Q1 21/22

Jul 20, 2021

Earnings release

Welcome everyone and thank you for joining the call today. This was another very busy quarter for Ubisoft. We continued to focus heavily on the strongest brands and technologies, while bringing further evolutions to our organization to since the industry's biggest opportunities. Ubisoft Forward offered a glimpse at the extensive premium lineup and our teams are working on for the coming months years. Along with our investment in free to play, This amazing content is intended to significantly grow our audience as well as recurring revenues and deliver strong return on investment. Ubisoft has proven time and time again its capacity to successfully and turned new markets and segments in which it initially lacked expertise. 15 years ago, we learned new skills and ultimately became one of the leaders in open world games with Assassin's Creed and Far Cry among the industry's most successful franchises. 10 years ago, we underwent another round of significant investments to become one of the best operators of live services with the division Rainbow 6, Ghost Recon, For Honor and the Crew. Additionally, Over the prior console cycle, we created 5 successful new IPs in RPG, Action Adventure, PVP Combat, driving and strategy, while significantly increasing our exposure to the shooter segment. We also successfully revamped 3 franchises. All these results in audience and engagement KPIs growing respectively 5 and 9 times over the past 8 years, with one of the deepest and most diversified portfolios in the industry. As a consequence, we delivered massive return on investment and shareholders value over that timeframe, significantly outperforming all major stock market indices. Our new investment phase initiated 2 years ago is the natural evolution of our commitment to build quality and depth in our portfolio to the benefits of our players. This will ultimately lead to bigger audiences and more recurring revenues. First, around 80% of our current investments are targeted at significantly expanding our premium offering by growing our biggest existing franchises, by building new IPs with a focus on player engagement and social interactions and by adding blockbuster licensed entertainment brands to our portfolio. 2nd, around 20% of our current investments are targeted as free to play to expand our brands' universes and brings them to a wider audience across all platforms including mobile, across all geographies including emerging markets and with multiplayer titles designed to be evergreen. Each of these premium and free to play projects It's built to maximize impact on its respective brands universe. With Ubisoft Connect and our direct to player ecosystem, we aim to leverage the depth and diversity of this portfolio to maximize traffic undiscoverability, social interactions and engagements and ultimately value for our players. Overall, our assets have never been so strong in an industry that continues to offer great prospects. The combination of our high quality brands, technology and exceptional team EDLE positioned Ubisoft to deliver over the coming years double digit top line growth as well as continued profitability progression leading to a material rise in operating income. I will now hand over the call to Frederic. Frederic? Thank you, Yves, and hello, everybody. As I mentioned last quarter, my comments are now based after the mobile reclassification. Q1 of last year saw exceptional levels of engagement following initial lockdown measures. While they were softer this quarter with MAUs of €37,000,000 across Translarna and PC, down 8% versus last year. They were up 9% versus 2 years ago, despite the fact Q1 fiscal 2020 had benefited From the record launch of Anno and from the recent releases of the Division 2 and Far Cry New Dawn. We believe this highlights our continued progress. Keeping this in mind and in order to better illustrate our underlying performance, I will also compare our Q1 financial performance to fiscal 2020. Our Q1 net bookings came out slightly ahead of our guidance at €326,000,000 down 21% year on year and slightly up versus Q1 of fiscal 2020, a solid performance considering we didn't have any meaningful new releases this year. Our back catalog was indeed up 11% versus fiscal 2020, demonstrating once again the value of our deep and diversified bench of franchises. The main contributors to performance this quarter were Assassin's Creed, Far Cry, Far Cry, Crash Re KON, Immortals, Just Dance, Rainbow 6, The Crew, the division and Wildox. I3d.net, our fast growing hosting activity, continues to perform remarkably well with revenues up sharply. Total digital net bookings reached €279,000,000 down 4% compared to Q1 fiscal 2020 and represented 86% of our total net bookings. PRI stood at €174,000,000 up 13% when compared to Q1 fiscal 2020, representing 53% of our total net bookings and mobile amounted to €41,000,000 Looking at Q2, we expect net bookings of around €340,000,000 broadly stable versus last year. Q2 will include initial physical shipments of IFRS 6. We also confirmed our fiscal 2022 targets of single digit net booking growth and non IFRS operating income between €420,000,000 €500,000,000 Let's now look at the lineup for the upcoming year. Ubisoft Forward was a fantastic opportunity to showcase our premium content. It generated very strong engagement with record viewership. We could not be more pleased with the Far Cry 6 comeback that generated