budget of a video game remake versus the initial game budget? Would it be, let's say, 50% of the initial budget or 10%, for example? And as a follow-up, can you please discuss how will you monetize these remakes? Will it be the [indiscernible] approach where you basically give it for free to gamers that have already bought the initial game? Or will it be the Sony Group approach where you'll also charge something, say, $10 even to those users that have purchased the initial game?
Then the Ubisoft -- another question. The Ubisoft+ premium subscription is available on PC and Xbox. It was added on Xbox in April last year. Can you please discuss what's the holdup to added to PlayStation as well and whether that's even in the works. And finally, how do you see the addition of Call of Duty at the end of October and Game Pass impacting demand for XDefiant, if at all?
So in terms of the remakes, yes, we have a number of remakes and remasters in the work. Indeed, that usually works well for in reviving games that players love. In terms of budget, I can't give you a precise indication. But of course, there is a significant level of reuse. So that's why usually it provides strong economics when we release such products. In terms of business model, moving forward, we have not defined -- we have not communicated on what will be the propose, so I can't tell you more at this stage. And the Ubisoft+ is indeed proposed to be a multi-platform subscription. So PC, Xbox, Luna as well. So yes, by nature, this type of subscription offer is meant to be a cross platform, but we have nothing more to announce at this stage.
And on -- so for COD, maybe it's important to consider that it's going to really bring more players to the franchise. But at the same time, it will -- it will not consume as much cash than it does generally. So you can see it in 2 ways, the fact that it will be played by more people, but they would be more cash available to actually do other things, to buy other games, in fact.
Your next question comes from the line of George Brown from Deutsche Bank.
I have 2, if I may. Just firstly, how should we think about R&D spending going forward in the context of free-to-play? You said before that free-to-play has accounted for roughly 20% of your R&D but a lot of these free-to-play games have either been canceled or they've been delayed or they've underperformed like Hyper Scape for example, in recent years. I guess the question is, do you see scope to reduce free-to-play spending beyond fiscal year '25? And if so, does that mean you can reduce total R&D spending going forward?
And then secondly, how should we think about your pipeline for next year and your competitiveness with the likes of Grand Theft Auto 6 releasing in 2025. Do you see any risk of crowding out similar to Fortnite? Or should we interpret this in another way?
Thank you, George. So on the free-to-play side, first of all, we've been happy to launch XDefiant recently and that, as we said, over performed the first quarter and for which the gameplay has been praised by players. We, of course, want to establish this on the long term across console and PC. In terms of the overall investment, as you know, among the 8 projects that we can sold about last 2 years. We had mentioned that 2 of them were free-to-play games. Having said so, free-to-play fits very well with our stress and focus on bringing game as a service native experiences. So that's really part of the strategy to expand our franchises across different business models, so including free-to-play. Of course, as we said, we are more selective. And so that's why we really take the time to optimize KPIs so that this game can stay there for the long term and increase the recurring share of our revenues. As for fiscal year 2026, we -- it's too early to tell you more about what would be our lineup. What we mentioned is that over the next years, we'll have a strong lineup that will fit well with our focus on Open World Adventures and GaaS-native experiences, but we'll tell you more by May.
And what we see generally when GTA is coming as more people come to play. So generally, it's positive on the overall market and other games that are available during that time are actually doing really well as well. So it's something we saw a few times already because we had very good sales when GTA came -- GTA 5 came and also when they did a remaster on the new consoles. So it's something that is counterintuitive, but it's working for us in general.
And another element of perspective is that, of course, we are focusing on delivering high-quality experiences like when we did so with AC IV Black Flag in 2013. He -- actually the game that came with high quality, achieved record sales for the franchise at the time of versus lifetime. So the key, as always, even when there is strong competition is to focus on delivering high quality.
Your next question comes from the line of Ali Naqvi from HSBC.
Just on your full year guidance, I appreciate there's been no change in the wording, but how should we think about the impact from the removal of Rainbow Six Mobile and Division Resurgence please? And then could you talk about preorders for both Outlaws and Shadows and how they compare to previous titles, please? And then finally, at the full year results, there was quite a better balance buildup from your partnership income related to the Activision Blizzard streaming rights. Has that started to unwind, i.e., have you been paid some or all of that money, please?
