Management Board Report on the Activities of the CD PROJEKT Group: H1 2021

Key insights

6 takeaways

01
CD PROJEKT is implementing a 'RED 2.0' corporate restructuring to transition to a dual-franchise model, enabling parallel AAA development for The Witcher and Cyberpunk IPs starting in 2022.See it on page 37
02
H1 2021 sales revenue grew by 29.3% to 470.6 million PLN, though net profit fell to 105 million PLN due to high maintenance costs for Cyberpunk 2077 and increased development depreciation.See it on page 48
03
The company maintains a strong financial position with over 1.1 billion PLN in cash reserves and zero outstanding debt.See it on page 56
04
Strategic expansion efforts include the acquisition of Digital Scapes and a broader focus on mobile gaming, esports, and cross-media initiatives.See it on page 8
05
The United States remains the company's largest market, despite the group facing ongoing class-action litigation in the region related to the Cyberpunk 2077 launch.See it on page 74
06
Operational stability was tested by a major cybersecurity breach and the need for continuous post-launch support for its flagship title.See it on page 32

Summary

CD PROJEKT navigated a complex transitional period during the first half of 2021, defined by the stabilization of Cyberpunk 2077 and the implementation of a fundamental corporate restructuring known as RED 2.0. The primary objective of this strategic shift is to transition the organization toward a dual-franchise model, enabling the parallel development of AAA projects across both The Witcher and Cyberpunk intellectual properties beginning in 2022. This evolution is supported by the acquisition of Digital Scapes and a commitment to expanding brand presence through mobile gaming, esports, and cross-media initiatives.

Financially, the organization demonstrated resilience despite significant operational headwinds. While sales revenues grew by 29.3% to 470.6 million PLN, driven by licensing royalties, net profit declined to 105 million PLN. This contraction resulted from elevated operating costs associated with the ongoing maintenance of Cyberpunk 2077, increased development depreciation, and expenses related to long-term incentive programs. Nevertheless, the company maintains a robust balance sheet with over 1.1 billion PLN in financial reserves and no outstanding debt, ensuring a stable foundation for future investment.

The scope of operations remains global, with the United States serving as the largest market for the Group’s products. Throughout this period, the company managed several external challenges, including a major cybersecurity breach and ongoing class-action litigation in the United States regarding the launch of its flagship title. By adhering to conservative investment policies and maintaining a focus on community engagement through the GOG.COM platform and its core franchises, the company aims to mitigate risk while positioning itself for long-term growth within a global gaming market projected to reach 3 billion players by 2023.