CD PROJEKT Group Condensed Interim Consolidated Financial Statement: Q1 2021

Key insights

6 takeaways

01
CD PROJEKT Group’s net profit fell by approximately 65% year-over-year to 32.5 million PLN in Q1 2021, driven by high R&D, administrative costs, and ongoing maintenance for Cyberpunk 2077.See it on page 8
02
Despite lower profits, the company’s liquid financial reserves surged by nearly 119% compared to year-end 2020, reaching over 1.9 billion PLN.See it on page 3
03
Operating cash flow exceeded 1 billion PLN in Q1 2021, supported by a 95.7% reduction in trade receivables as licensing royalties for Cyberpunk 2077 were collected.See it on page 10
04
The company maintains a total asset base of approximately 2.89 billion PLN, bolstered by strategic investments in treasury bonds and bank deposits.See it on page 11
05
Sales revenue remained stable at 197.6 million PLN, though the business remains highly concentrated with a single external client accounting for over 40% of consolidated sales.See it on page 43
06
Operational shifts in Q1 2021 included the implementation of the RED 2.0 parallel AAA development strategy, the acquisition of Digital Scapes, and recovery efforts following a cyberattack.See it on page 10

Summary

The CD PROJEKT Group’s financial performance for the first quarter of 2021 reflects a period of transition characterized by high liquidity and significant operational expenditure following the late 2020 release of Cyberpunk 2077. While sales revenues remained stable at 197.6 million PLN, net profit declined by approximately 65% compared to the same period in the previous year, falling to 32.5 million PLN. This contraction in profitability was primarily driven by elevated operating costs, including increased R&D spending, administrative expenses, and the ongoing maintenance requirements for its flagship title.

Despite the decline in net profit, the Group’s cash position strengthened substantially. The collection of licensing royalties from Cyberpunk 2077 led to a 95.7% reduction in trade receivables and a robust net cash flow from operating activities exceeding 1 billion PLN. By the end of the quarter, liquid financial reserves had surged by nearly 119% compared to year-end 2020 figures, reaching over 1.9 billion PLN. This liquidity was further bolstered by the strategic allocation of surplus cash into treasury bonds and bank deposits, ensuring a stable asset base of approximately 2.89 billion PLN.

Operationally, the Group navigated a complex environment involving a cyberattack, the implementation of the RED 2.0 strategy for parallel AAA development, and the acquisition of Digital Scapes. The business remains heavily reliant on digital distribution, particularly within North American markets, with a single external client accounting for over 40% of consolidated sales. Moving forward, the company’s financial health is tied to the long-term growth of The Witcher and Cyberpunk franchises, the execution of its updated development strategy, and the continued expansion of its GOG.com platform, all while operating under a remote work model necessitated by the global pandemic.