So in terms of the fiscal year guidance relative to the mobile games, they were expected to come in the second half with limited EBIT impact. So no significant impact on the overall guidance. We don't disclose or comment per-orders usually. What we can say is that what we've been observing and measuring is that our 2 big titles actually are indeed among the most awaited games of the industry, and they enjoy a very strong positive community sentiment overall.
In terms of receivables, I can't give you more detail than what I said already, which is we expect a meaningful amount to be cashed in within the first year related to this Q4 partnership and the majority within the first 18 months.
On Star Wars Outlaws, we'll have also previews that will happen at the end of this month. So we will have also lots of content that will come to the market at that time.
Your next question comes from the line of Aleksander Peterc from Bernstein.
My question has just been answered. It was pertaining to the pushout of Rainbow Six Mobile and Division Resurgence. Maybe if you could just help us understand if there's a delay. Does that mean that we should model a little bit more cautiously fiscal '26 if you say the initial contribution is small, but maybe the ramp-up then is pushed out?
Aleks, yes, we will tell you more about fiscal year '26 later. What is important, as we said already is that such games can have a very big impact in our biggest franchise expansion. So we really need to go to the final end of test so that we optimize KPIs ahead of launch to make sure they are long-term successes.
Your next question comes from the line of Adrien de Saint Hilaire from Bank of America.
Yes. So you talked about the positive feedback you got from the community on Star Wars. I think there was a 10-minute preview video, which was released yesterday, which actually got some relatively mixed reviews on some of the graphics. So just wondering if the date for the release is fully confirmed or if you could adjust the date based on the feedback that you're getting on those previews?
Secondly, can you disclose potentially the headcount level that you're in at the end of this quarter? And maybe thirdly, I'd be interested in your thoughts about broader industry trends. Do you think we've seen the worst in terms of market growth after a couple of years of digestion after COVID?
So on the first point, the game has got gold. So it's -- the date is well confirmed for August 30. And as you've mentioned, we'll be showcasing more content, very high-quality multiple hours that would really show the depth of the Open World that is a key element of the promise for players to enjoy the exploration of galaxy and with multiple planets. So that should bode well for the game in terms of high-quality delivery. In terms of headcount, at the end of the quarter, we didn't give any number, but we -- head count continued to go down and we follow the -- our program along the same line that we had defined.
And as we've said also for Star Wars, the level of quality of the world and the experience, it's really very high. We are really leveraging our engines, and I think people will love it.
On the industry trends, we've seen the same trend that we have been commenting over the last 18 months, meaning that we see that this is a selective and demanding market that rewards biggest franchises and live services. So that's why we believe our focus on Open World Adventure with our big brands and to accelerate our progress on the game service native experiences led by Rainbow Six and now with XDefiant and other brands that do well are the right priorities moving forward.
We will now take our final question for today. And your final question comes from the line of Mike Hickey from the Benchmark Company.
Just 2 questions. First one on XDefiant, you noted that you had 10 million players within those 2 weeks, which obviously is significant. You launched Season 1 in July 2, so you've got about another 2-week window there. Can you help us size the level of your player base over the most recent 2 weeks compared to the 10 million? And then we're also curious if you have an estimate at least in terms of how many of the XDefiant, current XDefiant players or also Call of Duty players?
The second question is on Rainbow -- the delays on Rainbow Six Mobile and The Division seems really early in their fiscal year to be delaying games, it sort of points to maybe some more structural issues with those games. So curious if that's the case, we're not -- and I'm also wondering sort of whether or not you think these games, in fact, are commercially viable?
So what we can say on the mobile games is that you need -- it's very difficult to define a set date. What is important is that the work on KPI is really working and that when you launch, the game will last forever. So we are putting all the energy necessary to make sure they are perfect when they launch. And that's something that is more and more crucial now in this specific industry. On the 2 other points, Frederick can answer.
Yes. So on the first point, we continued getting a steady growth of players since we launched the Season 1. But we don't disclose the share of XDefiant players that also play Call of Duty. What we can say is that it's a huge market, competitive but big and rewarding for games that can stay there for the long term.
Thank you. I will now hand the call back for closing remarks.
So thank you very much for your questions, and have a good evening or good afternoon. Thank you. Bye-bye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
