Management Board Report on CD PROJEKT Capital Group and CD PROJEKT S.A. Activities in 2018

Key insights

6 takeaways

01
CD PROJEKT solidified a dual-franchise strategy in 2018, focusing on the development of the Cyberpunk 2077 IP while sustaining the commercial longevity of The Witcher series.See it on page 63
02
The Group maintained a strong balance sheet with over 1 billion PLN in equity and zero outstanding debt, despite a decline in net profit to 101.7 million PLN due to the absence of a new AAA release.See it on page 89
03
Consolidated sales revenue reached 362.9 million PLN in 2018, with 95.6% of total revenue generated from international exports.See it on page 79
04
The company aggressively expanded its operational capacity, increasing headcount by 19% to 887 employees and acquiring the Strange New Things studio alongside the launch of the mobile subsidiary Spokko.See it on page 57
05
Market confidence in the Group grew significantly in 2018, resulting in a 45% increase in stock price and inclusion in the WIG20 and Stoxx Europe 600 indices.See it on page 35
06
The organization achieved a robust gross profitability of 70.7% while self-funding record-level development expenditures for the fourth-generation REDengine.See it on page 62

Summary

During 2018, CD PROJEKT Capital Group solidified its transition toward a dual-franchise model, centering its long-term strategy on the development of the Cyberpunk 2077 intellectual property while maintaining the commercial longevity of The Witcher series. Operating through the CD PROJEKT RED development studio and the GOG.com digital distribution platform, the company focused on aggressive capacity expansion, including the acquisition of the Strange New Things studio and the establishment of the mobile-focused subsidiary Spokko. These efforts were supported by a 19% increase in headcount, bringing the total workforce to 887 employees across 39 countries, all while prioritizing internal R&D through the development of the fourth-generation REDengine.

Financially, the Group demonstrated significant resilience and stability, ending the year with over 1 billion PLN in equity and no outstanding debt. While consolidated sales revenue reached 362.9 million PLN and net profit stood at 101.7 million PLN—representing a decline from the previous year due to the absence of a new AAA release and increased amortization costs—the company maintained a robust gross profitability of 70.7%. Market confidence remained high, evidenced by a 45% increase in stock price and the company’s inclusion in the WIG20 and Stoxx Europe 600 indices.

The Group’s operational focus remained heavily skewed toward international markets, with 95.6% of sales generated from exports. Despite facing challenges such as currency fluctuations, the need for specialized talent, and ongoing legal disputes regarding intellectual property, the company successfully leveraged its internal cash reserves to fund record-level development expenditures. By balancing high-profile promotional campaigns for upcoming titles with a commitment to sustainable workplace practices and transparent investor relations, the organization successfully positioned itself for its next phase of growth within the global gaming industry.