Shares of Ubisoft (UBSFY (OTC:UBSFY)) tumbled Friday after the company reported its latest quarterly earnings, disappointing investors.
The stock fell by more than 14% despite the company delivering FY1Q25 net bookings of €290, above the guidance of €275M. However, analysts noted that the company left FY25 guidance unchanged as Rainbow Six Mobile and The Division Resurgence delays shifted outside the FY25 slate.
Nevertheless, the company described its first quarter as a "solid start to the year with Q1 net bookings ahead of target."
Yves Guillemot, Co-Founder and Chief Executive Officer of Ubisoft, said: "In a selective market, we delivered a solid start to the year with net bookings above target, reaffirming that we are on the right track."
Analysts added that the XDefiant launch exceeded expectations, reaching 10 million players in the first two weeks and seeing strong Average Revenue per Session Day.
"Our focus turns to the upcoming Star Wars Outlaws launch (8/30) and Assassin's Creed Shadows (11/15) as UBI's premier FY25 launches," added the firm. "Fine-tuning forward estimates on game launch timing shifts. Target price remains unchanged on this sales-only 1Q25 update."
Meanwhile, analysts at Citi said Ubisoft delivered a set of 1Q net bookings that are in line with consensus expectations (albeit ahead of guidance) and issued a 2Q guide that is below expectations.
"Coupled with the pushing back of two key titles to FY25, the scene is set for the update to be received poorly," said Citi. "In mitigation, though, [the] performance of XDefiant is encouraging, and the game delays may be linked to growing confidence on the outlook for Star Wars and Assassin’s Creed."
Overall, Citi said that with no change expected to consensus EPS, improving revenue momentum, and discounted valuation, they are staying constructive on the stock, maintaining a Buy rating and €45 target.