Operator
Good day, and thank you for standing by. Welcome to the Ubisoft Strategic Update Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Yves Guillemot. Please go ahead.
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
Welcome, everybody, and thank you for joining the call on such short notice. Today, I want to provide an update on the strategic and execution reviews initiated by the Executive Committee a few months ago. We have made good progress and are confident that this will position Ubisoft for a stronger future. We have taken decisive steps to reshape the group in order to deliver best-in-class player experiences, enhance operational efficiencies and maximize value creation.
With the appointment of leading advisers, we are actively exploring various transformational, strategic and capitalistic options to extract the best value for stakeholders. We are convinced that there are several potential paths to generate value for Ubisoft assets and franchises. This process will be overseen by the independent members of the Board of Directors. As part of the renewed focus on gameplay quality and engaging day-1 experiences, we have made the decision to provide an additional month of development to Assassin's Creed Shadows. While an extra month might not seem like much, it will allow our teams to better incorporate the player feedback we gathered over the last 3 months and help create the best conditions for launch by continuing to engage closely with the increasingly positive Assassin's Creed community.
Next week, we will be hosting gamers, content creators and journalists in our studios in Quebec City for hands-on session where they will be able to play the game and interact with the team. We are all behind our team's effort to create the most ambitious Assassin's Creed office of the franchise and fully deliver on the potential of the game. It is now scheduled for March 20.
Operationally, we will continue to drive significant cost reductions together with a highly selective approach to investments. We now expect to exceed EUR 200 million in a reduction of our fixed cost base by 2026 on an annual basis. One clear example of this came in December when after a thorough review of XDefiant's performance, profitability and market conditions, we decided to discontinue the game and close three production studios in high-cost geographies. I here take the opportunity to thank the XDefiant teams very warmly for the hard work they put in the game and the players who supported us throughout this journey.
I will now hand over the call to Frédérick, who will cover the updated financial targets.
Frédérick Duguet
Chief Finance Officer
Thank you, Yves, and hello, everybody. On the back of lower-than-expected holiday sales, mainly for Star Wars Outlaws as well as the discontinuation of XDefiant, we are now expecting Q3 fiscal '25 net bookings to come in at around EUR 300 million.
Turning to the fiscal year. Our guidance is marginally adjusted on the net bookings side, which are now expected at around EUR 1.9 billion and reflect the following moving parts. First, the updated Q3 net bookings as well as its subsequent impact on Q4; second, the updated March 20 release date for Assassin's Creed Shadows; and third, both elements being partially offset by new partnership opportunities for our catalog of games and franchises as well as for the streaming rights acquired last fiscal year.
Of note, the net booking reduction of XDefiant came with a very limited profit and cash impact. Overall, we continue to expect around breakeven non-IFRS operating income and free cash flows for fiscal year '25.
To conclude, our balance sheet remains solid. Cash and cash equivalents currently stands at around EUR 800 million, with the difference versus the end September position driven by the reimbursement of debt. We will provide more detail on the Q3 performance when we report our sales on February 13.
We are now ready to take your questions.
Operator
[Operator Instructions] And your first question comes from the line of Ed Young from Morgan Stanley.
Edward Young
Morgan Stanley
The first is on the various transformational strategic and capitalistic options. It's a bit of a vague phrase, if you don't mind me saying. Could you perhaps elaborate on the kind of things you're talking about and perhaps particularly there were press reports of detailed discussions with Tencent that was reported on in December. Should we sort of read that there is now some sort of proposal, which the independent Board members are going to review against other options? Or is that not what you mean by that?
Second, the EUR 1.9 billion of net bookings includes, as you said, some offset from new partnership opportunities and franchises. I wonder if you can elaborate again what those are a little bit? And particularly, could you quantify the benefits within that number for the year?
And then finally, what are the lessons from XDefiant as you think about the development of future free-to-play titles?
Frédérick Duguet
Chief Finance Officer
Thank you, Ed. So on the first topic, the objective of this process is to unlock the best value potential of our assets to the benefit of our stakeholders and to foster the best conditions to create great games in a fast-evolving market. That's the overall objective. So that's why we mentioned that we appointed leading advisers. So we are currently activating -- actively exploring different options. And we can't say more. Of course, we won't comment on specific rumors that we've seen in the market. But we are convinced that there are several potential paths to generate value from Ubisoft assets and franchises. We will inform the market if and when a transaction materializes.
