Ubisoft Entertainment SA (UBI) Earnings Call Transcript & Summary

With our H1 earnings release, a few changes in our financial communication format. As you will have noticed, we have evolved our press release to include a large part of our traditional conference call prepared remarks. Frédérick will therefore directly start with a review of our H1 financial performance as well as comments on our targets. Yves will then conclude, and we will dive into Q&A. Your feedback on this new format is welcome, and it is set to evolve further. I will now hand over the call to Frédérick.

Thank you, Jean-Benoît, and hello, everybody. We delivered a solid performance this half with a clear outperformance in Q2 driven by the depth and the strength of our back-catalog. This semester, unique active users were up 15%, and MAUs, at 37 million, were up 9% versus 2 years ago, a more normalized comparison base. This solid performance was achieved despite the fact that, as previously mentioned, H1 fiscal '20 had benefited from the record launch of Anno and from the recent releases of The Division 2 and Far Cry New Dawn. This highlights our continued progress on building a more recurring and dependable business as well as confirming post-COVID structural gains. Keeping this in mind and in order to better illustrate our underlying performance, I will also compare our H1 financial performance to fiscal '20, and this will be done excluding the mobile reclassification. Net bookings in H1 reached EUR 718 million, down 4% year-on-year and up 6% versus fiscal '20. For its part, back-catalog is up 16% compared to fiscal '20, representing 83% of our total net bookings. Our Q2 net bookings came out well above our guidance at EUR 392 million, up 15% year-on-year and 11% versus fiscal '20. Our back-catalog was strongly up 20% versus fiscal '20, demonstrating once again the value of our deep and diversified venture franchises. Total digital net bookings reached EUR 277 million, up 10% compared to Q2 fiscal '20 and represented 70% of our total net bookings. PRI stood at EUR 175 million, up 5% when compared to Q2 fiscal '20, representing 43% of our total net bookings. And mobile amounted to EUR 39 million. PRI excluding mobile is strongly up 16%, reflecting the overall momentum of our catalog. Our solid PRI and back-catalog momentum demonstrates that our performance is not based on one particular game but on a broad-based portfolio. Let me now go into the details of our first half earnings. First, you will find our non-IFRS P&L on Slide 6 of our presentation. With a EUR 57 million net bookings progression compared to fiscal '20, non-IFRS operating income was strongly up by EUR 37 million. This reflects a EUR 50 million progression of gross margin and EUR 9 million reduction in R&D that was partly offset by a EUR 21 million increase in SG&A. This increase is mostly related to investment in our expanding digital store, growing subscription program and thriving i3D.net business. Please refer to our press release or presentation appendix for the full IFRS to non-IFRS reconciliation. Turning now to Slide 7. P&L R&D was down 3% versus H1 fiscal '20. Total cash R&D was up an average 15% per annum over the past 2 years with H1 fiscal '22 year-on-year growth decelerating to 10%, as expected. Looking at our cash flow statement on Slide 8. With no games released since December 2020, free cash flow stood at minus EUR 333 million versus minus EUR 71 million in H1 fiscal '20. More than half of the difference come from variation in working capital requirements and the rest from our investment in future top line growth. For the second half, thanks to our meaningful release plan, we expect strong cash flow generation. Looking at Q3, we expect net bookings of between EUR 725 million and EUR 780 million. Far Cry 6 is off to a solid start, in line with Assassin's Creed Odyssey, a title launched in a similar time frame. Players are having a great time, and overall playtime per player is 25% stronger than in Far Cry 5. The game's weighted average Metacritic score stands at 77, a very solid achievement by our teams in Toronto. Riders Republic started its trial week on October 21, ahead of its official release today. And the reception continues to be very supportive. At its core, it is a community-driven game that brings a thrilling multiplayer experience while we expect to have a very long life. We confirm the release of Rainbow Extraction -- Rainbow Six Extraction in January. And new details will be revealed in the next few weeks. Today, we confirm our fiscal '22 non-IFRS operating income target of between EUR 420 million and EUR 500 million. Net bookings are now expected to be flat to slightly down versus single-digit growth previously. This reflects the fact that Prince of Persia: The Sands of Time Remake, Rocksmith+ and The Division Heartland will be released in fiscal '23. Additionally, while still expected in the current fiscal year, we are no longer factoring Roller Champions in our guidance. Prince of Persia is a bigger brand, and we are taking the appropriate time to ensure that we are living up to players' expectations. As we said during Q1, testing phases of our free-to-play games are ongoing and inform our release plans. Testing on Heartland has provided great feedback, and the team is committed to make the title engaging for a wide audience. I now hand over the call to Yves for his ending remarks.

