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Ubisoft vows to get back to operating margin above 20% in medium term

by Staff GBAF Publications Ltd
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By Enrico Sciacovelli

(Reuters) -French video game producer Ubisoft said it would reach operating margin above 20% in the medium term, as it aims to shift its focus to major franchises and “long-lasting” live service games.

The family-run firm has been dogged by game delays in recent years and last month warned of the biggest operating loss in its history, while vowing to focus on blockbuster titles after scrapping seven projects since July.

“We anticipate that in the coming years, behind a very rich lineup, we progressively get back to above 20% operating margin in the medium term,” Chief Financial Officer Frederick Duguet said in a call with analysts.

Last year Ubisoft achieved an operating margin of 19.1%, compared to a 21.1% in 2020-21, as the pandemic kept people home and boosted sales.

The gaming market is estimated to have shrunk 4.3% in 2022, according to market research firm Newzoo.

The company stuck to January’s forecast for an operating loss of around 500 million euros in its 2022-23 year.

Ubisoft shares are down roughly 25% year-to-date, on top of an almost 40% drop in 2022.

The maker of the Assassin’s Creed franchise reported on Thursday net bookings of 726.9 million euros ($776.2 million) in its third quarter to the end of December, in line with its forecast.

That was a drop of 2.6% year-on-year, however, with Ubisoft citing the impact of the macro-economic environment on the video game market and the company’s performance.

Ubisoft said its lineup for the next fiscal year would include Skull & Bones – first revealed in 2017 – Assassin’s Creed Mirage, and Avatar: Frontiers of Pandora, in addition to mobile entries in the Rainbow Six and The Division series.

($1 = 0.9365 euros)

(Reporting by Enrico Sciacovelli, Editing by Hugh Lawson, Kirsten Donovan and Bill Berkrot)