CD PROJEKT's quarterly profit has almost tripled due to the costs of Cyberpunk 2077 and new AAA projects
The Polish CD PROJEKT Group of companies summed up the results of the first quarter (ended March 31, 2021). It didn’t go well. Despite the increase in sales revenue, net profit immediately fell by 64.7%.
The main thing from the report:
- In January-March 2021, CD PROJEKT earned 197.6 million zlotys or $54 million in sales. This is 2% more than in the same period in 2020.;
- The lion’s share of revenue (73.8%) was received by the group of companies due to sales of games. Mainly, The Witcher 3: Wild Hunt and Cyberpunk 2077. Moreover, the latter accounted for 60% of sales (but it is not clear — in dollars or in the number of copies sold). CD PROJEKT did not disclose the circulation of Cyberpunk 2077, however, if these 60% relate to the revenue from the sale of games, then we can roughly estimate that about 398.6 thousand copies were sold in the first quarter;
- CD PROJEKT explained the small increase in revenue by “the too successful first quarter of 2020.” Then her finances were affected by the COVID-19 pandemic, the release of The Witcher series on Netflix and the release of the game about The Witcher on Nintendo Switch;
- the net profit of the group of companies amounted to 32.4 million zlotys or $8.8 million — 64.7% lower compared to the same period last year;
- according to Financial director Piotr Nielubowicz, the sharp decline in profits is due to the continued depreciation of the costs of developing Cyberpunk 2077, work on patches for the game and research (R& D) for some of the company’s next projects;
- while a significant part of the Cyberpunk 2077 team was engaged in the next-gen version of the game and patches, another started new projects. What exactly these projects are is unknown. The Poles only noted that these are two AAA games, full-fledged parallel work on which will begin no earlier than 2022.
Note that CD PROJEKT’s results were much lower than analysts’ forecasts. Previously, they assumed that sales revenue would be higher by 88.2%, and net profit by 42.5%. In part, this may be due to the poor sales of Cyberpunk 2077, due to the lack of it in the PlayStation Store and the late release of the main patch.
Against the background of the publication of the CD PROJEKT financial report, the shares of the group of companies fell again. At the time of writing, you can buy one share for 154.1 zloty or $42. This is 8.6% lower than yesterday.
