UBISOFT Entertainment (UBI) AI Stock Analysis

• Market Cap: €1.23B
• Dividend Yield: N/A
• Average Volume (3M): 477.73K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.84
• Revenue Growth: -17.46%
• EPS Growth: -203.48%
• Country: FR
• Employees: 18,666
• Sector: Technology
• Sector Strength: 85
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 1.02
• Shares Outstanding: 132,598,650
• 10 Day Avg. Volume: 366,577
• 30 Day Avg. Volume: 477,730
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €11.50
• Price Target Upside: 26.51% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

• Rating: 47 Neutral
• Price Target: €9.00 ▼(-0.99% Downside)

Ubisoft's overall stock score is primarily impacted by its financial performance, which is under pressure due to declining revenues and profitability issues. The technical analysis provides mixed signals, with no clear momentum direction. The valuation is unattractive due to a negative P/E ratio and lack of dividend yield. These factors collectively result in a below-average stock score.

Positive Factors

Guidance

The above-consensus 2Q guidance was €450m, 15% ahead of consensus.

New Game Release

The launch of Assassin’s Creed Shadows exceeded expectations with strong engagement and monetization, offering a potential multi-quarter tailwind.

Strategic Transaction

The Tencent-backed subsidiary transaction is set to fully deleverage Ubisoft and strengthen liquidity, providing strategic flexibility amid its ongoing portfolio transformation.

Negative Factors

Earnings Performance

Ubisoft reported Q1 net bookings of €282M, below the €310M target and down 2.9% YoY, driven by a weaker than expected showing from Rainbow Six Siege, delayed B2B revenues now expected in Q2, and FX headwinds.

Execution Risk

Execution risk remains elevated given uncertainty around leadership, capital control, and long-term governance.

Operational Control

The presence of Charlie Guillemot suggests that the family intends to retain effective operational control of the company and associated assets for the foreseeable future, which is viewed as a negative given the series of missteps over the last half-dozen or so years.

UBISOFT Entertainment Business Overview & Revenue Model

Company Description

Ubisoft Entertainment SA produce, publishes, and distributes video games for consoles, PC, smartphones, and tablets in both physical and digital formats in Europe, North America, and internationally. The company designs and develops software, including scenarios, animation, gameplay, layouts, and game rules, as well as develops design tools and game engines. It is also involved in the development in the area of online and mobile gaming; and film business. The company was incorporated in 1986 and is headquartered in Saint-Mandé, France.

How the Company Makes Money

UBISOFT generates revenue through multiple streams, primarily by selling video games and downloadable content (DLC) for its titles. Game sales occur through both physical retail and digital distribution platforms, such as Ubisoft's own Uplay store and third-party platforms like Steam and the Epic Games Store. In addition to traditional game sales, UBI focuses on monetizing its franchises through in-game purchases, subscriptions, and season passes, which provide players with additional content and experiences beyond the base game. The company also benefits from partnerships with console manufacturers and collaborations with other developers, enhancing its market reach and revenue potential. Furthermore, UBI invests in live services and esports initiatives, creating ongoing revenue opportunities through player engagement and competitive gaming events.

UBISOFT Entertainment Financial Statement Overview

Summary

Ubisoft faces significant financial challenges, with declining revenues and profitability issues impacting its income statement. The balance sheet shows high leverage, posing financial risks, while cash flow generation is weak. The company must focus on improving operational efficiency, managing debt, and enhancing cash flow to stabilize its financial position.

Income Statement

Ubisoft's income statement shows significant volatility. The company experienced a revenue decline of 11.12% in the most recent year, indicating challenges in maintaining sales momentum. Gross profit margins remain strong at 89.33%, but the net profit margin is negative at -8.37%, reflecting operational inefficiencies and losses. The EBIT margin is also negative, suggesting struggles in core operations. Despite a healthy EBITDA margin of 35.29%, the overall profitability is concerning.

Balance Sheet

Ubisoft's balance sheet reveals a high debt-to-equity ratio of 1.21, indicating significant leverage and potential financial risk. The return on equity is negative at -8.86%, highlighting inefficiencies in generating returns for shareholders. However, the equity ratio is reasonable, suggesting a balanced asset structure. The company needs to manage its debt levels to improve financial stability.

Cash Flow

The cash flow statement shows a concerning trend with a significant decline in free cash flow growth at -78.54%. The operating cash flow to net income ratio is 0.17, indicating challenges in converting income into cash. Although the free cash flow to net income ratio is 0.75, the overall cash flow position is weak, necessitating improvements in cash generation and management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.90B	1.90B	2.30B	1.81B	2.13B	2.22B
Gross Profit	1.34B	1.70B	2.10B	370.10M	1.27B	1.35B
EBITDA	412.50M	670.30M	1.11B	667.00M	932.50M	948.10M
Net Income	-159.00M	-159.00M	157.80M	-494.20M	79.10M	103.10M
Balance Sheet
Total Assets	4.70B	4.70B	5.12B	4.67B	4.96B	4.88B
Cash, Cash Equivalents and Short-Term Investments	990.00M	990.00M	1.21B	1.49B	1.45B	1.87B
Total Debt	2.17B	2.17B	2.51B	2.46B	2.07B	2.09B
Total Liabilities	2.90B	2.90B	3.24B	3.19B	3.15B	3.22B
Stockholders Equity	1.79B	1.79B	1.88B	1.48B	1.81B	1.66B
Cash Flow
Free Cash Flow	959.80M	126.90M	-465.60M	-380.70M	-240.90M	107.90M
Operating Cash Flow	1.01B	168.80M	537.60M	689.60M	705.70M	957.90M
Investing Cash Flow	-846.00M	-49.00M	-1.01B	-1.11B	-1.01B	-868.20M
Financing Cash Flow	-343.50M	-300.40M	204.70M	543.60M	98.60M	463.80M

UBISOFT Entertainment Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.09
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:UBI, the sentiment is Negative. The current price of 9.09 is below the 20-day moving average (MA) of 9.16, below the 50-day MA of 9.24, and below the 200-day MA of 10.89, indicating a bearish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 46.04 is Neutral, neither overbought nor oversold. The STOCH value of 35.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:UBI.

UBISOFT Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$35.62B	7.50	-10.94%	1.87%	8.86%	-10.27%
UBI	47 Neutral	€1.23B	―	-8.66%	―	-17.46%	-203.48%
0KUV	―	€80.04M	―	-514.29%	―	―	―
0HF	―	€193.63M	8.92	13.78%	―	―	―
GUL	―	€77.70M	66.50	1.17%	―	―	―
RFV	―	€11.89M	―	-74.48%	―	―	―
4AW	―	€88.52M	3.05	-0.49%	―	―	―