very strong community engagement and highly positive sentiment. Players praised the tropical setting, guerilla fantasy and stronger narrative push, particularly for Giancarlo Esposito's performance as antagonist entered. Also fans were thrilled to learn they will be able to play as their favorite villains for the first time. We have also revived the beloved Far Cry 3 Blood Dragon title that players will be able to experience as part of a strong season pass offering. The Far Cry franchise has gone from strength to strength and we expect Far Cry 6 to build on the strong momentum when it's released on the 7th October. Last week, we announced that we were giving more time to both Rainbow Six Extraction and Riders Republic. We presented the games at Ubisoft Forward and it provided us with useful feedback from players that informed this decision. While our games are in great shape, this additional time gives us more opportunities for players To test, play firsthand and give feedback to ensure we are bringing the best experiences to market and allowing them to reach their full potential. We believe the new release schedule will enable us to achieve that goal. This was the right decision for our players and for the long term performance of our games, while keeping our fiscal 2022 guidance unchanged. We are incredibly excited about Rambus 6 extraction and believe it will bring something new and fresh to the marketplace with the family attention and strategic gameplay that the 75,000,000 Rambo 6 players love. Relying on strong unique features, Rainbow Six Extraction is set to be a triple experience that will change the way players think about co op games. Our teams have also been Hard at work on building bridges between Extraction and Siege as we will reactivate lapsed players from Siege and recruit new players to the franchise. We have only scratched the surface of what the title will bring to the table and look forward to showing more in the upcoming months. Extraction will be released in January 2022. Riders Republic, the new massive multiplayer outdoor sports game, will launch on October 20 Players will ride through breathtaking landscapes and engage in mass races of more than 50 players as well as a range of multiplayer modes. We expect this lively social playground to be a long lasting title, and we are happy to welcome players in an upcoming beta. Also revealed was the new Just Dance, which after 2 years of strong growth, will continue to leverage the ongoing strength of the brand and switch impressive momentum. A real entertainment phenomenon, Just Dance is the number one music video game franchise of all time. Ubisoft ForWord was also an opportunity to present RockSmith Plus, an evolution of the successful electric guitar and bass learning software. We expect this new subscription service to be a solid addition to our long term recurring revenue streams. And finally, We showcased our commitment to strong post launch content for our major franchises, including Assassin's Creed, Rainbow 6 Siege, Pro Lala, For Honor and The Crew. Speaking of Assassin's Creed, the franchise has been evolving over the years toward a live service model that has been hugely successful among gamers, with Odyssey and Halala shattering records and significantly expanding the brand's recurring profile. We will continue to deliver powerful assessing Content over the coming months years, starting with an ambitious post launch plan for Halala, including the siege of Paris expansion coming this summer, The release of the Discovery Tour, Viking Age and a very ambitious and surprising second year of content for the first time in the franchise's history. Regarding the project called Name Infinity, we have exciting plans for the future that have the potential to significantly expand both the brand's rich and recurring profile, while holding true to Assasinski legacy of rich narrative experiences. It is in the early stages of development, and we will share more details in due time. During Ubisoft Forward, we also unveiled 2 games set to release in fiscal 2023 that were met with a very enthusiastic response. Mario plus Sparks of Hope will build on the success of the first Opus, renewing our strong partnership with Nintendo and leveraging the massive switch installed base. For its part, Avatar: Frontiers of Panthera was a remarkable showcase combining Ubisoft recognized capacity to create living and breathing worlds with the latest iteration of the Snowdrop engine. As we're on track for our fiscal 2023 release is Cullen Bones, whose production is just past alpha, a key phase of the game's development. We can't wait to show you more. Let's now turn to the free to play side of our lineup. Our ambition is clear. We want to grow our audiences and recurring revenues by widening our brand's top of the funnel. We revealed Tom Clancy's X Defiant yesterday, A first person shooter blending fast paced 6 versus 6 arena combat with faction based abilities. It's an accessible game whether players want to have fun with their friends or play competitively. This new take on the free to play shooter segment associates Realistic gameplay with close quarter combats and personalized play style. Testing phases of all our free to play games are ongoing, and we will communicate additional information to our fans in due time with dedicated standalone events. As it is standard industry practice for free to play games, Release dates are ultimately a function of the