Thank you, Frédérick, and hello, everybody. The industry is striving and quickly evolving, offering us new challenges and opportunities. Players have a deeper impact on the world they are engaging with, and technological breakthroughs are opening up exciting avenues. As Frédérick said, there are many positive outcomes and ongoing initiatives taking place at Ubisoft. And our assets have never been so strong. Assassin's Creed Valhalla continues to break profit record, and we are able to see that players are having such a great time in Far Cry 6. We can't wait for players to discover Riders Republic, Just Dance and Rainbow Six Extraction with their friends. Looking at our free-to-play operations. Let me be clear, our organic value creation model implies that we may go through phases of trial and error, where we sometimes fail but always learn, grow and become better positioned for success on subsequent attempts. While we are never satisfied with our pace of progress, we have a proven track record in building new skills, technologies and capabilities through their initiative -- this initiative process. Recently, we have thoroughly reviewed our different initiatives and taken the necessary decisions. We are confident applying our iterative process to free-to-play will ultimately create great value, expand our brand's reach and step change our recurring revenues. Overall, our road map is impressive, with our talented teams developing an ambitious, diverse and exciting slate of games for the coming years. I sincerely thank them for continuing to prove that one of Ubisoft's greatest strengths is our ability to unite diverse talent from around the world to deliver excellent experiences for players. With our rich IP portfolio, cutting-edge technologies, strong balance sheet and thriving recurring revenues, we will deliver meaningful value for our players, teams and shareholders. We are now ready to take your questions.

[Operator Instructions] We can now take our first question from Ken Rumph of Jefferies.

So 2 questions. I think -- so firstly, I'm trying to understand the implications of the unchanged guidance given that you've delayed Heartland's and it seems like Roller Champions. I don't understand how it can be kind of not in the guidance and not delayed. Anyway, wouldn't that imply better profitability given that those games at the top end of guidance were assumed to be breakeven? So haven't you moved some losses potentially into next year and therefore, this represents a lower profitability from the rest? And my second question is the implications for next year. I guess perhaps that now Heartland will come out earlier in the year potentially and have a full year to generate revenue, hopefully, successfully, but have you -- what does that imply for margins next year? Does it kind of shift the burden that would have been this year to next year?

So on the -- your first question, we postponed Heartland and we removed Roller Champions, as you said, keeping in mind that we also postponed Rocksmith+ and Prince of Persia that had a positive profitability impact. But marginally, what we can say that we said back in May and July that we took general prudence across the whole business, and that reflects in the low side of the guidance. We still have a big semester ahead of us, so this general prudence is still valid. For your second question, so as we said, we, of course, want to complete our set of tests for Heartland that is coming along very well. We have a great game in our hand. The team is finalizing its tests, and we want this game to come in fiscal '23. It's too early to give any more comments on the margin impact.

And we can now take our next question from Jamie Bass of Berenberg.

Two for me as well, please? One is on the frontline test that -- the Ghost Recon frontline test that you postponed. Could you give us a bit more color on why that was postponed and if we've got any sort of updated time frame now? The other is on longer term on the cash R&D side. So I remember you talking about a 15% growth target from a base of fiscal '19. Could you maybe outline whether, as we go further along and you've released -- down the line, you've done on Avatar, Star Wars, Infinity project and the free-to-play stuff. Are we then expecting that growth rate to come down over the longer term?

