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Ubisoft (UBSFY)
OTHER OTC:UBSFY
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UBISOFT Entertainment
(OTC:UBSFY)
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Rating:46Neutral
Price Target:
$1.00
▼(-35.06% Downside)
Action:ReiteratedDate:01/23/26
The score is held down primarily by weak financial performance (revenue decline, losses, and strained cash flow) and a bearish technical trend (price below all key moving averages with negative MACD). The earnings call was a relative positive with bookings outperformance and deleveraging support from the Tencent cash injection, but ongoing negative free cash flow outlook and operational risks keep the overall score low.
Positive Factors
Strong franchise engagement
High and rising engagement in Assassin's Creed (211m session days, +35%) indicates durable player retention and live-service potential. Sustained session growth supports recurring monetization (DLC, season passes, in‑game purchases) and reduces reliance on one‑time releases over multiple quarters.
Improving margins and operating income
A meaningful gross margin uplift and a return to positive non‑IFRS operating income reflect improving cost discipline and operating leverage. If sustained, these margin gains provide a structural buffer during cyclical sales periods and improve the company's ability to fund development and live‑ops from operations.
Strategic cash injection and cost program
The imminent EUR 1.16bn Tencent injection materially strengthens liquidity and reduces leverage risk, while a targeted ≥EUR 100m fixed cost savings program creates a clearer path to deleveraging. Together these structural moves improve runway for execution and reduce refinancing pressure over the medium term.
Negative Factors
Revenue decline and losses
A persistent revenue contraction (-11.12%) combined with negative net margin (-8.37%) signals structural demand or execution weaknesses. Continued top‑line declines constrain reinvestment in content and live services and make sustained improvement dependent on successful product cycles and cost discipline over several quarters.
Negative free cash flow
Material negative free cash flow (EUR -251m) undermines the company's ability to self‑finance long dev cycles and live‑service investments. Over a multi‑quarter horizon, persistent FCF deficits increase reliance on external funding or asset sales, limiting strategic flexibility and raising refinancing or covenant risk despite temporary cash injections.
Accounting restatement & covenant risk
An accounting restatement tied to revenue recognition creates audit uncertainty and has already affected leverage covenants. This structural governance and covenant pressure can restrict capital allocation, force accelerated deleveraging actions, or limit M&A and investment flexibility until accounting and covenant issues are resolved.
UBISOFT Entertainment (UBSFY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$614.49M
Dividend YieldN/A
Average Volume (3M)81.37K
Price to Earnings (P/E)―
Beta (1Y)0.53
Revenue Growth-11.04%
EPS Growth-45.92%
CountryUS
Employees18,666
SectorCommunication Services
Sector Strength97
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)-0.07
Shares Outstanding673,678,200
10 Day Avg. Volume26,427
30 Day Avg. Volume81,366
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)0.77
Price to Sales (P/S)0.73
P/FCF Ratio10.92
Enterprise Value/Market Cap3.57
Enterprise Value/Revenue1.17
Enterprise Value/Gross Profit1.53
Enterprise Value/Ebitda4.79
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)-1.69
Revenue Forecast (FY)$1.77B
UBISOFT Entertainment Business Overview & Revenue Model
Company DescriptionUbisoft 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 MoneyUbisoft generates revenue through multiple streams, primarily from game sales, both physical and digital. The sale of video games represents a significant portion of its income, with the company releasing new titles regularly. Additionally, Ubisoft monetizes its games through downloadable content (DLC), season passes, and in-game purchases, which enhance the gaming experience and provide ongoing revenue after the initial sale. The company also earns income from subscription services, such as Ubisoft+, which offers players access to a library of games for a monthly fee. Furthermore, Ubisoft collaborates with various partners for marketing and distribution, and it engages in licensing agreements that can contribute to its revenue. The growth of esports and online gaming further supports Ubisoft's earnings, as the company often hosts events and tournaments that can drive engagement and additional revenue opportunities.
UBISOFT Entertainment Earnings Call Summary
Earnings Call Date:Nov 21, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong net booking performance and strategic achievements like the Tencent partnership, alongside challenges such as Rainbow Six Siege's issues and financial restatements. Despite challenges, the strategic and financial improvements suggest a positive outlook.Q2-2026 Updates
Positive Updates
Strong Net Booking Performance
Net bookings stood at EUR 772 million for H1 FY26, up 20% year-on-year, with Q2 net bookings at EUR 491 million, up 39% year-on-year, surpassing guidance.
Strategic Partnership with Tencent
Closing of the strategic transaction with Tencent is imminent, bringing in EUR 1.16 billion of cash to strengthen financial position and enable group deleveraging.
Assassin's Creed Franchise Success
Assassin's Creed franchise showed strong performance with 211 million session days, up 35% compared to the last two years' average, and positive reception of new expansions.
Innovation in Gaming Technology
Significant strides in applying GenAI to high-value use cases and advancing player-facing generative AI applications.
Improved Financial Metrics
Gross margin increased by more than 3.5 percentage points year-on-year, and non-IFRS EBIT returned to positive at EUR 27 million, a strong improvement from the previous year's loss.
Negative Updates
Rainbow Six Siege Challenges
Despite new player acquisitions, a surge in cheating affected player activity and spending, requiring additional resources and measures to address the issue.
Cash Flow and Debt Concerns
Free cash flow was negative EUR 251 million, and non-IFRS net debt stood at EUR 1.15 billion, with cash and cash equivalents down EUR 265 million year-on-year.
Restatement of Financial Accounts
Restatement of FY25 accounts due to new auditor's position on revenue recognition under IFRS 15, impacting leverage covenant ratios.