outcome of the successive testing phases. As of today, we expect to release the division Heartland and Royal Champion in fiscal 2022 as well as the soft launch of our 1st mobile game in partnership with Tencent. For its part, while X defined my launch in fiscal 2022, It is not factored in our guidance. I would also like to highlight that 3 of our games have been officially approved in China, Rabbids Party, Mario plus Rabbids Kingdom Battle and The Division 2. The approval of The Division 2 on PC bodes well for our partnership with Tencent. We are now working with them to ensure that the gaming experience will be great for the Chinese community once the game is launched. We are also looking forward to Mario plus Kingdom Battle as well as Rabbit's Party, a game specifically conceived for the Chinese market. Both will leverage the growing Switch installed base in China. Beyond our games, I also wanted to highlight other positive news. We received great ESG ratings from Sustainalytics that ranks Ubisoft among the top 6% of the more than 14,000 companies they cover. This is a testimony to the effective execution of Ubisoft's ambitious ESG strategy and I want our long term commitment to having a global positive impact. This follows other solid ratings over the past year, notably from ISS, Sam's Corporate Sustainability Assessment and the Financial Times Diversity Index. Similarly, in the 2021 Glazdur ranking based on employee ratings, Yves Guillemot was ranked among the top 15 CEOs in France. Before handing the call back to Yves for his conclusion, I would like Come back to our fiscal 2021 performance. Indeed, we have had regular questions on the profitability of our core business since we announced earnings last May, and we wanted to provide more granularity. If we focus only on our premium business, our fiscal 2021 non IFRS operating income margin exceeded 25 percent versus the group's 21% we reported. And our cash flow from operations was a multiple of the reported €65,000,000 The digital transformation, the expansion of our portfolio of our strong player engagement and our increasingly recurring business have delivered strong profitability progression, confirming our strong return on investment track record. While we do not plan to share this level of detail in the future, we believe this offers useful insights into the organic value creation of our business. I now hand over the call back to Yves. Thank you, Frederic. Q1 again demonstrated the benefits of having a much more recurring business, significantly less dependent on the performance of any given game. 1 of our key focus is to continue building that level of depth and Recurrence over the coming years. We are also convinced of the strategic value of reinvesting a portion of our highly profitable and cash generated premium core business into free to play. This major segment indeed offered exciting growth and value creation opportunities for Ubisoft with an attractive risk reward profile. Before answering your question, I would like to highlight 3 key recent events. 1st and in line with our ambitious ESG strategy that Frederic just mentioned. We recently announced our commitment to actively contribute to global carbon neutrality. In 2020, Ubisoft made voluntary contributions that covered an amount of carbon dioxide equal to the emission resulting from our operations. Medium term, our objective is to decarbonize our direct operations with the goal of reducing carbon emissions per employee by 8.8% by the end of 2023. Longer term, we are working on a carbon footprint reduction plan for 2,030, in line with the goal of limiting global warming to +1.5 degrees Celsius, which will be submitted to the science based target initiative for validation. As a major media and entertainment company, it is important that we continue increasing our positive impact on the planet. 2nd, in line with the evolution highlighted in May, we continue to adapt our organization to ensure that Ubisoft is well positioned to meaningfully seize the opportunities I described in my introduction. As such, we recently announced the appointment of Guymette Piccard as VP of Production Technology. In this newly Created role, Guymet will lead a team of transversal experts to boost the strategy and supervision of all aspects of Ubisoft Production Technologies. Additionally, from a publishing standpoint, we are moving from a region based to a global organization and we set up a dedicated team overseeing our direct to player initiatives with very ambitious development goals and an increased focus on our biggest brands. And lastly, I wanted to thank our shareholders for their Steady support at our latest Annual General Meeting held earlier this month. We are now ready to take your questions. Thank Please note that the number of questions by analysts is limited to 2. We'll now take the first question from Nicholas Langley, Exane BNP. Please go ahead. Yes. Hello, everyone. I've got 2 questions, please. The first one on asset intensity. So can you tell us a bit more about the Business model you want to retain for this project? And also, should we expect AC Infinity to coexist with the traditional single player experience of That's great. Hope to replace it at the time. And second question on the Chinese approval for the Division 2. What Prospect do you see for the franchise in the country? Do you expect to release the game in full year 2022 or it's too early? And finally, can you update us