French video game publisher Ubisoft faced harsh market reality as its shares fell 20% on Thursday – the steepest single-day drop in over 11 years. The plunge came after the company reported disappointing financial results and forecasted continued cash burn for game development.
The Numbers Tell the Story
- Net bookings dropped 20.5% to €1.85 billion
- Revenue declined 17.5% to €1.89 billion
- Operating loss of €82.6 million, compared to last year’s €313.6 million profit
- Positive free cash flow of €128 million, exceeding internal targets
- Mobile revenue share grew from 6% to 16%
- North America leads revenue at 45%, Europe follows at 33%
Game Delays and Market Pressures
CEO Yves Guillemot stated plainly: “This year has been a challenging one for Ubisoft, with mixed dynamics across our portfolio, amid intense industry competition.”
The company’s latest release “Assassin’s Creed Shadows” drew more than three million players since March 20, 2025. However, another major title “Star Wars Outlaws” fell short of sales expectations, while multiplayer shooter “XDefiant” was canceled due to low player numbers.
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The Tencent Deal
A key development is Tencent’s €1.16 billion investment in a new Ubisoft subsidiary housing three major franchises: Assassin’s Creed, Far Cry, and Rainbow Six. The deal gives Tencent a 25% economic stake while Ubisoft maintains control. About 3,000 employees will move to this new unit.
Cost-Cutting Continues
The company reduced its workforce by 1,230 people during FY 2024-25. Guillemot told the Senate they’re replacing only one in three departing workers. The company aims to save an additional €100 million over two years, building on €200 million already saved since 2022.
Market Analysis
Barclays analysts expected €96 million in free cash flow this year. “They have strong hopes for the years beyond but investors will believe in (free cash flow) when it is in front of them,” they noted.
Morningstar analyst Martin Szumski observed that creating the subsidiary with Tencent “was the least committal of the available options without simply returning to shareholders empty-handed.”
Looking Ahead
For FY 2025-26, Ubisoft projects:
- Flat net bookings year-on-year
- Break-even operating income
- Negative free cash flow exceeding €100 million
- New organizational structure announcement by year-end
- Major game releases pushed to FY 2026-27 and FY 2027-28
The company’s net debt stands at €885 million, down from €1.4 billion in September.
Ubisoft’s player base remains stable:
- Assassin’s Creed and Rainbow Six: 30 million unique active players each
- Far Cry: 20 million unique active players
- Total portfolio: Over 100 million unique active players in FY2024-25
The company plans to release a new “Prince of Persia” game, strategy game “Anno 117: Pax Romana,” and mobile versions of “Rainbow Six” and “The Division” in the coming fiscal year.