Q3 2012/2013 Ubisoft Entertainment SA Sales Conference Call Transcript - Thomson StreetEvents

Q3 2012/2013 Ubisoft Entertainment SA Sales Conference Call Transcript

16 pages (8656 words) — Published Feb 07, 2013
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Abstract:

Edited Transcript of UBI.PA sales update conference call or presentation 7-Feb-13 5:15pm GMT

  
Brief Excerpt:

...Operator Ladies and gentlemen, welcome to the Ubisoft Fiscal Year 2012-2013 Third Quarter Conference Call. I will now hand over to Mr. Yves Guillemot, CEO. Sir, please go ahead. Yves Guillemot ...

  
Report Type:

Transcript

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Company:
Ticker
UBI.PA
Time
5:15pm GMT
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Arvind Bhatia - Sterne Agee - Analyst : Okay, thank you very much and congratulations on a good quarter. I wanted to ask you about, you know, what you can talk to us about in the next generation. I know you are probably limited in terms of what you can reveal, but how much cost are you anticipating in your next fiscal year to come from development for next generation? So that's my first question and then I have a follow-up. Unidentified Company Representative We are clearly not in a position to give you any further details, as everybody from the industry, and you understand that. So it's going to be very complicated to give you a breakdown of investment we are making by platform. So my apologies, but I think that on that one, we'd better skip it.


Question: Arvind Bhatia - Sterne Agee - Analyst : Okay, then one clarification. I think you said that you would expect, firstly you said 16% of Far Cry sales came from -- did you say direct downloads? And was that 16% of the PC version or 16% of the overall revenue from Far? Unidentified Company Representative Of the overall version. We also said it might be interesting for you, the second figure that we quoted is that going forward right now, and this can change, we consider that on average, on a new release product, about 6%, 7% of our sales will be done digital. If I look at a couple of years ago, it was less than 2% and again, as we said, Far Cry was much bigger, about 16% and we might be underestimating, but we wanted to give a kind of indication of what we see today as being a reference. You have to have in mind that also we sell casual games for which there is a lesser amount of download, but we feel it's a good and interesting reference for people to have a feeling what it is. Of course, each game might change but we think it is interesting.


Question: Arvind Bhatia - Sterne Agee - Analyst : So what do you think the combined number would be for a given franchise? So let's say you have lifetime units of 5 million for some franchise, would you venture a guess on what percentage of that would be overall, including back catalogue, come from digital, say a few years out? Unidentified Company Representative Okay, so if you take the first six months and you say that 7% was done in the -- on digital, and that represents a 70% of the total sales, you can say that the next 30% is done and 50% on distribution, so that would give you maybe 15%, 20% being digital, over the lifetime. companies.


Question: Arvind Bhatia - Sterne Agee - Analyst : Okay. And one final one, I'm sorry, for me. That is on Just Dance, I assume you're going to have the next version come out in fiscal '14, and what I'm wondering is would you consider the fiscal '13 unit level or revenue level as sort of the trough? Because I know you had difficult comparisons. Would you expect that franchise to start to grow in fiscal 2014? Unidentified Company Representative We only gave an indication about the overall casual market for which we, we are saying that in our anticipation for next year, we believe that we will have again a growth of our core games and of our online and digital revenue, and we anticipate a year of downward trend for fiscal '14 of our casual, which will include Just Dance, but I cannot tell you Just Dance 5 versus Just Dance 4, it's globally more the casual market.


Question: Edward Williams - BMO Capital Markets - Analyst : Good evening. Just a couple of questions. First of all, could you guys comment a little bit about, if I heard you correctly, I think, Yves, you mentioned that your assumption for gross markets for the back half -- or for the fiscal year is derived relative to what you were looking at previously. Is that the lion's share of the change in your projected operating income? Is it coming through gross margins or is there anything changing on some of the operating expense lines? Unidentified Company Representative I would say that when we gave our prior, our targets, we were including a number of games that I've skipped, so we are doing the same amount of sales on the high end that we were giving as a reference three months ago, but with a few games that have been postponed, but in return, we have had those lesser games that we have released are, I believe are better revenue. They also have had a very good pricing reference. We are gaining gross margins in every direction. It comes from our core games, which are faring better than what they were doing last year. It's interesting because everybody is a bit scared about pricing of the game, and we actually are seeing that both our games have a better pricing average on our core side than last year, and also because we sell better, we have less returns and price protection. We also have more discount from manufacturers and therefore our overall margin is getting better. And we mentioned also, the digital distribution is helping overall our gross margin. This is why we have raised our expectation there. The thing that is, has probably grown on the other side, has been the marketing expenses. So R&D is in line with what we expected, but marketing expense is probably a bit on the higher side. That's how we, we can manage our gains for this year.


