Management Board Report on CD PROJEKT Capital Group Activities: H1 2018

Key insights

6 takeaways

01
CD PROJEKT maintained a strong financial position in H1 2018 with 607.9 million PLN in cash and zero debt, despite a decline in net profit to 52.4 million PLN and sales revenue to 168.4 million PLN.See it on page 7
02
The company’s stock value surged by 62% during the first half of 2018, driven largely by the positive market reception to the E3 unveiling of Cyberpunk 2077.See it on page 37
03
The Group expanded its operational capacity by acquiring a new studio in Wrocław and establishing Spokko, a subsidiary focused on mobile development.See it on page 25
04
Export-driven revenue accounted for 95.8% of total sales, though profitability faced pressure from the strengthening of the Polish Złoty.See it on page 48
05
The GOG.com digital distribution platform grew its catalog to nearly 2,600 titles, with the United States remaining its primary market.See it on page 32
06
The company is executing a dual-franchise strategy that uses sustained revenue from The Witcher 3: Wild Hunt to fund the development of Cyberpunk 2077 and GWENT: The Witcher Card Game.See it on page 35

Summary

During the first half of 2018, the CD PROJEKT Capital Group focused on balancing the long-term development of its high-profile intellectual properties with the sustained monetization of its existing portfolio. The primary thesis of the period centered on leveraging the enduring success of The Witcher 3: Wild Hunt to fund the ambitious production of Cyberpunk 2077 and the ongoing refinement of GWENT: The Witcher Card Game. By prioritizing a dual-franchise development model, the company aimed to mitigate market risks while expanding its operational capacity through the acquisition of a new studio in Wrocław and the establishment of the mobile-focused subsidiary, Spokko.

Financial results for the period reflected a transitional phase, with sales revenue reaching 168.4 million PLN and a net profit of 52.4 million PLN. While these figures represented a decline compared to the previous year due to the absence of new major releases, the company maintained a robust financial position with 607.9 million PLN in cash and no outstanding debt. Export-driven revenue, which accounted for 95.8% of total sales, faced downward pressure from the strengthening of the Polish Złoty, yet the company’s stock value surged by 62% during the half-year, bolstered by the critical acclaim surrounding the E3 unveiling of Cyberpunk 2077.

The Group’s operations, spanning the CD PROJEKT RED development segment and the GOG.com digital distribution platform, demonstrated significant growth in digital reach. GOG.com expanded its catalog to nearly 2,600 titles, with the United States serving as its primary market. Strategic investments in research and development, alongside the integration of new talent and infrastructure, underscore a commitment to maintaining high-quality AAA standards. Despite ongoing legal proceedings and minor shifts in shareholding among leadership, the company remains focused on its long-term growth strategy, prioritizing the successful delivery of its upcoming titles to ensure future market competitiveness.