Condensed Interim Consolidated Financial Statement: CD PROJEKT Capital Group Q1 2019

Key insights

7 takeaways

01
CD PROJEKT generated 80.9 million PLN in revenue for Q1 2019, an increase from 75.4 million PLN in the same period of 2018.See it on page 3
02
Net profit declined to 17.8 million PLN from 22.9 million PLN in Q1 2018, driven by higher operating expenses related to Cyberpunk 2077 development and GOG Galaxy 2.0 maintenance.See it on page 8
03
The company maintains a strong financial position with total assets exceeding 1.1 billion PLN.See it on page 3
04
Operating cash flows were temporarily negative in Q1 2019 due to significant advance payments to suppliers and the settlement of trade liabilities.See it on page 15
05
The group adopted IFRS 16 accounting standards during this period, requiring the recognition of building lease agreements as assets and liabilities.See it on page 21
06
Management signaled long-term confidence by recommending a dividend distribution from 2018 profits despite increased operational expenditures.See it on page 64
07
The company expanded its corporate structure by establishing a new subsidiary, CD PROJEKT RED STORE sp. z o.o.See it on page 17

Summary

The CD PROJEKT Capital Group’s financial performance for the first quarter of 2019 reflects a period of strategic investment and operational transition. The company generated 80.9 million PLN in revenue, marking a year-over-year increase from 75.4 million PLN. Despite this growth in top-line figures, net profit declined to 17.8 million PLN from 22.9 million PLN in the same period of 2018. This contraction in profitability is primarily attributed to elevated operating expenses, including significant development costs for the highly anticipated Cyberpunk 2077 and ongoing maintenance and expansion efforts for GWENT: The Witcher Card Game and the GOG Galaxy 2.0 platform.

The Group maintains a robust financial foundation, reporting total assets exceeding 1.1 billion PLN. While operating cash flows were temporarily negative due to substantial advance payments to suppliers and the settlement of trade liabilities, the company’s liquidity remains stable. The period was characterized by a shift in accounting practices, most notably the adoption of IFRS 16, which necessitated the recognition of building lease agreements as assets and liabilities. Furthermore, the company expanded its corporate footprint by establishing the subsidiary CD PROJEKT RED STORE sp. z o.o. and continued to rely on digital distribution as its primary revenue driver.

Looking forward, the Group’s financial trajectory remains tethered to the development cycles of its core intellectual properties and the performance of the GOG.com segment. Management continues to prioritize long-term growth through the expansion of the GWENT multiplayer ecosystem and the development of Cyberpunk 2077. Despite ongoing legal challenges and increased operational expenditures, the company maintains a stable shareholder structure and has recommended a dividend distribution from 2018 profits, signaling confidence in its long-term commercial viability and adherence to international financial reporting standards.