on the number of game of pure game which are waiting for approval from the Chinese market? Thanks. Thank you. So for the Division 2, we are working with Tencent to complete the development so that it fits exactly the Chinese market. And what is interesting is that we will We're able to launch the game and also all the add ons and expansion that we created on that game. So it's going to be able to live for a long time. Now Frederic, maybe for the first question. Yes. So Hello, Nicolas. On the AC Affinity, yes, it's an exciting and ambitious project for the franchise. It will contribute to expand the audience and recurring revenue level as well as player engagement for the medium to longer term. As we said, at an early stage of development, so we cannot say much more, but we are happy to see talents among the best of the industry joining forces from the Montreal and Quebec Studios, that's great news for the product and for the development of the franchise. What is important to have in mind is that we Plan to come with very strong and powerful content every year in the short, medium and longer term. And We are committed to staying true to the D and A of AC, meaning that we'll come with high quality narrative experiences. For the short term, we as you know, focusing on delivering the most ambitious, biggest post launch program we've ever had on the franchise for 2 years. We are pushing the live service model to a level that allows VALALA to be the best performer ever for the franchise to date. And we will be coming with exciting and new news and surprising, including for the 2nd year of content. In terms of the third question, The update on the number of games waiting for Chinese approval, we still have Rainbow Six Siege that is in the backlog. So but we can't say more on that stage. We have other games in the pipeline as well, but we have not unveiled them yet. Operator? Thank you. We'll now take the next question from Charles Scottie at Kepler. Please go ahead. Hi, everyone. My first question, I'm sorry I missed your point on the Far Cry 6 shipment. Does your Q2 guidance include any contribution from Far Cry 6? And my second question, if we take in To consideration your Q2 and full year guidance, this suggests net bookings in excess of 1.6 Beyond with only 2 AAA against instead of 3 last year and more back end loaded release schedule. So to what extent your full year target rely on the performance of the 2 expected free to play titles? Thank you. Yes. Hello, Jean Louis. So in terms of the Q2, yes, it will include some pre shipments for Far Cry 6. In terms of the perspective for the second half of the year, we are indeed relying on the growth versus last year as we are coming with a very strong lineup. Far Cry 6, both on the premium and free to play games. Even if we said that we took reasonable assumptions on our 2 free to play games. Far Cry 6 comes as a must have game. It's going to be one of the biggest game of the industry This year remembering it was the 4th biggest title in 2018 and we leveraged strong momentum, the Far Cry 6 I thought we'll leverage a strong momentum from the franchise that we've had iteration after iteration and we are coming also with a very strong post launch program. Rambosix Extraction is expected to be a bigger seller than Wazhoc Legion last year. Riders Republic is expected Yes, at least as big as Immortals Fenix Rising last year. And Just Dance 2022 is expected to be bigger than Just Dance 2021 as we Enjoy a strong momentum, not only from the franchise itself, strong on TikTok, but also from the growing installed base of Offswitch. As for the back catalog, we expect a bigger post launch program in the second half than last year across Assassin's Creed, Rainbow 6 Siege, For Honor, the crew, and Gas Recon, the Division 2 and we will also have Prince of Persia coming as a back catalog as it is a remaster that we will leverage the nostalgia that we've had from the sense of time. We'll now take the next question from Omar Saik at Morgan Stanley. Please go ahead. Operator? I'm very sorry, Omar. We are struggling to hear you. We will now take the next question from Brian Fitzgerald. Please go ahead. Thanks, I've got a couple. I want to know maybe if you could elaborate a little bit on how extraction will redefine co op play. Should we think about Rainbow 6 Siege is an evergreen PVP game at this point alongside extraction. And do you expect 6 Siege to be a bigger game than extraction For the foreseeable future, it's your 2nd biggest title. So it's an important change or wrinkle to the product strategy. And then What power up? Yes. So Extraction is an amazing corp and PVA experience. It will borrow the tension, the intensity, the tactical, strategic element of Siege. So it has no equivalent in the coop Market today, and that's why we are pleased to already leverage the extra time to optimize the potential by launch. By at forward event, we only showed 1 game mode, only a fraction of the promise and of the content and game mode that will come at launch. So That will be a big game important for the expansion of the Rambo 6 franchise. As we said, we are building good bridges between siege and extraction as we will reactivate reengage lapsed players from Siege, but we will also recruit new players for the whole franchise and that will benefit also to some extent to Siege. Rainbow Six Siege has been for 6 years in the market. It's one of the biggest shooter Competitive shooter game