So on the Ghost Recon frontline test, what we saw was interesting, important feedback from the players. As you know, we're going through an iterative process, and we are looking at incorporating all the feedback that we got from these players, exactly like we had done when we moved into live services. So this feedback loop is very important for our teams to constantly improve the game that will come to a new test phasing. We haven't given the time and the date for the next test phase, but the team is working hard to make it convincing for our players with an even more polished version. As for the cash R&D growth, yes, we said back in fiscal '19 that we were anticipating an average growth of 15% year-on-year on cash R&D as we plan to go for a double-digit strong top line growth in the coming years. As we said back in May and July, the last 2 years have been growing at 17%. And we had said that now we've moved into a deceleration phase of this growth rate. In the first semester, it was growing 10%. We believe that we have a strong pipeline of products in the coming years that is being supported by this good pace of investment we've been doing in the last years. But yes, we should anticipate a deceleration of this growth rate in the future.

And we can now take our next question from Charles-Louis Scotti from Kepler Cheuvreux.

Two questions for me, please? You mentioned in the press release that Far Cry 6 early sales were in line with Assassin's Creed Odyssey. And if I remember well, Assassin's Creed Odyssey was one of the -- was the best launch-week performance for the Assassin's Creed franchise. So does that mean that Far Cry 6 is in line with your expectations for the full year? And my second question on Riders Republic. It seems that players' feedback are very positive on the game. Can you share with us any preliminary figures or data point that could give us a trend for the performance of the game this year? And if I may, a quick sub-question. Can you give us more details on your investment in Animoca Brands, the play-to-earn mobile leader?

So yes, we mentioned that in our press release and as I said earlier that Far Cry 6 follows the successful curve of Assassin's Creed Odyssey. That was a strong performer in -- back in fiscal '19. And yes, before Valhalla, Assassin's Creed Odyssey was the most profitable game ever for the franchise. What we have seen is that the players have great fun. They have a great time in the game. And this is being reflected by community sentiment being very strong and actually improving week after week. And that's also translated into a very strong playtime per player, actually 25% above Far Cry 5. So as we said, we expect Far Cry 6 to be the biggest game for us this year. And we are coming soon with a big post-launch program that actually will come earlier than what we usually do. So that will support a strong reactivation but also acquisition of new players through the busy season.

We had also 1 billion views on all the assets that were presented to players, so it's the biggest in Far Cry franchise as well on that front.

On the Riders Republic, it's, of course, too early to say anything on specific figures. What we can observe is that the reception by players is very positive, very strong. This is a great experience that we propose through a multiplayer with the objective to revolutionize the extreme sports. So that's a very social game. And we expect it to have very long and positive dynamics through replayability in the long run.

And for sure, on Riders Republic, it's really the kind of modern games that we want to create with a lot more social in them, multiplayer and social. So it's a direction that we want to take as a company -- to continue to take.

So on blockchain, we -- as you said, we invested in Animoca Brands. That is a leading blockchain gaming company. And we're happy to partner with key leaders in the sector that is very attractive for the long term. But maybe, Yves, you can...

Yes, for sure. Actually, as you see, this industry is changing regularly with lots of new -- of regulations happening, and we consider blockchain is one of those regulations. It will imply more play to earn that will enable more players to actually earn content, own content. And we think it's going to grow the industry quite a lot. So we are -- we have been working with lots of small companies going on blockchain, and we start to have a good know-how on what it can -- how it can impact the industry, and we want to be one of the key players there.

And we can now take our next question from Omar Sheikh from Morgan Stanley.

So I've got a couple of questions. Maybe to start, I want to go back to the guidance for the year, if possible. So if you look at the 4 games that are being pushed out this year; Prince of Persia, Rocksmith, Division Heartland and Roller Champions, is it fair to assume that the -- in aggregate, you're expecting those 4 games to be loss-making to the tune of about EUR 130 million? That seems to be the delta in your guidance for the year. So just some color on that would be helpful. And then secondly, the only game, I guess, we haven't discussed on this call, and I think you mentioned in your prepared remarks, was the mobile game you've been developing with Tencent which is due for release in the March quarter. Could you maybe perhaps confirm that, that's still planned for that quarter? And then if so, whether you're thinking about it being a global launch, including China, or whether you'd be willing to launch it out just in the rest of world only?

