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Ubisoft Sales Surge, Increases Full Year Guidance

by Rainier on April 26, 2007 @ 3:58 p.m. PDT

Ubisoft released sales figures for the Q4 of its fiscal year 2006/2007, reporting a 37.4 % increase with full year sales up 24.4%, mainly driven by GRAW 2 (X360), TMNT, R6 Vegas, Rayman (Wii), Red Steel (Wii), and The Petz.

Sales for the fourth quarter of 2006-07 came to €197 million, up 37.4%, or 41.7% at constant exchange rates, compared with the €144 million recorded for the same period of 2005-06. Full-year sales for fiscal 2006-07 totaled €680 million, versus €547 million for fiscal 2005-06, representing an increase of 24.4%, or 27.2% at constant exchange rates.

Fourth-quarter sales beat the €152 million minimum target Ubisoft projected in its third-quarter sales figures announcement by €45 million. This superior performance was fueled by the following factors:

  • Robust performances of two key games launched during the quarter :
    • Tom Clancy's Ghost Recon Advanced Warfighter 2 got off to an excellent start with 1 million units sold on the Xbox 360.
    • Launched just one year after the first game, this success highlights the proven strength of the Tom Clancy's Ghost Recon franchise.
    • Teenage Mutant Ninja Turtles also turned in a good showing with more than 1.1 million units sold for its launch on eight platforms.
  • Continued success of games launched in previous quarters, including:
    • Tom Clancy’s Rainbow Six Vegas (1.7 million units sold since the game was launched).
    • Wii games, particularly Rayman and Red Steel which have sold more than 830,000 and 950,000 units respectively since their launch.
    • The Petz series of games, which collectively sold 3.5 million units during the fiscal year.

During the first three months of the calendar year, Ubisoft continued to grow faster than the sector and to win new market share :

  • Second independent publisher in Europe, with growth of 31% (compared with market growth of 15%) and market share of 8.6% versus 7.6% in the first quarter of 2006. Ubisoft was ranked number one independent publisher on Wii, the Nintendo DS and the Xbox 360.
  • Third independent publisher in the United States, with growth of 41% (compared with market growth of 28%) and market share of 6.7% versus 6.1% in the first quarter of 2006. Ubisoft was ranked as the number one independent publisher on Wii and number two on the Nintendo DS and Xbox 360.

Due to its strong sales performance, Ubisoft has revised its target for full-year current operating income1 to approximately 5.5% of sales, higher than the previous guidance of approximately 4% of sales. In addition, the Company expects to achieve a positive net cash position of approximately €50 million, sharply up on the former objective of zero net debt.

Yves Guillemot, CEO of Ubisoft, stated: "Our fourth quarter performance was an excellent way to round off 2006-07, a year in which we exceeded all of our targets. We have not only confirmed the strong position of our key franchises Splinter Cell, Ghost Recon, Rayman, and Rainbow Six but have also launched new brands in the form of Red Steel and Heroes of Might & Magic. Our investment in games for the Xbox360, Wii and Nintendo DS systems has paid off and we have successfully broken into the casual games segment with the Petz series of games (Catz, Dogz and Horsez). Finally, above and beyond the recognized quality of our internal development studios, this year has confirmed the increasingly important role of our Publishing and Third Party Development divisions.”

Outlook for Full-Year 2007-08

Ubisoft has raised its 2007-08 sales target to approximately €800 million – compared with the previous forecast of between €750 million and €766 million – in order to reflect the quality of its games line-up and favorable outlook for the sector. Ubisoft is maintaining its previously-announced objective for current operating income before stock options to represent at least 8% of sales.

Based on the provisional games release schedule, the first half of 2007-08 is expected to account for a larger portion of full-year sales than in the past.

Consequently, Ubisoft expects First-Quarter 2007-08 sales to be up 71% to approximately €120 million, driven by:

  • The video game based on Sony Pictures Animation’s feature-length CG animated film Surf's Up.
  • Four new games for the Wii and four for the Nintendo DS.
  • Tom Clancy’s Rainbow Six Vegas on the PS3.

Yves Guillemot concluded: ""In 2007-08, Ubisoft will have the best line-up in its history with the launch of seven franchises including Brothers in Arms and Splinter Cell; six new brands, including Assassin’s Creed, End War and Haze; and four licensed games, including Surf’s Up, Lost and Naruto. We intend to reap the full benefits of the ramp-up of new generation consoles and grow, again this year, our presence in the casual market on the Wii and Nintendo DS systems. Ubisoft should continue to win market share and significantly boost its profitability in 2007-08.”

Significant Events of the Quarter

Market shares: During the first three months of the year, Ubisoft has been ranked 3rd independent publisher in the US with 6.7% market share (compared to 4th with 6.1% the previous year), 2nd in France with 8.5% market share (compared to 2nd and 8.2%), 2nd in the UK with 10.3% market share (compared to 2nd and 8.6%) and 3rd in Germany with 7% market share (compared to 3rd and 6.1%).

Acquisition of Anno (April 11, 2007): With 5 million units sold to date, Anno is one of the most successful strategy games and a best-seller in the German market. This acquisition will strengthen Ubisoft leading position in the strategy segment, Germany's most important segment and consolidate its number 2 position in this country.

New expansion plan in Quebec: objective of creating 1,000 additional jobs by 2013 and opening a studio specialized in the creation of digital cinema content.

Conversion of 2008 warrants (BSAR): Ubisoft increased its capital by €50 million following the conversion into shares of 92% of its 2008 warrants.

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