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Ubisoft Q3 earnings down 35 percent

Ubisoft reported a year-over-year decline in earnings for the third quarter of its 2013-14 fiscal year today, and blamed the "console transition" for the drop.

The French publisher recorded sales of €520 million ($709.34 million) for the quarter ending Dec. 31, 2013, a decrease of 35.2 percent from the same period one year prior. Sales for the first nine months of the 2013-14 fiscal year were also down significantly, by 24.8 percent from revenue of €1.08 billion (April-December 2012) to €813 million (April-December 2013). The third-quarter sales came in right in the middle of Ubisoft's guidance for the quarter of between €500 million and €540 million.

"Over the short term, the high quality of our titles — which is unanimously recognized by gamers — has enabled us to achieve our third-quarter sales target despite the transition period currently affecting the market," said Yves Guillemot, CEO of Ubisoft, in a press release today.

Strong sales of Assassin's Creed 4: Black Flag and Just Dance 2014 led the way during the third quarter. While sales of Rocksmith 2014 came in about half a million units shy of Ubisoft's target, Guillemot said during a conference call this afternoon that the game is "already profitable," and pointed to regular releases of downloadable songs as providing a long trail of revenue. Back-catalog sales of games like Assassin's Creed 3 and Far Cry 3 saw a 21 percent year-over-year drop in the quarter, but are still up 6 percent for the first nine months of the fiscal year.

Ubisoft also confirmed its guidance for the fourth fiscal quarter and full year. The publisher expects sales for the fourth quarter — which includes the release of Rayman Legends on PlayStation 4 and Xbox One, and the long-delayed launch of South Park: The Stick of Truth — to come in at €187 million, which would be up nearly 7 percent on Q4 2012-13. For the full 2013-14 fiscal year, Ubisoft expects sales of €1 billion, and an operating loss of €65 million on a non-IFRS (International Financial Reporting Standards) basis.

The company set guidance for its 2014-15 fiscal year as well, with a non-IFRS operating income target of "at least €150 million." The fiscal year's first quarter, which runs from April-June 2014, will see the release of Watch Dogs on Windows PC and all major consoles except Wii U; that version will arrive later, Guillemot announced during the call.

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