Question: Edward Williams - BMO Capital Markets - Analyst : Okay, and then again, looking at the revenue line for a moment. What's your thought at this point as to the contribution you think you can get this year from Nintendo's Wii U console? Unidentified Company Representative I think we are right now holding at about EUR40 million of sales that we've done for this quarter, and we were guiding for about between 6% and 7% of our sales today and considering that Rayman has been postponed, I think it will be anywhere between EUR40 million and EUR55 million but not as big as what we anticipated.


Question: Edward Williams - BMO Capital Markets - Analyst : Okay, good, thank you.


Question: Jean-Christophe Liaubet - Exane BNP Paribas - Analyst : Yes, good evening, gentlemen. One question regarding your outlook for the coming quarters. You expressed in the press release a positive message regarding the fact we should see further growth in the next fiscal year. But you gave also during the presentation some comments about the new feeling, but in terms of facing quarter by quarter, could you tell us how you see the coming quarters evolving in terms of top line trends and the releases? Unidentified Company Representative Well, no; what we can tell you is that as you've seen for Q4, we have had, we have been prudent about our guidance for the end of this fiscal year. I think we are not the only one. We are seeing that the market, we are lucky we are doing well with some of our products like Far Cry, but we do feel that the market is tough. We've mentioned it. So given also the fact that we have postponed a few products, we have preferred to take a prudent stance on Q4. For the rest, I think we have to wait for May to give you more color about the splits by quarter of our sales.


Question: Jean-Christophe Liaubet - Exane BNP Paribas - Analyst : Okay, thank you. And the second question, regarding the recent acquisition of some THQ assets, can you give us a bit a view about what to expect in terms of value creation, on the asset acquired and notably on the license, on the games?


Question: Jean-Christophe Liaubet - Exane BNP Paribas - Analyst : Okay. Thank you. And can we expect deals like this in the coming months? Unidentified Company Representative Unless there is somebody that goes bankrupt, I don't know. But I hope not.


Question: Jean-Christophe Liaubet - Exane BNP Paribas - Analyst : Okay, thank you. companies.


Question: Evan Wilson - Pacific Crest Securities - Analyst : Thanks. I'd like to follow up on Arvind's question a little bit on digital downloads. As far as I can remember, you guys are the first Western publisher to say that digital full game downloads on consoles are being a material part of the revenue mix on triple-A games. Can you talk a little bit more about the downloads on PSN and Xbox live specifically, and just what's changed to make that a bigger business for you?


Question: Evan Wilson - Pacific Crest Securities - Analyst : Can you also talk about what, what percentage of digital downloads you're seeing on the Vita?


Question: Evan Wilson - Pacific Crest Securities - Analyst : Yes. A different topic, but after the heavy support you guys put forward for the launches of Vita, of the 3DS, of Wii U, and each of those didn't really take off as quickly as the market expected, are you rethinking your plans for your SKU counts on new hardware launches?


Question: Evan Wilson - Pacific Crest Securities - Analyst : Great. Last question, I'd just like to take a step back and look at the economics of the industry. You guys are in the middle of a year where pretty much everything has gone right, 25 million units of Assassin's Creed and Far Cry and Just Dance combined. Yet, we're still looking about a 25% lower operating profit than your previous peak in operating profit on something like 30% or 35% more sales. So we've seen this deleveraging occur on a much larger revenue base. I'm curious what's your longer-term view is to see if we can see a material lift in the operating margin, you know, now that you're doing such, such major units of your games and a lot of revenue, but there's clearly some dislocation that's happening.


Question: Evan Wilson - Pacific Crest Securities - Analyst : Thanks.