today, we've just crossed the 75,000,000 player mark. We've seen a very strong growth in viewership on Twitter versus last year. The 6th Invitational event also saw record viewership. So we see that it confirmed very strong traction for that game. And yes, CIGI is expected to be a long game, a long lifetime game is therefore many years to come. We continue working on increasing, intensifying the frequency of content drop. We continue expanding the value of The battle pass for players. And again, we're building strong synergies as well as with extraction. Got it. And then the follow-up was just kind of some recent announcements in the space, in the industry around Steam Deck, we assume that's just another distribution channel, it's a platform. That would be incremental for new publishers in the industry. How important is cross platform play for you guys going forward? And then what's your if you have any point of view on Netflix It's machinations to enter the gaming business. Thanks. Thank you. It's We're happy to see a steam deck coming to the industry. It shows that the continuous flow of very innovative new hardware coming to the market. And so we will look and see how big it becomes. But if it's big, we will have we'll be able to put our games on it. Now Netflix is also another big actor coming in the industry and that's really good for the industry. We think that it's going to put again emphasis on the fact that content is the most important thing in the industry. And what we see is Netflix is very dynamic, And so they we expect them to have a good success. Thank you. We'll now take the next question from Mike Ng at Goldman Sachs. Please go ahead. Hi, thank you very much for the question. My first question is just on Assassin's Creed. How does the 2nd year of content for Valhalla and Assassin's Creed Infinity, change your release strategy for Assassin's Creed. Should we still be Expecting a release every other year? And then I have a quick follow-up. Thank you. Hello, Mike. Yes, as I said, Infinity is at an early stage of development. What we can say at this stage is that we plan to come with a powerful content program every year In the short, medium and longer term, at this stage, we can say much more except that we will have Very important percent for them for Valala for 2 years. And yes, there is still much to come on this content delivery. Great. Thanks. And I just wanted to follow-up on the comment that fiscal 2021 EBIT margins It would have been, I think you said 25% for premium only. What were some of the investments in those non premium games? I guess Hyperscape comes to mind, but were there other non premium investments That you were speaking to? Thank you very much. Yes, Mike, I mentioned that on our premium business It was exceeding 25%. Yes, so we've been investing in free to play games, Ice Perscape being one of them, But across all platforms, so that includes console PC and also mobile games. Thank you. We'll now take the next question From Omar Saque, Morgan Stanley. Please go ahead, sir. Hi, there. Can you guys hear me now? Yes. Great. Super helpful. So I've got a couple of questions if I could. First of all, maybe one for Patrick. Could you just confirm that the guidance that you've got for the year includes Same assumptions of game releases as you gave you initially gave us guidance in May. So you haven't sort of included any other games in the slate. So it's truly like for like. That's the first question. And then secondly, on free to play, we talked A little bit on this call about some of the things you're looking for from the investments. So you talked about recurring revenues, you talked about High ROIs, winding top of the funnel. How should we measure success? What data points are you going to be able to give us, which will help us judge whether Heartland, the Next define and other free deposit you may launch are doing what you expect them to do. Thanks very much. Yes, Omar. So yes, we confirm the guidance with the same elements in terms of releases than what we had in May. So we didn't add any New release versus the assumption of May. On free to play, the way we should be measuring Success first will be, of course, audience impact, I called the portfolio and that will also be we will be also following carefully About engagements as well as the percentage of recurring revenues, so we expect PRI to continue growing at an accelerated phase. We expect, of course, that free to play game has a standard base as well as for the whole brand to which they will contribute We'll participate to continue increasing the financial performance of the company. So can I assume then Frederic on that, that you should assume that the total number of users for the game for say, for example, the division should expand post at some point post the launch of Heartland, for example? That's the expectation because we expect to come with a business model that will be more accessible to more people That will allow us also to accelerate our growth in the emerging markets in a more decisive way than we have ever done. And we will be bridging building bridges between premium and free to play games. So that should be allowing us to create really a virtuous circle with players enjoying different experiences across different game modes and business model. And of course, beyond Heartland, we also mentioned mobile games. So going into the mobile platform for our biggest franchises is a fantastic