On the second question, yes, indeed, we've seen a growing pipeline of opportunities for partnerships. I will say that they are covering two categories, some that will value our catalog of games and franchises and others that will allow us to further monetize opportunities from the streaming rights we acquired last year. In terms of quantification, we won't comment specifically because these are sensitive and confidential terms, but you should expect a meaningful contribution with the same order of magnitude of -- as last year Q4.
As for XDefiant, as we had seen, the initial enthusiasm came when we launched the game. But as we've seen over the different months despite good content being put on the market. And looking at the return on investment, future profitability and the market conditions, we took the decision that it was the right one to discontinue the game and to close studios from high-cost geographies. We learned a lot, of course, from this journey, but we believe it was the difficult but right decision.
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
And we can add that what was very important in this case is we had too much difference between the costs and the revenue. And so it's very important to create all the tools and make sure we have a team that can create lots of content at a cost-effective price, I would say.
Edward Young
Morgan Stanley
I appreciate you don't want to say what the different options are in the first, I can understand that. But could you perhaps say whether there are any concrete courses of action or scenarios that are being considered? Or is this sort of more of an exploratory kind of process?
It's -- there's obviously been already statements previously about reviewing strategic options in various ways. You updated that in October with the rumors that came out. So what's different about today? It's the appointment of advisers, but are there concrete things they're looking at? Or is it they're looking at several possible thematic options, if you like?
Frédérick Duguet
Chief Finance Officer
Yes, of course, we are limited with what we can say today, but we started a process.
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
With advisers. So it's -- that's one more step.
Operator
And your next question comes from the line of Nick Dempsey from Barclays.
Nick Dempsey
Barclays Bank
So first of all, just on the reduction in fixed cost base by FY '26, you're now saying you're going to exceed EUR 200 million. I think you said that you would do -- that you were already on a run rate to do about EUR 210 million when you spoke to us at the second quarter, and that included some benefit from FX. So does this still include the benefit from FX? And if so, should we assume that, that EUR 210 million is definitely more? Otherwise, it kind of looks like you're saying the same thing as you did at that point.
Just a follow-up on one of your answers on the partnership deals. So I think you said that they were the same order of magnitude as the Q4 number from last year, not the full year number from last year, but you said Q4, I just wanted to check that.
And the third one, so we've seen this week that Tencent has been put on the U.S. Department of Defense's Section 1260H list. I want to get that right. Are there any ramifications from that for whether you think Tencent will be allowed to be the majority owner of Ubisoft?
Frédérick Duguet
Chief Finance Officer
Thank you, Nick. So on the first topic, yes, we had said that on the first half, we were on track on an annualized basis, so ignoring the seasonality on a semester basis that we're on track to deliver EUR 210 million and cost reduction, including the impact of foreign exchange. What we're saying today is that we will exceed that initial target of EUR 200 million, meaning by a significant margin, but we will update you with our progress at a later stage.
On partnership, yes, I did say that we will reach the same order of magnitude as last year Q4 over the quarter, obviously. As for...
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
And for Tencent, we can't comment on what was said.
Operator
Your next question comes from the line of David Lustberg from BMO.
David Marshall Lustberg
BMO Capital Markets Equity Research
Two questions, if I can. Maybe to start off on the delay of Assassin's Creed by another month. You talked about incorporating some player feedback. Maybe can you dive in and give some specifics, if possible, what some of that player feedback was?
And then secondarily, on the implied guide down for Q3 from, I believe, it was EUR 380 million to now EUR 300 million. You did call out Star Wars Outlaws and XDefiant. I was curious maybe if you could provide a little bit more color into that EUR 80 million driver between those two. Specifically, we obviously saw the XDefiant refunds you guys gave and obviously discontinued the game. So any incremental color there would be super helpful.
Frédérick Duguet
Chief Finance Officer
Yes. So Assassin's Creed, we took the benefit of the additional months to gather more player feedback while engaging even more with our community. And we've seen an increasingly positive reaction from the overall community. So we want to pursue that momentum and to incorporate the latest feedback that will allow us to deliver on our commitment to provide with a great experience by the time we launch. So we will continue to fine-tune the gameplay mechanics and progression balancing.