Question: Peter Testa - One Investment - Analyst : This is Peter Testa. Just a couple of questions, please. Firstly, just if you could help us on, you've had some terrific unit sell-in for the main titles. I was wondering if you could give us some sort of sense on sell out, I'm trying to relate the sell out to the price of the game to the sales. So just if you can help on sell out, please.


Question: Peter Testa - One Investment - Analyst : Okay, thank you. Right. And Far Cry 3, I gather, I assume, is like Assassin's Creed? Unidentified Company Representative Oh, yes.


Question: Peter Testa - One Investment - Analyst : Okay, and then the other question, please. It's just when you're looking at the next generation consoles, I was wondering if you have any particular clarity on the development platform this moment and the extent, you might be able to help us with what differences you might expect, you know, whether you think there will be back compatibility with existing games, and do you expect core engines, therefore, to help you with the transition, just to help understand the development transition, please?


Question: Peter Testa - One Investment - Analyst : Okay, but no sense on how the development transition, the extent to which you might be able to use your core engines and build upon them or whether you have to rebuild some of the main engines from, because of different hardware configuration or something, or to help us understand that transition phase.


Question: Peter Testa - One Investment - Analyst : Okay and do you expect forward or back-compatibility of existing generation with next generation games?


Question: Peter Testa - One Investment - Analyst : Right. Okay, thanks for your help.


Question: Arvind Bhatia - Sterne Agee - Analyst : Just one last one on Far Cry. In general, the mix between consoles and PC for that particular product, I know it's more of a PC product, can you give us a mix there? Unidentified Company Representative Yes, It is -- we have 1 million units of PC versus on 4.5 million. So it's quite a healthy amount from the PC game.

Table Of Contents

Q3 2013/2014 Ubisoft Entertainment SA Sales Conference Call Transcript – 2014-02-10 – $54.00 – Edited Transcript of UBI.PA sales update conference call or presentation 10-Feb-14 5:15pm GMT

Half Year 2013/2014 Ubisoft Entertainment SA Earnings Conference Call Transcript – 2013-11-12 – $54.00 – Edited Transcript of UBI.PA earnings conference call or presentation 12-Nov-13 5:15pm GMT

Ubisoft Entertainment SA Provides Initial Non-IFRS Operating Income Targets for 2014-15 and 2015-16 Conference Call Transcript – 2013-10-15 – $54.00 – Edited Transcript of UBI.PA guidance conference call or presentation 15-Oct-13 4:30pm GMT

Q1 2013/2014 Ubisoft Entertainment SA Sales Conference Call Transcript – 2013-07-18 – $54.00 – Edited Transcript of UBI.PA sales update conference call or presentation 18-Jul-13 4:15pm GMT

Full Year 2012/2013 Ubisoft Entertainment SA Earnings Conference Call Transcript – 2013-05-15 – $54.00 – Edited Transcript of UBI.PA earnings conference call or presentation 15-May-13 4:15pm GMT

Half Year 2012/2013 Ubisoft Entertainment SA Earnings Conference Call Transcript – 2012-11-06 – $54.00 – Edited Transcript of UBI.PA earnings conference call or presentation 6-Nov-12 5:15pm GMT

Q1 2012/2013 Ubisoft Entertainment SA Sales Conference Call Transcript – 2012-07-19 – $54.00 – Edited Transcript of UBI.PA sales update conference call or presentation 19-Jul-12 4:15pm GMT

Full Year 2011/2012 Ubisoft Entertainment SA Earnings Conference Call Transcript – 2012-05-15 – $54.00 – Edited Transcript of UBI.PA earnings conference call or presentation 15-May-12 4:15pm GMT

Q3 2011/2012 Ubisoft Entertainment SA Sales Conference Call Transcript – 2012-02-15 – $54.00 – Edited Transcript of UBI.PA sales update conference call or presentation 15-Feb-12 5:15pm GMT

Half Year 2011/2012 Ubisoft Entertainment SA Earnings Conference Call Transcript – 2011-11-08 – $54.00 – Edited Transcript of UBI.PA earnings conference call or presentation 8-Nov-11 5:15pm GMT

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Thomson StreetEvents. "Q3 2012/2013 Ubisoft Entertainment SA Sales Conference Call Transcript" Feb 07, 2013. Alacra Store. Sep 30, 2014. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q3-2012-2013-Ubisoft-Entertainment-SA-Sales-Conference-Call-T4982902>
  
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