So on the 4 games, so we push 3 games to next year. One might still come this year, but as we said, we removed it from the guidance. So around these 4 games, we not -- don't -- I won't give any specific or precise number. But what we -- that explained the reason why we moved from single-digit growth rate expectation to flat to slightly down. As for the mobile game with Tencent, we are now planning to have the soft launch being planned in fiscal '23.

Okay. And sorry, just to go back on the guidance, Frédérick, if it's possible. Are you saying that the revenue guidance change does not include -- only include those 4 games? Does it include anything for Far Cry 6 as well?

So as for the new releases, we can reaffirm what we -- for the paid games, what we said before. Far Cry 6 is expected to be our biggest game this year, and it started solidly in line with the Assassin's Creed Odyssey sales curve.

And we can now take our next question from Tom Singlehurst of Citi.

It's Tom here from Citi. I mean, obviously, it's disappointing that these free-to-play games are being delayed, but I don't suppose financial markets are putting a huge value on them. The question is, firstly, why -- you talked about trial and error. But what's going wrong with the games? I mean with Roller Champions. Can you give a bit more detail on what the problem is? Is it just after extensive testing, you just can't see how it's going to make money? And then I suppose the question is what happens to this content afterwards? And how can we just make sure that you're not sort of using too many resources in that space and just getting more error than success in FTP? That was the first question. And then secondly, on Animoca, which is a very interesting development, I just wanted to know whether we should infer from what you've done with Animoca that you're going to be exploring blockchain and NFTs as an opportunity only via strategic investments, not organically, not within the sort of main Ubisoft enterprise.

So first, on your first question, it is important to consider that the free-to-play, and we saw that on mobile, you need enough time and feedback from players to actually change, improve and make sure the game, when you launch it, is really adapted to what players want. And that's why it's taking a bit of time, and it's more complex to give a precise date -- a precise date, sorry, for the launch. But what we see is that the reaction from players on many of our free-to-play is actually a good reaction. We have some pushback sometimes on some elements, but that helps us to actually adapt. But we feel the investment on the free-to-play is really a very good investment for the company, and that will result in lots of profit in the future. So that's why we take the time needed to actually really generate good revenue and profit in the future on that front. On the blockchain aspect, we plan to do both, invest in companies and also work organically in creating games so that we can do the best game to adapt it to this audience. So it's really in speaking with many companies and in looking at what we can do inside that we think we will have the best result.

What is important to have in mind is that we are learning how to manage infrastructure, how to design economies. But we also need to learn relative to the aspect of impact on environment as well as in terms of compliance and vis-a-vis regulations. So we are just at the early stage of this very promising venue, but we need to -- of course, to learn on a number of topics. And that's why we combine, as you said, organic experiments and development, incubation, partnership with key leading companies and strategic investment that can -- where we can leverage our expertise but that also can expose us positively to the value creation that will happen in the sector. To come back on free-to-play, as Yves said, it's very important to have in mind that we are really -- our value creation model relies on an iterative process for creation, exactly like we did when we moved into open-world, when we moved into live services, where we go through testing, learning and each time we come with stronger capabilities, stronger skills and technologies. We have great games in our hands. All the free-to-play games that we have shared with the market so far are great games. We reviewed them thoroughly lately. We've taken some important decisions, and we are confident that they will create meaningful value. The market in free-to-play continues to grow. This is a great opportunity for us to really get to a much wider audience through high-quality game play but accessible game play, and making sure that our biggest games can profit -- biggest brands can profit from this wider audience with the possibility to step change recurring revenues over time. It's an iterative process that we actually follow.

That's brilliant. One final follow-up question. I mean, obviously, in the last few weeks, we had this exciting moment where you announced a potential free-to-play title with -- in the Ghost Recon family of sort of products and then got a negative reaction from the community, and then you shelved it again, which is all fine. But what happens to that investment? Can you reuse it in another context? Or is that just inadvertently come as wastage?

