CD PROJEKT GROUP $CDR (+0.15%)

recorded a net profit of PLN 78 million in the third quarter of 2024, an increase of 12% compared to the second quarter, although there were no new releases in this period. Revenue for Q3 2024 amounted to PLN 227.6 million, a decrease of 49% compared to the same quarter last year - an effect mainly due to the lack of new products.

Balance sheet overview

• Total assetsTotal assets increased by 4% from PLN 2,660,007 thousand on June 30, 2024 to PLN 2,755,416 thousand on September 30, 2024.
• LiquidityCash, deposits and bonds increased by 3% to PLN 1.401 billion by the end of September 2024.

Profit and loss account

• Cost structureDistribution costs decreased by 56% to PLN 63.5 million in the third quarter of 2024 due to lower amortization costs for Cyberpunk products. Operating costs also decreased, with distribution expenses reduced by 56% to PLN 29.2 million.

Cash flow overview

• Cash flowThe Group generated a net cash flow of PLN 122.9 million (excluding R&D costs) in the third quarter of 2024. Changes in other assets and liabilities contributed to the improvement with a positive effect of PLN 10 million.

Key figures and profitability metrics

• Net profit marginThe net margin was stable at 38%, slightly above the previous year's figure.
• EBIT: EBIT amounted to PLN 80.6 million in the third quarter of 2024, a decrease of 57% compared to the previous year.

Segment information

• The Witcher: Revenue from Witcher games increased by 44% compared to the same period of the previous year, supported by the integration of The Witcher 3 into PlayStation Plus.
• GOG.COM: The digital distribution service continues to record a growing user base and an expanded product range.

Competitive position

CD PROJEKT is strengthening its position in the gaming industry by strategically expanding its portfolio and actively involving the community. The collaboration with Netflix on a new cyberpunk-animation project should further increase brand awareness.

Management forecasts and comments

The management has set ambitious targets for the coming years, including a cumulative consolidated net profit of PLN 4 billion for the period 2025-2028. By the end of next year, the team size for the Sirius project is to be doubled.

Opportunities and risks

• OpportunitiesInvestments in research and development and new technologies such as AI offer potential for innovation and future growth.
• Risks: The lack of new publications in the current year could have a negative impact on short-term sales growth.

Summary of the results

CD PROJEKT GROUP is going through a challenging year with no new product releases, but has maintained strong profitability ratios and solid cash reserves. The company is making targeted investments in future projects and technologies to secure long-term growth.

Positive aspects

High profitabilityThe net margin remained stable at 38%.

Strong liquiditySolid cash reserves of PLN 1.401 billion.

Successful milestones: Continued high sales figures for Cyberpunk 2077 and its expansion.

Growth in Witcher games: Sales increase of 44 %.

Strategic cooperations: Cooperation with Netflix to strengthen brand presence.

Negative aspects

Decline in sales: A 49 % decline in sales compared to the previous year.

Reduced operating profitEBIT decline of 57 %.

High R&D expenditure: burden on short-term profitability.

No new releasesLack of new products in the current year.

Decrease in financial assetsDecrease of 20 %.