opportunity. Great. Thank you very much. That's very clear. We'll now take the next question from Jamie Bass at Berenberg. Please go ahead. Hi there. Two questions from me, please. The first one, so on the Q2 guidance, normally we're seeing A drop in backpack catalog performance, but you've got an increase in the outlook. So is that mainly coming from the DLC in Siege of Paris? Second question, with the game delays and you still reiterating your full year target, does that imply there was a bit of caution in the original numbers The delay for Rainbow Six going to the Q4? Yes. So in terms of the Q2 guidance, so there is no change in outlook, but it clearly includes the release of the DLC of And we will recognize some of the season pass into the quarter. In terms of the impact Of the delay of Rainbow Six Extraction and Riders Republic, we had taken some flexibility in our initial estimates. Each Games delay is not meaningful relative to the overall guidance. That's why we confirmed the guidance as it was. We are not far from shipping these products. So it has no meaningful impact from the cost point of view overall. And we are leveraging a strong opportunity to maximize the audience by launch time. Great. Thank you. You're welcome. We'll now take the next question from Charles Lewis Pointerde of TEP. Please go ahead. Hello, everyone. Just one more question for me. I was wondering if there's some shortage of PlayStation 5 and other next gen consoles We'll continue. Would you consider some new some additional delays with your being launches Next year or is it already a bit included in your plans? It is included in our plans. What we see is that step by step they are finding ways to deliver the machines. It's difficult, but It is steady. So we think they will be able to bring the number expected this year and it Looks like they are coming with a big number for next year. Okay. Thank you. We'll now take the next question from Ken Romp from Jefferies. Please go ahead. Good evening, gentlemen. Two questions. If I could start Just looking again at that comment that you made, which was very helpful about last year's margin Would have been over 25% for premium games. You mentioned that in a sense what wasn't included and what was there for holding down the margin, One thing was Hyperscape, but you also mentioned mobile. Are we to take it from that, that mobile was either loss making or at least Significantly below that margin. I wasn't thinking that it was a loss making business. So yes, hello, Ken. So I was talking about free to play overall, not specifically mobile itself. What we're saying is that we are happy to enjoy such a high level of profitability from our Core premium business as well as strong generation from cash to help us and allow us actually to finance A very strong strategic opportunity for us to grow free to play because this is a fantastic opportunity to expand our premium Franchises into free to play, it's naturally we are in the learning phase. So it's we can lose money on some projects As long as we maximize and accelerate learning, which is what we're doing and that's why we're coming with such a strong lineup as you can see. Okay. Well, maybe then my second question kind of follows on from that, which is, I think Hyperscape was a very interesting game and I'm sure a useful Learning experience. We're now moving into free to play games, in part based on your core IPs, so Heartland and then X Defiant. Those 2 do overlap a bit in that they both contain elements from the division, for instance. Do you feel there's kind of enough of an audience for 2 different kind of games, both free to play, Partly in that universe? And should we kind of consider these still in some sense experimental? Obviously, every game can See it or fail, but is this kind of multiple games will be experimented with and we'll see what happens? Or You would aim that both of these would be successful in what we may. What's important to know is that on Exifient, You see first some division elements, but as it is a Tom Clancy experience, You are going to see lots of diversity in the content. So it can look like those games are close, but they are not going to be close at all. Actually, we're Ken, we're talking about the big and fast growing market. And for of course, we haven't said much about So you'll see later when we unveil more content, but they are coming with very different experiences and gameplay propositions. What is very interesting with X Defiance is that we come with a unique proposition in the free to play space, combining realistic Gunplay, faction based abilities, the possibility with classes to offer great personalization, customization, flexibility on the fly. So the xDefine proposition is unique. You'll see later to what extent Heartland has also some very specific features. Okay. Can I be permitted a final fanboy question? Does the mention of Beyond Good and Evil Imply that it's appearing over the horizon for maybe FY 2024? That's a good try, Ken. We have progressed well with the Beyond Good and Evil 2, but it's too early to tell you more at this stage. Sure. I'm waiting. I'm waiting. Thank you very much. Thanks for your patience. We'll now take the next question from Matthew Walker at Credit Suisse. Please go ahead. Thanks very much. Good evening, everyone. Just two questions. The first one, the first can you hear me all right? Yes, yes, Patrick. Thanks. The first question sort of goes back to an earlier one, which