Yes, we didn't shelve it. We are working on it and making sure it fits with what our players want. So no, it's underway and it's going to be -- we expect a very good experience for players. It's just we are putting more time into it.

Through testing, we get very interesting feedback loop from the players, and that's exactly what we've done with live services. That's what we plan to do for our free-to-play games.

And we can now take our next question from Nicolas Langlet of Exane BNP Paribas.

I've got 2 questions. The first one, on Rainbow Six Siege, you didn't really comment what was the momentum in Q2, so if you have any comments on that? And also if you can give us a bit more detail on the big new content you expect by the end of this year, is it in terms of [indiscernible] or other things? And second question, if we look at full year '23, so at this stage, you announced free-to-play game, Skull & Bones, Mario + Rabbids and Avatar. Is there a room for [indiscernible] game for next year or not?

Yes. So on Rainbow Six Siege, what we see is that it's still one of the best and strongest competitive shooter game in the market. But it has been facing a stronger competition than before, so we are working on a strong plan with a focus on different elements. The team is working to come back with exciting new features to reinforce the content strategy, meaning that they will notably increase the frequency of high-quality content delivery. They pursue the progressive expansion of the Battle Pass. They are also working to bring a structural improvement on the onboarding experience to improve retention over time. And they are also working to come with an important program of international e-sport competition. And last but not least, the team is, as you know, partnering with the Extraction team to build strong bridges so that we can reactivate a number of players from the 75 million of players we've got with Siege and to recruit also new players from the Cup segment and to bring them ultimately to Siege. So all of this plan will be rolled out over the coming year, and that's what we're working on. As for the lineup, so yes, we have 3 big games coming that we already unveiled with Avatar coming next to the movie. Mario + Rabbids Sparks of Hope that we will benefit from a strong installed base from Switch. And Skull & Bones, that is a promising new IP. And there will be other exciting premium games.

And we can now take our next question from Matthew Walker from Crédit Suisse.

It's Matthew from Crédit Suisse. The first question is just on the lineup next year. As mentioned, Assassin's Creed has been on a 2-year cycle. And also, you've announced a slightly different way of working on Assassin's Creed. So just to be explicit, we should not expect another Assassin's Creed in FY '23. Is that the case? Second question is on the guidance. You've taken off about EUR 130 million of revenue. Is the reason you're leaving your EBIT guidance unchanged because there's not going to be any amortization attached to those games? Or is it because there's no marketing attached to those games that you've delayed? And then last question was, did I hear you correctly, it's more of a factual question. Did you say that the Tencent mobile game is not coming in Q4 '22? It's going to come at some point in FY '23. Did I hear it right?

So on your first question, what we can say today is that we plan to come with a meaningful content every year on Assassin's Creed, meaning paid content every year with, as you know, strong focus on solo and narrative. Today, we're celebrating the amazing performance of Assassin's Creed Valhalla. We mentioned that after less than a year, it's already the second most profitable game in Ubisoft's history. So that says a lot about the great transformation that we've done with this franchise in making it a true live service type of brand. And we are focusing to come with a big year 2 in post launch. As we said, it will be the biggest post-launch program ever for the franchise. On the guidance. So on the guidance, if you remember what we said at the beginning of the year, we had free-to-play games with 0 EBIT for the high side of the guidance. That's one element that we mentioned. We also mentioned that we took a general prudence across the whole business for the low side of the guidance. So when we look at the free-to-play games that we removed together with the 2 games, paid games, the Rocksmith+ and the pub game that we removed, what we see is that we remove revenues, we remove cost as well. In the end, that doesn't change the EBIT for the high side or the low side of the guidance.

And on the Tencent game?

On the Tencent game, yes, you heard it well. We moved the soft launch that was planned in Q4 of fiscal '22 to fiscal '23.

And we can now take our next question from [indiscernible].

Most of my questions have been answered, so maybe just a last one. What's your view on the PlayStation 5 sales? And when can we expect you to release pure next-gen titles?

