Ubisoft Entertainment is sinking in U.S. trading - ( OTCPK:UBSFY ) -10% , ( OTCPK:UBSFF ) -10.7% - after the videogame maker held a call discussing new measures and updated financial targets .
The moves include increasing expected writedowns to €500M (about $537M) and canceling three more unannounced projects, on top of four it had already announced last July.
Shares had closed up 0.3% Wednesday in Paris.
Despite some achievements in building recurring revenue, Ubisoft is "facing major challenges as the industry continues to shift towards mega-brands and long-lasting titles than can reach players across the globe, across platforms and business models," the company said.
It had planned to adapt its strongest franchise (mainly Assassin's Creed, Far Cry, and its Tom Clancy games) to a live-services model. "However, the games from this investment phase have yet to be released, while our recent launches have not performed as well as expected."
Along with the writedown and cancellation, it plans to cut nonvariable costs by more than €200M over the next two years, through "targeted restructuring, divesting some non-core assets and usual natural attrition."
“We are clearly disappointed by our recent performance. We are facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending," said CEO Yves Guillemot.
He said the company was "surprised by Mario + Rabbids: Sparks of Hope underperformance in the final weeks of 2022 and early January."
It's also delaying the release of Skull and Bones to "early 2023-24."
The company cut its Q3 net bookings target to €725M from €830M, and expects full-year net bookings down more than 10% year-over-year, vs. prior expectations for 10%-plus growth. It sees non-IFRS operating income at -€500M, vs. a previous gain of €400M.
And it's introducing a 2023-24 non-IFRS operating income targtet of €400M. It says the balance sheet is strong, with €1.5B in cash and equivalents after reimbursing a €500M bond expiring at the end of January.
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Ubisoft stocks dip as game maker increases writedowns, slashes guidance