Ubisoft Returns to Profitability with 20% Revenue Growth in H1 FY2025-26

French gaming giant Ubisoft released delayed H1 FY2025-26 financial results, a marked improvement from the recent Ubisoft's recent challenges situation on November 21, revealing a return to profitability alongside substantial revenue growth. Net bookings reached €772.4 million, representing a 20% increase from the prior year's €642.3 million, while non-IFRS operating profit returned to positive territory following quarters of losses. The announcement came after stock trading suspension related to accounting standard revisions that required auditor review.

The results demonstrate recovery momentum for the publisher behind franchises including Assassin's Creed, Far Cry, and Rainbow Six. However, the path to these numbers proved complicated by accounting adjustments that triggered loan covenant violations, ultimately resolved through a strategic capital injection from Chinese technology conglomerate Tencent. The financial turnaround accompanies a major organizational restructuring centered on autonomous "Creative Houses" designed to refocus development efforts around franchise specialization.

Accounting Revisions Delay Earnings Release

Ubisoft postponed its H1 FY2025-26 earnings announcement and suspended stock trading while auditors addressed IFRS accounting standard compliance issues. The revisions concerned revenue recognition practices in partnership operations from prior fiscal years, requiring adjustments that reduced previously reported figures. These changes pushed the company's debt-to-EBITDA ratio into non-compliance with loan covenants, creating a technical default situation that needed immediate resolution.

The accounting adjustments reflect stricter interpretation of revenue timing recognition in collaborative publishing deals where Ubisoft shares development or distribution responsibilities with external partners. While the revisions didn't indicate fraudulent activity, they highlighted aggressive revenue booking practices that auditors flagged for correction. The delay extended several weeks beyond the original reporting date, with stock trading resuming only after complete financial restatement and covenant breach resolution.

Strong Revenue Growth and Profitability Recovery

Despite accounting complications, Ubisoft's underlying business performance showed marked improvement. The €772.4 million in net bookings represented growth across both new releases and back-catalog titles, with digital distribution continuing to dominate revenue mix. Non-IFRS operating profit returned to positive levels after multiple quarters of losses, though the company did not disclose specific profit figures in the initial announcement.

The revenue increase stems from successful launches during the first half of the fiscal year alongside sustained engagement with live-service titles. Assassin's Creed Mirage, released in late 2024, contributed ongoing revenue through post-launch content, while Rainbow Six Siege maintained its position as a consistent revenue generator through seasonal updates and battle passes. The performance exceeded internal projections that had anticipated flat year-over-year bookings given the challenging comparison period.

Tencent Investment Resolves Covenant Breach

To address loan covenant violations triggered by accounting adjustments, Ubisoft executed early debt repayment funded by fresh capital from Tencent. The Chinese investment giant acquired increased stake in Vantage Studios, a newly formed Ubisoft subsidiary that houses the company's largest franchises including Assassin's Creed, Far Cry, and Rainbow Six. The investment structure provides Ubisoft with immediate liquidity while giving Tencent expanded exposure to premium Western game properties.

The capital injection solved Ubisoft's immediate covenant compliance problem by enabling full repayment of the loans in question, eliminating the breach entirely rather than negotiating covenant waivers. This approach preserves management's operating flexibility while deepening Tencent's involvement in Ubisoft's strategic franchises. The Chinese company already held minority positions in Ubisoft's capital structure through previous investments, making this additional commitment an expansion of existing relationship rather than new partnership.

Creative Houses Restructuring Targets Franchise Excellence

Ubisoft announced plans to reorganize development operations around "Creative Houses"—autonomous studio groups focused on specific franchise families. Vantage Studios becomes the inaugural Creative House, concentrating resources on Assassin's Creed, Far Cry, and Rainbow Six with a goal of achieving €1 billion annual revenue per franchise. The restructuring philosophy emphasizes three pillars: development autonomy, franchise specialization, and player-centric design.

The Creative Houses model represents a shift from Ubisoft's traditional matrix organization where shared technology teams supported projects across all franchises. Under the new structure, each Creative House will control dedicated engineering, art, design, and live operations teams aligned exclusively to its assigned properties. This vertical integration aims to accelerate development cycles, strengthen franchise identity, and reduce the homogenization that critics argued made Ubisoft games feel formulaic.

Vantage Studios' formation signals management's commitment to prioritizing the company's most valuable intellectual properties. By concentrating elite talent and investment on proven franchises, Ubisoft expects to improve both game quality and commercial performance. The €1 billion per-franchise revenue target implies sustained engagement models that extend years beyond initial launch through expansions, seasonal content, and live service operations.

Detailed Restructuring Plans Coming January 2026

While Ubisoft outlined the Creative Houses concept and Vantage Studios' role, comprehensive details about the organizational transformation remain forthcoming. Management scheduled a detailed presentation for January 2026 that will explain reporting structures, additional Creative House formations, and the timeline for transitioning existing projects into the new framework.

The announcement will likely address questions about whether additional franchises beyond Assassin's Creed, Far Cry, and Rainbow Six receive dedicated Creative House treatment or continue under traditional development models. Observers anticipate information about headcount allocation, studio realignments, and potential cost restructuring associated with the reorganization. The January timing coincides with Ubisoft's next quarterly earnings report, providing a forum for investors to question management about the strategy's financial implications.

What This Means for Ubisoft's Future

The H1 results and Creative Houses restructuring present contrasting narratives about Ubisoft's trajectory. Revenue growth and profitability recovery demonstrate that the company's core franchises retain commercial appeal, while the accounting issues and covenant violations expose management and financial reporting weaknesses that spooked investors. The Tencent capital injection solves immediate problems but further dilutes existing shareholders and deepens Chinese influence over major Western gaming IP.

The Creative Houses model offers a strategic framework that addresses long-standing criticisms about Ubisoft's formulaic design approach, but execution risks remain substantial. Reorganizing thousands of employees across global studios while maintaining development schedules for existing commitments presents significant management challenges. Whether the new structure delivers on promises of franchise excellence and player satisfaction will determine if this restructuring marks a turning point or represents expensive organizational churn.

For complete financial details and investor information, visit Ubisoft's official investor relations page.

Company Information