was, does Infinity Mean that you'll no longer be we should not expect a premium Assassin's Creed came in FY 2023, as I think probably most people are expecting, because it's basically Infinity as a Affinity is a sort of live services permanent replacement for any premium Assassin's Creed games. And the second question is, obviously, you're pumping all this money into lots of new projects, lots of interesting ideas, Free to play, but the market doesn't seem to be giving you value for all these different projects which are going on. At the same time, you're not doing M and A yourself. But I'm just kind of wondering where this ends from a strategic perspective because We're seeing a lot of consolidation in the industry, but not much action around Ubisoft because the market is not giving you value for your assets In the R and D? Yes, in fact, we are investing in new IPs and free to play, and we think it's going to grow to be The basis of the growth of the next few years, we think it's the best place to put our money, especially because The M and A multiples are really high at the moment. So those investments are going for us to be the most effective ones. It's not yet taken by the market because they need to see what we are creating, but we are optimistic on the fact that we will be able to surprise with good quality games that will be able to be additional to one to the other to build a big a large growth in the next few years, growth and growth of profitability as well. Yes, Matthew, We started the investment into Free2Play 2 years ago. That's the decision that we took 3 years ago. So it hasn't started to deliver yet, but we expect that to be a meaningful contributor on top of pursuing our investment into premium in our premium business that still a fantastic Opportunity to grow and that's why we believe that we'd be growing double digit year on year in the coming years that should Lead to a material rise in operating income in the coming years. As for AC Infinity, forgive me if I repeat myself, but yes, we as I said, we It's Infinity in the early stage of development. And in the meantime, we are planning to come with a very powerful Content program every year with high quality narrative experiences and that's all we can say For now, with a big focus in pushing Varela to even higher levels for the 2 years post launch. Okay. Thanks and good evening. Thank you. We will now take the next question from Nick Dempsey at Barclays. Please go ahead. Yes. Good evening, guys. I've got three questions. So first of all, I wonder if you could just provide a bit more color on the reasons for the internal reorganization that you And anything around the cost of that reorganization? Second one, at one point you were planning to launch Watch Dogs Legion and Rainbow Six extraction pretty close to each other. At that stage, were you already expecting extraction to be the larger game or have you kind of changed It was interesting that you made that comment about 2 of them. And the third question, I guess, for your investment in free to play, it's It's probably fair to say we won't be seeing the full benefit in revenues for 18 months to 3 years. I mean, if we look back 3 years ago, The industry's approach to free to play from consumer point of view is quite different to how it is now. How much confidence You have that you won't be missing another change in the industry by the time those assets come to fruition. So first on your first question, we feel that it was important to align all the countries now that The market is a lot more global. So that's why we have now one head for distribution and marketing and it's helping to have also a smoother communication with production. So this is going to help Be more agile and we still in taking care of each individual market. So and on top, we were able to create this direct to player group but it's going also to grow our direct to player business that will help us to be close to players and understand exactly what they want and push all of our games. So to your second question, Nick, in terms of Rambo 6 Extraction, yes, we see it as Bigger game than the WarLock Legion is coming as with a different business model as it's a multiplayer co op type of game and it plays a key role next To see, so it's really a different model as than World Talk Legion, but yes, we see it as a bigger seller. In terms of free to play, we know that it's a business where we are need to acquire the key skills and To master success factors, we are learning fast, the same way as we had done for live services. And as you can see, we are coming with Comparing lineup. We know that the hit ratio on free to play is not 100%. So We want to take the time to optimize the KPIs, make sure that we are coming with accessible game with long retention, And we're confident that we have all it takes to create very meaningful value in the medium term. And the best technology as well. Yes, very strong technology. Last year, we could see that Envil was a very strong Engine for free to play game for hyperscapes. So that's a good capability that we have and with xDefine, we're coming with Snowdrop. That's also a very powerful engine for that type of FPS. Thank you, guys. Thank you. That concludes today's question and answer session. Mr. Gilmore, I'd like to turn the conference back to you. Thank you so much and thank you for your questions. Have a good day or a good evening. And have a good summer. And a good summer, yes.