CD PROJEKT Group H1 2022 Financial Results

Key insights

6 takeaways

01
CD PROJEKT Group reported H1 2022 revenue of 378 million PLN, a 20% year-on-year decline driven by the normalization of Cyberpunk 2077 sales.See it on page 2
02
Net profit increased by 8% to 114 million PLN, with net profitability margins improving from 22% to 30% due to reduced operating expenses and favorable exchange rates.See it on page 4
03
The company maintains a strong liquidity position with 1.189 billion PLN held in cash, bank deposits, and T-bonds as of June 2022.See it on page 4
04
Development resources are currently concentrated on the Cyberpunk 2077: Phantom Liberty expansion and the next installment of The Witcher saga, which is being built using Unreal Engine 5.See it on page 7
05
The GOG segment returned to profitability during the period, contributing to a 12% growth in the Group's overall EBIT.See it on page 3
06
Management is preparing to release the next-gen version of The Witcher 3 in Q4 2022 and plans to provide a comprehensive long-term strategy update in October.See it on page 6

Summary

CD PROJEKT Group’s financial results for the first half of 2022 reflect a period of operational transition, characterized by a strategic shift toward new development projects and the optimization of existing franchises. The company reported sales revenue of 378 million PLN, a 20% decrease compared to the same period in 2021, primarily due to the absence of the high post-release sales curve associated with Cyberpunk 2077 seen in the previous year. Despite the revenue decline, the company achieved a net profit of 114 million PLN, representing an 8% increase year-on-year, with net profitability rising from 22% to 30%.

Key financial drivers included a significant reduction in selling expenses and administrative costs, alongside a favorable impact from the USD/PLN exchange rate. The company’s EBIT grew by 12%, bolstered by the reorganization of the GOG segment, which returned to profitability. As of June 2022, the Group maintained strong liquidity, with cash, bank deposits, and T-bonds totaling 1.189 billion PLN.

Development efforts are currently focused on two primary AAA projects: the Phantom Liberty expansion for Cyberpunk 2077 and the next installment in The Witcher saga. The latter marks a shift to Unreal Engine 5, a move intended to enhance development efficiency and expand the talent pool. The company is also preparing for the release of the next-gen version of The Witcher 3 in the fourth quarter. While the company faces inflationary pressures on wages, management maintains that its core gaming franchises remain resilient. The Group continues to prioritize long-term franchise development, with plans to provide a comprehensive strategy update in October to outline its future business outlook and vision.