CD PROJEKT Capital Group Condensed Interim Consolidated Financial Statement: Q3 2018

Key insights

7 takeaways

01
CD PROJEKT reported 235.6 million PLN in net revenue and 67.9 million PLN in net profit for the first nine months of 2018, marking a decline compared to the same period in 2017.See it on page 3
02
The company maintains a strong balance sheet with 601.6 million PLN in cash reserves and 93.5% of assets financed by equity.See it on page 9
03
R&D investment remains a primary focus, with 28.2 million PLN allocated in Q3 2018 to support the development of Cyberpunk 2077 and GWENT: The Witcher Card Game.See it on page 14
04
North America is the company's largest market, accounting for over 57% of total revenue, with digital distribution serving as the primary sales channel.See it on page 56
05
The October 2018 release of Thronebreaker: The Witcher Tales underperformed initial sales expectations despite receiving critical acclaim.See it on page 42
06
Strategic expansion included the acquisition of the Strange New Things studio and the launch of Spokko, a new subsidiary focused on mobile gaming.See it on page 66
07
Key distribution partnerships for Cyberpunk 2077 were finalized with Warner Bros. and Bandai Namco.See it on page 69

Summary

The CD PROJEKT Capital Group’s financial results for the first nine months of 2018 reflect a period of transition characterized by significant research and development investment and a lack of major new product releases. Net revenues for the nine-month period reached 235.6 million PLN, with a net profit of 67.9 million PLN, representing a decline from the same period in 2017. Despite this contraction, the Group maintains a robust financial position, with 93.5% of assets financed by equity and stable cash reserves totaling 601.6 million PLN. Operations remain heavily export-oriented, with North America accounting for over 57% of revenue, while digital distribution continues to serve as the primary sales channel.

Financial performance during the third quarter was primarily sustained by the enduring popularity of The Witcher 3: Wild Hunt. The company aggressively allocated capital toward the development of Cyberpunk 2077 and GWENT: The Witcher Card Game, with R&D expenditures totaling 28.2 million PLN for the quarter. Strategic expansion efforts included the acquisition of the Strange New Things studio and the establishment of Spokko, a new subsidiary dedicated to mobile gaming. While the October 2018 launch of Thronebreaker: The Witcher Tales received critical acclaim, initial sales volumes were lower than anticipated, though management maintains a positive outlook on its long-term commercial viability.

The Group successfully navigated the adoption of new accounting standards, including IFRS 9 and IFRS 15, confirming that these changes did not materially impact overall financial results or equity. The report also highlights the finalization of key distribution agreements for Cyberpunk 2077 with Warner Bros. and Bandai Namco, alongside the management of ongoing litigation and a royalty dispute. By maintaining a conservative capital structure and focusing on long-term development, the Group continues to prioritize the expansion of its intellectual property portfolio and corporate footprint within the global gaming market.