So we've seen the results from Sony that shows that sales are increasing from one quarter to the other. That's what we expected. We see that there are more and more machines coming, and they should be able to deliver on the objective that they had set for the year. We expect that, ultimately, with the strong demand we see for next-gen consoles, that the accumulated installed base should be higher than what it was for the previous cycle. So we benefit from strong demand and positive demographics.

What we see more and more is that the #1 platform today is a next-gen platform on all the games we launched. So it's already taking a lot of the sales, and we expect that with the number of machines coming, it will take a bigger and bigger share of the total sales happening.

And we can now take our next question from Richard Eary of UBS.

I've got 3 questions from myself. Just the first one is that on the breakdown for the change in guidance, which I think is probably roughly about EUR 130 million, EUR 150 million by changing the top numbers, can you split that down in terms of what you thought was going to come from free-to-play and what was going to come from the other games so we've got a bit of a clear distinction on that? The second question is just to go back to Matthew's question on the guidance. Is the -- did the original guidance last year include costs for the soft launch of the Tencent mobile game? And with those now being pushed into next year, I presume there's been a cost savings on that. I just wanted to clarify that. And then just lastly, on back-catalog guidance, obviously, numbers were better in the second quarter. You've talked about the biggest rollout this year. Can you just talk about what your expectations are for back-catalog in Q3 and also for the second half of the year?

So on the breakdown for the change in guidance in net booking, as I said, I won't give a precise number, but you can consider that it was -- the impact was half and half between free-to-play and paid games as a general view. No, the Tencent soft launch has no impact on the guidance. There was no expectation from net booking or from a cost point of view in this year as it was just a soft launch. In terms of back-catalog, so for the full year, we expect it to be flat to slightly up versus last year. So far, in the first half, we were down minus 20% -- minus 22% in back-catalog in the first quarter because there was the strong impact of the confinement last year. It's been improving in the second quarter, minus 7%. So we expect growth in the second half with a bigger post-launch program in Q4 than last year, starting with Assassin's Creed Valhalla and The Division 2.

And what we should say is that the mobile games that we are coming with next year are really coming along very well and that you will see very high-end AAA games coming from us. So it's -- we are very happy with the progress we are making on those different games.

Could I just ask a follow-up just on expectations for back-catalog in Q3? You said, obviously, you get momentum in Q4 with obviously Assassin's Creed coming through. Are Q3 expectations within the numbers?

So we should -- as I said, we should expect growing back-catalog in the second half versus last year, especially in Q4.

We can now take our next question from Nick Dempsey of Barclays.

Nick here. I've got 2 questions left. When I'm thinking about full year '23 margins versus full year '22, I know you don't want to give me a guidance at this point, but you're absorbing the early phase of potentially 4 free-to-play games into FY '23. What would it take for you to see margin improvement in FY '23 versus FY '22? Would you have to see very strong delivery on units from Skull & Bones and Avatar, for example? And second question, you benchmarked Far Cry 6 against Assassin's Creed Odyssey. I guess the natural benchmark was Far Cry 5. Were you expecting previously Far Cry 6 to match Far Cry 5 in its early stages? And can you give any indication of how it's done versus Far Cry 5?

So in terms of fiscal '23, it's too early to talk about the margin perspective. What we can reaffirm is that we will have a very strong lineup. We have 3 big games already unveiled on the premium side. We'll have other premium games coming along. We already mentioned, of course, that we have Rocksmith+ and Prince of Persia. And we have a strong lineup on the free-to-play side, notably on the shooter side, but also looking at all platforms including big games on mobile. On -- for Far Cry 6, you can't compare with Far Cry 5 at this stage because when you launch a game like we did in March for Far Cry 5, usually come with a very steep sell-through curve, while when you launch a game early October, the sell-through ramp-up is more progressive throughout the busy season across Thanksgiving and Christmas. So that's why the natural benchmark is Assassin's Creed Odyssey that started exactly at the same time. And it's good to see that we've seen a solid start with a very strong community sentiment and very strong playtime per player. For you to have in mind, on a lifetime basis, Assassin's Creed Odyssey sold quantities was significantly higher than what we have for Far Cry 5.

