Earnings call transcript: CD Projekt Q2 2025 sees 20% EBIT growth

CD Projekt reported a robust performance for the second quarter of 2025, with group sales revenue increasing by 4% year-over-year and EBIT seeing a 20% rise. Despite a one-off tax adjustment affecting net profit, the company maintained a net profitability of 35%. The stock experienced a slight decline of 1.65% following the earnings announcement, closing at PLN 197.84. According to InvestingPro analysis, the company is currently trading slightly above its Fair Value, with a beta of 1.44 indicating higher volatility than the market.

Key Takeaways

• Group sales revenue rose by 4% year-over-year.
• EBIT increased by 20% compared to the previous year.
• Workforce expanded by 10%, reaching nearly 800 developers.
• Cyberpunk 2077 launched on new platforms, including Nintendo Switch and Mac.
• New Cyberpunk anime announced for Netflix.

Company Performance

CD Projekt demonstrated solid performance in Q2 2025, driven by strategic product launches and platform expansions. The company capitalized on its strong brand presence in the gaming industry, particularly in open-world game development. The launch of Cyberpunk 2077 on additional platforms like Nintendo Switch and Mac, along with its inclusion in PlayStation Plus services, contributed to the revenue growth.

Financial Highlights

• Revenue: Increased by 4% year-over-year.
• EBIT: Grew by 20% from the previous year.
• Net Profit: Impacted by tax adjustments, resulting in a 35% profitability.
• Cash Reserves: PLN 1,427 million.
• Dividends Paid: PLN 99.9 million.

Outlook & Guidance

CD Projekt remains focused on developing major projects, including Witcher 4 and Cyberpunk 2. The company anticipates a gradual increase in developer headcount and expects development expenditures to rise. Additionally, CD Projekt is exploring new intellectual property with the HADAR concept.

Executive Commentary

"Our goal is to combine technological innovation with multiplatform presence and transmedia storytelling," stated CEO Michal Novakovsky, highlighting the company’s strategic direction. CFO Piotr Nielubovic added, "We continue to expand our development activity both internally and through collaboration with external partners."

Risks and Challenges

• Potential market saturation in the gaming industry could impact future sales.
• Increasing development costs may pressure profit margins.
• Dependence on successful launches of new projects like Witcher 4 and Cyberpunk 2.
• Regulatory changes affecting tax adjustments could impact net profit.

Q&A

During the earnings call, analysts inquired about the increase in development expenditures and the impact of the Witcher tech demo on marketing. CD Projekt declined to provide specific sales numbers for the Cyberpunk Switch launch but confirmed ongoing work on the HADAR IP concept without a firm commitment.

Full transcript - CD Projekt SA (CDR) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by, and I would like to welcome you to CD Projekt’s First Half twenty twenty five Earnings Conference Call on the August 28. At this time, all participant lines are in a listen only mode. The format of the call today will be a presentation by the management team followed by a question and answer session. So without further ado, I would now like to pass the line to Mr. Michal Novakovsky, the Joint Chief Executive Officer.

Please go ahead, sir.

Michal Novakovsky, Joint Chief Executive Officer, CD Projekt: Thank you, and good afternoon. My name is Michal Novakovsky, and I’ll be your host during today’s conference, where we will sum up the 2025. I’ll be co presenting with Piotr Nielubovic. And after the presentation, we will invite you to participate in a Q and A session, where we will be joined by Karolina Agnasch, our VP and Head of Investor Relations. So in the 2025, we have taken important steps to show how The Witcher and Cyberpunk are evolving into more diversified experiences with an even broader reach.

June 3 marked a milestone for CDPR credit. At State of Unreal twenty twenty five, we presented a technical demo of The Witcher four developed in partnership with Epic Games. The demo highlighted how our teams are pushing the boundaries of open world game technology and enhancing Unreal Engine for the next generation of open world games. The demo ran at 60 frames per second on a standard PlayStation five console, showcasing the capabilities of Unreal Engine five and the tools our respective teams are developing to create large, immersive open worlds. This technical showcase reflects our ambition for The Witcher four.

Our goal is not simply to create another game using Unreal Engine, but to explore new possibilities in immersion, interactivity, and world building. The innovations we are developing together with Epic Games today will shape the way we create experiences for our players, while also at the same time solidifying CDPR Aggregates’ position at the forefront of technological progress in the gaming industry. We’re extremely happy with the amazing reception from the community and gaming media that followed the showcase, and that motivates us obviously to carry on with our hard work on delivering The Witcher four. Just two days after The Witcher four tech demo, presentation, Cyberpunk 2,077 Ultimate Edition had its premiere as one of the launch titles for the debut in Nintendo Switch to console. This event was another important milestone for us, like in the very first time one of our games would be a launch title on a new platform.

