Ubisoft halves annual top-line growth estimate on games delay

By Federica Mileo and Enrico Sciacovelli

(Reuters) -French video game producer Ubisoft Entertainment SA on Thursday cut its top-line growth guidance due to the impact of two game delays, after posting net bookings slightly above its forecast for the first quarter.

In recent months Ubisoft has been facing delays and waning demand from the sales highs seen earlier in the pandemic. It also faces competition from blockbuster titles and free-to-play games.

Ubisoft, whose titles include "Prince of Persia" and "The Division", said it continued to expect a significant top-line year-on-year growth, while slashing it to above 10%.

"We revised our top-line growth guidance that was above 20%, now to be above 10%. That reflects the impact of game delays, mostly Avatar," said co-founder and Chief Executive Yves Guillemot in a call with analysts.

The maker of the "Assassin's Creed" blockbuster franchise postponed the releases of "Avatar: Frontiers of Pandora" and a smaller unannounced premium game to 2023-24. Both titles were originally slated for the current year.

The group expects net bookings for the second quarter to come in at around 270 million euros and still sees a non-IFRS operating profit of around 400 million euros in 2022-23.

"The negatives of lost revenue and profit is offset on the earnings level by the upfront on the mobile licensing deal [...] and cost-cutting," Jefferies notes.

Ubisoft announced a "high-value" mobile licensing deal for one of its major franchises and said it was pursuing cost optimization, as it revealed in an analyst call the cancellation of games such as Splinter Cell VR and Ghost Recon Frontline.

The Paris-listed company posted a 10% drop in net bookings to 293.3 million euros ($324.63 million) for the three months ended in June, compared with its guidance of around 280 million euros.

IFRS 15 sales for the first quarter came to 318.2 million euros, down 9.8% compared with 352.8 million euros generated last year.

($1 = 0.9802 euro)

(Reporting by Enrico Sciacovelli and Federica Mileo in GdanskEditing by Kirsten Donovan, Matthew Lewis and Andrea Ricci)