CD Projekt SA (OTGLF) (FY 2024) Earnings Call Highlights: Navigating Challenges and Seizing ...

Yahoo

26-03-2025

Revenue: PLN985 million for 2024, 80% of the previous year's revenue.
Cyberpunk and Phantom Liberty Sales: PLN589 million contribution to group sales.
The Witcher Products Sales: PLN163 million, slightly more than the previous year.
Selling Expenses: Decreased by PLN108 million to PLN135 million.
Net Profit: PLN470 million, 2% less than the previous year.
Net Profitability: Increased to 48% for the group, 58% for CD Projekt RED.
Cash Reserves: Increased by PLN163 million, reaching PLN1.47 billion.
Development Expenditures: Increased by PLN168 million, mainly due to The Witcher 4, Series, and Orion projects.
Dividend Policy: Starting 2025, a dividend of at least 25% of net profit recommended.
Warning! GuruFocus has detected 6 Warning Sign with OTGLF.
Release Date: March 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
CD Projekt SA (OTGLF) achieved a major milestone with The Witcher 4 entering full-scale production, involving over 400 developers.
The Witcher 4 trailer received significant attention, becoming the most watched at the game awards event with over 8 million views in 72 hours.
Cyberpunk 2077 maintains a high rating on Steam and won a BAFTA award, indicating strong community appreciation.
Sales of Cyberpunk 2077 and its expansion, Phantom Liberty, were robust, with over 13 million and 8 billion copies sold, respectively.
CD Projekt SA (OTGLF) announced a strategic partnership with Scopely to develop a game within one of its IPs, indicating future growth opportunities.
The Witcher 4 is not expected to be released by the end of 2026, raising concerns about the timeline for future releases.
The reorganization of project teams around Sirius and The Witcher remake may impact project timelines.
The company's net profit target for the 2023-2026 incentive program remains challenging, with over PLN1 billion still needed.
There is uncertainty regarding the financial impact of the new amortization schemes on future results.
The use of generative AI tools in development is limited due to legal and IP concerns, potentially affecting innovation.
Q: Can you provide details on the partnership with Scopely, including any upfront licensing fees and project timelines? A: Michal Nowakowski, Joint CEO: Unfortunately, we cannot provide further information on the Scopely partnership at this time. More details will be shared in the future.
Q: Will The Witcher 4 be released by the end of 2026, and can we expect it in 2027? A: Piotr Nielubowicz, CFO: We are not announcing a precise launch date for The Witcher 4 yet. However, it will not be released by the end of 2026. We cannot confirm a 2027 release at this time.
Q: Does the reorganization of project teams affect the timing of Sirius, The Witcher remake, and The Witcher 4? A: Michal Nowakowski, Joint CEO: The reorganization does not affect the timing of these projects. Sirius and The Witcher 4 are developed independently, with no significant overlap between the teams.
Q: How might the release of GTA VI impact the standard price of AAA games? A: Michal Nowakowski, Joint CEO: While we have no specific knowledge, there is a likelihood that GTA VI could influence AAA game pricing. If the standard price changes, it could benefit us.
Q: What are the chances of achieving the incentive program target of PLN 1 billion net profit by 2026 without new projects? A: Piotr Nielubowicz, CFO: Achieving the target relies on the longevity of our products, franchise management, and new content releases. We expect to be active in these areas to meet the goal.
Q: Can you provide an update on the development costs for The Witcher 4? A: Piotr Nielubowicz, CFO: We do not guide on future budgets. The headcount is at the target size, and costs will fluctuate as development progresses, especially in later stages like localization and QA.
Q: What is the status of animation and live-action projects? A: Michal Nowakowski, Joint CEO: We have no specifics to share. Animation teasers were shown last year, and more information is expected soon. Live-action updates will follow later.
Q: What percentage of investment expenditures are allocated to animation, live-action, and announced projects? A: Piotr Nielubowicz, CFO: Most investments are in major products like The Witcher 4 and Orion. Other projects are smaller in scale compared to these flagship titles.
Q: Is it possible to release the entire new Witcher trilogy within a 6-year window? A: Michal Nowakowski, Joint CEO: We see no obstacles to achieving this goal. Our experience with Unreal Engine 5 is positive, and we are progressing as planned.
Q: What impact will the new amortization schemes have on future depreciation? A: Piotr Nielubowicz, CFO: The updated amortization schemes reflect the strong performance of Cyberpunk and Witcher 3. For 2025, Cyberpunk and Phantom Liberty's quarterly amortization will decrease by PLN 3 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.