Ubisoft released their 3rd quarter results today and I’m impressed with the numbers. At 725 mil Euros in sales, the company outperformed their already raised expectations of 700 mil Euros. The lead game of the quarter Assassins Creed has received lots of favourable reviews and Ubisoft’s dedication to quality over the recent past is definitely now producing lots of fruit!
The company’s valuation is currently at just over 7 billion Euros, with the expected estimate for Non-IFRS operating income for 2018-2019 at 440 mil euro.
And you know what’s so impressive about all of this? The company still has a lot of room to grow.
Take a look at the company’s investor slideshow HERE
Lot’s of things stand out from the pack:
1. The video game market is expected to continue to expand. Not much insight here, we all knew this, but what hit me was how much of a leader gaming is in the entertainment industry in terms of revenue generation. The funny thing is that gaming companies still have so many markets that are untapped as yet! Think about it; once virtual reality takes hold, gaming companies are poised to benefit MASSIVELY; Ubisoft being one of them.
2. The shareholder return for the past 5 years was almost 800%; 8 times your original investment, not bad eh! This outperforms Take-Two, Activision Blizzard & EA. Will it continue? There no reason to think it wouldn’t
3. Ubisoft owns most of the IP of their AAA titles; very impressive and provides comfort that future revenue generation is based on company owned IP
4. The percent recurring investment (PRI) at Ubisoft is only 18% in comparison to other major gaming companies where the PRI stands at double this %. If Ubisoft had to increase its shared of PRI; profitability would definitely increase.
5. The company just took out a massive 500mln Euro bond. This money will be used for future investment and possible acquisitions.
Given all of these points, I really think Ubisoft is poised to continue growing and that it’s a solid pick.
However, as I always say, do your own research!:)