Company Guidance
During the Ubisoft H1 Fiscal Year 2026 earnings call, the company provided guidance indicating stronger-than-expected net bookings, with figures reaching EUR 772 million for H1, up 20% year-on-year, and Q2 net bookings at EUR 491 million, surpassing guidance and increasing 39% compared to the previous year. The call highlighted the strategic transaction with Tencent, expected to inject EUR 1.16 billion in cash, aiding in deleveraging efforts. Ubisoft's cost reduction program targets at least EUR 100 million in fixed cost savings by FY '27, while the company's non-IFRS operating income returned to a positive EUR 27 million, marking a significant improvement from the previous year's EUR 250 million loss. The company projects full-year net bookings to remain stable year-on-year, despite Rainbow Six Siege facing competitive pressure, with a focus on achieving breakeven non-IFRS operating income and negative free cash flow. Ubisoft anticipates Q3 net bookings of approximately EUR 305 million, a slight year-on-year increase, driven by new releases and partnerships, with a strong cash position of around EUR 1.5 billion expected by March 2026.UBISOFT Entertainment Financial Statement Overview
Summary
Weak fundamentals: revenue declined (-11.12%) and profitability is negative (net margin -8.37%) despite very strong gross margin (89.33%). Leverage is elevated (debt-to-equity 1.21) and cash flow trends are concerning with significantly negative free cash flow growth.Income Statement
UBISOFT Entertainment's income statement shows a challenging financial performance. The company experienced a significant decline in revenue growth, with a negative growth rate of -11.12% in the latest period. Gross profit margins remain strong at 89.33%, indicating efficient cost management, but the net profit margin is negative at -8.37%, reflecting substantial losses. EBIT and EBITDA margins have also deteriorated, highlighting operational challenges.45
Neutral
Balance Sheet
The balance sheet reflects a moderate financial position. The debt-to-equity ratio is relatively high at 1.21, indicating significant leverage which could pose risks in a volatile market. Return on equity is negative, suggesting inefficiencies in generating returns for shareholders. However, the equity ratio stands at a reasonable level, providing some stability.55
Neutral
Cash Flow
Cash flow analysis reveals concerning trends. Free cash flow growth is significantly negative, and the operating cash flow to net income ratio is low, indicating challenges in converting income into cash. The free cash flow to net income ratio is positive, suggesting some ability to generate cash despite net losses, but overall cash flow performance is weak.40
Negative
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.87B | 1.90B | 2.30B | 1.81B | 2.13B | 2.22B |
| Gross Profit | 1.43B | 1.70B | 2.10B | 1.60B | 1.86B | 1.90B |
| EBITDA | 457.69M | 670.30M | 1.11B | 719.30M | 799.90M | 804.60M |
| Net Income | -71.30M | -159.00M | 157.80M | -494.20M | 79.10M | 103.10M |
Balance Sheet | ||||||
| Total Assets | 4.31B | 4.70B | 5.12B | 4.67B | 4.96B | 4.88B |
| Cash, Cash Equivalents and Short-Term Investments | 668.40M | 990.00M | 1.21B | 1.49B | 1.45B | 1.87B |
| Total Debt | 2.32B | 2.17B | 2.51B | 2.46B | 2.07B | 2.09B |
| Total Liabilities | 2.75B | 2.90B | 3.24B | 3.19B | 3.15B | 3.22B |
| Stockholders Equity | 1.56B | 1.79B | 1.88B | 1.48B | 1.81B | 1.66B |
Cash Flow | ||||||
| Free Cash Flow | 778.86M | 126.90M | -465.60M | -425.80M | -282.20M | 107.90M |
| Operating Cash Flow | 817.29M | 168.80M | 537.60M | -354.20M | -191.60M | 957.90M |
| Investing Cash Flow | -772.30M | -49.00M | -1.01B | -107.90M | -152.00M | -868.20M |
| Financing Cash Flow | -269.60M | -300.40M | 204.70M | 588.60M | 139.90M | 463.80M |
UBISOFT Entertainment Technical Analysis
Negative
1.54
Price Trends
1.22
Negative
1.45
Negative
1.81
Negative
Market Momentum
-0.07
Negative
38.56
Neutral
6.14
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UBSFY, the sentiment is Negative. The current price of 1.54 is above the 20-day moving average (MA) of 0.99, above the 50-day MA of 1.22, and below the 200-day MA of 1.81, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 38.56 is Neutral, neither overbought nor oversold. The STOCH value of 6.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UBSFY.
UBISOFT Entertainment Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $50.36B | 145.12 | 10.03% | 0.37% | -1.45% | -11.99% | |
65 Neutral | $11.28B | 44.38 | 5.30% | ― | 16.84% | ― | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
57 Neutral | $40.19B | -126.36 | -86.22% | ― | 13.98% | -6.71% | |
57 Neutral | $47.77B | -52.47 | -345.84% | ― | 32.70% | 12.57% | |
52 Neutral | $1.05B | -7.20 | ― | 9.98% | 7.49% | -60.32% | |
46 Neutral | $614.49M | -1.97 | -4.98% | ― | -11.04% | -45.92% |
* Communication Services Sector Average
UBSFY
UBISOFT Entertainment
0.94
-1.80
-65.60%
EA
Electronic Arts
201.73
68.25
51.13%
TTWO
Take-Two
215.77
0.96
0.45%
BILI
Bilibili
27.50
5.39
24.38%
PLTK
Playtika Holding
2.74
-1.84
-40.21%
RBLX
Roblox
67.40
4.09
6.46%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.