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
There's a rich communication between the team and the community, and it's really helping them to look at what are the best solutions to some of the problems they have.
Frédérick Duguet
Chief Finance Officer
And we will provide -- as we said, as I mentioned, we'll provide players with hands-on session starting next week.
In terms of Q4 -- Q3, you should consider that the impact from Star Wars Outlaws was higher than the impact from XDefiant discontinuation. And if you look at the impact on the guidance, you should consider that with the discontinuation of XDefiant, that also came with a significant reduction in expenses. So that's why it came with a very limited impact on cash and profit.
Operator
[Operator Instructions] And your next question comes from the line of Ali Naqvi from HSBC.
Ali Naqvi
HSBC Global Investment Research
Three, if I may. Could you just remind us of your current sort of cash reserves and when the next major debt payment or refinancing is going to be due?
And then secondly, in terms of how you get to breakeven free cash flow, given the delay in AC Shadows, is there more that is coming from partnership revenues or some other source? Or how do you get to that given the change in guidance?
And then thirdly, just on the advisers, what stage are they at exactly? When do they sort of start work? And when are you expecting to get any sort of initial findings from them to be...
Frédérick Duguet
Chief Finance Officer
Hello, Ali. So on the first topic, as I said, we currently stand with a solid cash and cash equivalent position of around EUR 800 million. And our next major debt repayment will be by end of this calendar year for EUR 260 million.
In terms of the contribution to free cash flow, we expect more contribution from partnership than from Assassin's Creed Shadows. We will also expect, of course, a robust contribution from our growing back catalog.
In terms of where -- at what stage the advisers are today, we can only say that they started working. And in terms of initial findings, we expect good progress in the coming months.
Ali Naqvi
HSBC Global Investment Research
Got it. And just a quick follow-up. There was that big streaming debtor from last year that still has to come through. Is any of that accelerated? Or is the pace of the payment for that still the same?
Frédérick Duguet
Chief Finance Officer
So in terms of the Q4 receivable of last year, including partnership, we already cashed in a majority of that money, but we still have some to be cashed in, in the future.
Operator
We will now take the next question. And your next question comes from the line of Ben Shelley from UBS.
Benjamin Shelley
UBS Investment Bank
I've just got two questions. One is, do you expect the business to be free cash flow profitable in the next financial year?
And the second is, can you remind us of the upcoming debt obligations Ubisoft has and how you plan to manage the balance sheet in the coming year?
Frédérick Duguet
Chief Finance Officer
So as for next year, Ben, we haven't provided with a guidance yet in terms of free cash flow. What we can think about for next year is that we should get the benefit of significant cash entry from AC Shadows that we now pushed to the end of the fiscal year.
We should also expect, as we had mentioned before, a strong cash contribution from growing Rainbow Six business, and we should expect a bigger impact from our cost reduction program that is ongoing, but we haven't said more than that so far. What we expect is to come back to cash generation in the coming years. In terms of the upcoming debt maturities, we have an average maturity of between 3 to 4 years, with notably in 2026, around EUR 500 million.
Operator
[Operator Instructions] And your next question comes from the line of Nick Dempsey from Barclays.
Nick Dempsey
Barclays Bank
I just want to squeeze in another one. When we're thinking about the year to end [ March '26 ], can you give us any indication of the number of AAA games that you plan to launch just to give us some reassurance on how we start modeling that...
Frédérick Duguet
Chief Finance Officer
So you know more about that by May. What we have said so far is that when we unveiled the Assassin's Creed road map 2 years ago is that we have high-quality content, paid content being released every year. We've mentioned that we'll grow Rainbow Six next year, not only by going on mobile, but also with a good plan for Rainbow Six Siege. We also said that we will be releasing Anno Pax Romana. But -- and we will, of course, get the benefit of strong sales from Assassin's Creed Shadows, but we haven't said more at this stage.
Operator
There are currently no further questions. I will hand the call back for closing remarks.
Yves Guillemot
Co-Founder, Chairman, CEO, President & Chief Creative Officer
Thank you for your questions, and have a good evening or good morning. Thank you.
Operator
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
