Ubisoft reports loss of 1.3 billion Euros on costly game cancellations and delays

Ubisoft's FY26 earnings show the results of the company's costly reorganization efforts, leading to the second consecutive year of annual losses at the company.

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French games-maker Ubisoft recently posted its annual report for FY26, confirming a hefty 1.3 billion euro operating loss for the financial year. This is actually a reduction in losses--Ubisoft recorded a 1.46 billion euro loss the year prior in FY25.

The losses were driven by major expenses in Ubisoft's R&D segment, which spent 1.855 billion euros in FY26, of which 75% of that, or 1.402 billion euros, was related to accelerated depreciation of cancelled and delayed game software.

Company CFO Frederick Duguet explained in the call:

"[Total R&D P&L is] up significantly year-over-year, representing the acceleration of deprecation that we announced in January linked to the strategic decisions to refocus our portfolio, and revise our roadmap in order to ensure quality benchmarks are fully met."

FY27, this fiscal year which ends in March 2027, won't deliver any more favorable results. Ubisoft expects to take an operating loss this year as well, with the expectation of returning to significant free cash flow generation starting in FY28 and beyond.

Ubisoft has confirmed that it will release games in its three prestige brands by March 2029, including Assassin's Creed, Far Cry, and Ghost Recon.

The company is also about to conduct its third and final phase of its cost reduction program, which could entail more layoffs at key studios and divisions. The company wants to reduce its costs to 1.25 billion euros per year, and at the end of FY26, its cost base was at 1.435 billion euros.

"This two-year transformation comes with difficult decisions and a disappointing short-term financial performance, but I firmly believe that, together, these actions are better positioning Ubisoft to deliver sustainable free cash flow over time," Ubisoft CEO Yves Guillemot tries to assuage investors via a new press release.

"The expected outcome, beyond FY2026-27, will be an important rebound driven by a significantly stronger new release pipeline, the acceleration of our Live games and the continued reduction of our fixed cost base, with Free Cash Flow turning positive in FY2027-28 and reaching a robust level in FY2028-29."