And we can now take our next question from [indiscernible] of Jefferies.

So I guess 2 questions from me. So firstly, could we get more clarity on the Assassin's Creed Infinity? So I guess, like for that, so could you maybe talk a little bit more about that project? Is that -- is Infinity going to be the next game in the Assassin's Creed franchise? Is it going to be free-to-play? Does it kind of replace the model like Valhalla? So how should we think about the Infinity project? And I guess, my second question relates to the like FY '23's premium lineup. So currently, you have 3 games to be delivered next year. So how much confidence do you have to basically deliver your free-to-play games on schedule, especially for Skulls & Bones, which seems to be -- which seems to have been developed for a long time?

So first, on Assassin's Creed Infinity, thank you for your question. It's not going to be a free-to-play. And this game is going to have a lot of narrative elements in it. It's going to be a very innovative game, but it will have what players already have in all the Assassin's Creed game, all the elements that they love to get in it -- in them right from the start. So it's going to be a huge game but with lots of elements that already exist in the games that we published in the past.

For this important product, we are happy to have the -- among the best talents of the Quebec and Montreal studios joining forces for that great game. But it's still at an early stage of development, so we can't say anything more. And again, we will repeat what we said previously. You should expect meaningful paid content coming in the next years, every year, with strong solo and narrative experiences.

Yes. On Assassin's Creed in general. So...

Assassin's Creed in general, absolutely.

Yes, outside Infinity.

And with a strong focus on the short term on delivering a very big post-launch program for Valhalla in year 2.

Got it. No, I'm just going to stay quite looking forward to the Infinity projects and also like the big content job, Valhalla. Sorry to interrupt. Please go on for the -- to the FY '23 schedule. Sorry about it.

Yes, so for fiscal '23, as I said, we have a very exciting lineup, a big lineup on the premium and free-to-play side. And the premiums -- on premium lineup side, as you know, Avatar: Frontiers of Pandora is expected to be a big game next to the highly awaited movie. And the development is progressing well with a beautiful world based on the -- delivered by the Snowdrop Engine. We will -- and that should be a very long game in terms of content delivered over many years. In terms of Mario + Rabbids Sparks of Hope, it follows a successful first game with Kingdom Battle, but now we're coming at a time where the installed base on Switch is 10x bigger. So that will be clearly a much bigger game. And on Skull & Bones, it's just passed a very important -- another important production milestone. So production is going very well. That's a very promising, ambitious, new IP that will combine a great open world with naval combat in multiplayer. So that would be a very interesting experience for players.

And we can now take our final question from Mike Ng of Goldman Sachs.

Could you talk a little bit about the competition for game developer talent these days? Has it intensified given competition from technology companies but also other video game publishers, particularly those in the East? And then second, could you talk a little bit about whether or not there were any R&D write-downs in the quarter due to the game delays?

Yes. So there's more competition in the industry, and we are reacting to that. We were able to actually recruit lots of very good talents in the last 6 months. As we said, we recruited 1,200 people net in the last 12 months. So there's competition, but we have a good brand and also good projects that are of big interest for the people creating games. So on that front, there is competition, but we think we are in a good place there.

And what is interesting to have in mind is that we can leverage great investment we've been doing over the years. As you know, we had intensified R&D growth in the last 5, 6 years, notably in the last 2 years. So we are well equipped with the biggest workforce in the industry today to support a strong trajectory. Also, we can leverage a unique asset today, which is our 44 studios around the world. And we -- it's not the first time there has been strong competition on talent. And then we can then leverage [indiscernible] areas where there is less tension in some geographies relative to geographies where there is more tension. On the R&D question, there has been no write-down in the quarter due to game delays. As you know, we regularly test prototypes, and we can, of course, do some write-downs on prototype projects but no write-down relative to game delays.

This will now conclude the Q&A session. I would now like to hand the call back to Mr. Yves Guillemot for any additional or closing remarks.

So thank you very much for all your questions, and I wish you a good day or a good evening.