CD PROJEKT Q3 2020 Financial Results: Transcript of Audio Webcast

Key insights

7 takeaways

01
CD PROJEKT reported a Q3 2020 net profit of over 23 million PLN, representing a 57% increase compared to the same period in 2019.See it on page 3
02
Deferred revenues grew by over 77 million PLN, driven primarily by strong pre-order performance for Cyberpunk 2077.See it on page 3
03
Cyberpunk 2077 achieved gold status and full certification across all target platforms, including next-generation consoles, despite remote work challenges.See it on page 1
04
Development expenditures increased by 39 million PLN during the quarter, reflecting continued heavy investment in the company's project pipeline.See it on page 4
05
The company’s Q3 financial stability was supported by the sustained performance of The Witcher franchise and Gwent, which offset the absence of new major releases.See it on page 8
06
Marketing for Cyberpunk 2077 reached a global scale across 55 countries and 34 languages, utilizing a digital-first sales strategy.See it on page 1
07
Strategic details regarding post-launch expansions and multiplayer development for Cyberpunk 2077 are scheduled for disclosure in Q1 2021.See it on page 1

Summary

CD PROJEKT’s Q3 2020 financial results webcast centers on the company’s final preparations for the launch of Cyberpunk 2077. The primary thesis of the presentation is that despite the operational challenges posed by the COVID-19 pandemic and the necessity of remote work, the company successfully maintained its development schedule and financial health. Management emphasizes that the studio’s core focus remains on delivering a high-quality, innovative product, with the game having achieved gold status and full certification for all target platforms, including next-generation consoles.

Financial performance for the third quarter remained robust, with the company reporting a net profit of over 23 million PLN, a 57% increase compared to the same period in the previous year. This growth was driven by the continued popularity of The Witcher franchise and Gwent, which offset the lack of new major releases during the quarter. Notably, deferred revenues grew by over 77 million PLN, largely attributed to strong pre-order performance for Cyberpunk 2077. The company’s balance sheet reflects significant investment in development, with expenditures on projects increasing by 39 million PLN, while cash reserves remained stable despite a share buyback program executed earlier in the year.

The scope of the company’s operations is global, with marketing efforts spanning 55 countries and 34 languages. The promotional campaign for Cyberpunk 2077 is described as significantly larger in scale than previous projects, utilizing a mix of digital channels, high-profile collaborations, and traditional media. Management maintains a neutral, analytical outlook regarding future strategy, noting that detailed plans for post-launch expansions and multiplayer development will be disclosed in the first quarter of 2021. The company remains committed to a digital-first sales strategy, anticipating that digital channels will account for the majority of revenue, consistent with long-term trends observed in their existing product portfolio.