Our developers truly made the most of the console’s features, offering new exclusive ways to play Cyberpunk 2,077. We showcased them in a series of hands on presentations attracting praise from the player community and gaming media. And although we clearly see that sales of the on the new console are currently dominated by Nintendo’s first party titles, we were very pleased with Cyberpunk being among the best selling third party games. We believe that thanks to its high quality and Switch two exclusive enhancements, Cyberpunk 2,077 Ultimate Edition is well positioned to benefit from the console’s growing user base. As of June, the vast majority of sales, which is around 70% came from physical copies sold and that reflects the strength of our offering.

The entire game along with its expansion is fully contained on a 64 gigabyte cartridge, providing a plug and play experience which players find particularly attractive. This dominance of physical sales continues into the current quarter with additional stock orders coming in. In the long run, we expect the breakdown of sales between these channels to reflect our past experiences with the share of digital sales progressively increasing as time goes by. It’s worth noting that physical and digital sales channels have different economics. Digital sales naturally yield higher net revenue, while physical copies involve additional manufacturing and packaging costs as well as distributor fees.

Shortly after the release of Nintendo Switch two, Cyberpunk 2,077 Ultimate Edition appeared on yet another new platform. On July 17, the game became available on a wide range of Mac computers equipped with Apple silicon processors. Post for these reviews were very positive with players and media praising the quality and performance of the port. The beginning of q three saw Cyberpunk twenty seven seven included in PlayStation Plus for extra and premium service members, and this gives us an opportunity to reach a broad group of PlayStation players. Subscribers gain access to the base game along with all previously released updates.

If after playing the base game, they wish to expand their adventures in Night City, they have the option to do so by purchasing the Phantom Liberty expansion. Moving on, while we continue to expand the reach of Cyberpunk through new platforms and subscription services, this is not the only path we’re taking. We also continue to develop our core franchise for new transmedia projects and engage audiences beyond games. Last month, at the Anime Expo Convention in LA, we were thrilled to announce that we were once again teaming up with Studio Trigger to create a new standalone anime series set in the world of Cyberpunk 02/1977. Cyberpunk Headrunners two is coming exclusively to Netflix, following the footsteps of the original critically acclaimed series.

Each of these initiatives from the Witcher four tech demo for Cyberpunk 2077 arriving on new platforms to the announcement of Adronas two illustrates the way we’re taking our strategy forward. Our goal is to combine technological innovation with multiplatform presence and transmedia storytelling to strengthen the long term value of our brands and grow our global audience. And as we approach the end of my part of the presentation, let me briefly walk you through our current workforce allocation. Our recruitment efforts have significantly sped up over the last three months. And as a result, the total number of talented developers working across our projects has grown by 10%, reaching almost 800 people.

This growth was primarily driven by our two largest development teams, the Witcher four team grew to over four forty developers, while the Cyberpunk two project, which transitioned into preproduction recently in Q2, as you may remember, added 20 new team members. We anticipate further gradual growth in our total developer headcount by the end of the year, particularly for the teams working on projects in the most advanced stages of production. That will be all from me. And now it’s time for financials, and I hand it over to

Piotr Nielubovic, Chief Financial Officer, CD Projekt: Thank you, Michal. Good evening, everyone. Let’s start with our consolidated profit and loss account on Slide 10. Our group sales revenue for the 2025 reached million, 4% more than in the corresponding period last year. Most of the revenues came from sales of our own products.

It’s worth noting that both the Cyberpunk and The Witcher product families this year generated slightly higher sales than in the corresponding period last year. Our goods our sales of goods and materials reached million and recorded 28% growth. Both segments recorded visible increases versus last year. In the case of sales of goods and materials in our teleprioric rep segment, the figure reached nearly million. This was driven by our sales of physical cartridges of Cyberpunk Ultimate Edition for Nintendo Switch two.

Our cost of products and services sold was lower in H1 twenty twenty five compared to H1 twenty twenty four mainly for two reasons. First, due to the use of a declining amortization model and second, because we extended the amortization scheme based on an estimation of useful lives of our assets that was updated at the end of last year. The cost of goods for resale and materials sold grew in line with the discussed increase of sales in this category. Moving on to operating costs. In twenty twenty five H1, they remained relatively stable versus last year.

However, their structure changed. We had higher selling expenses due to our promotional activity related to the Cyberpunk 2077 launch on Nintendo Switch two, as well as celebration of the tenth anniversary of The Witcher three: Wild Hunt and The Witcher four tech demo presentation. At the same time, the administrative expenses decreased, which was mainly driven by the decrease in research work costs after the Cyberpunk two project changed its IFRS status in September 2024 from research to development, which qualifies for capitalization from that point onward. All in all, our EBIT reached million, 20% more than a year ago. The low income tax for the first half of the previous year was not typical for our business as neither is the relatively high income tax we recorded in the first half of this year.

As discussed during our last earnings call dedicated to the results of the first quarter, most of this amount, nearly million came from adjustments covering prior years driven mainly by corrections of our bookings related to withholding taxes, events of a one off nature. And finally, our net profit for the first half of this year reached million. The overall net profitability of the group was 35%. However, it’s worth noting that if we eliminated the non monetary adjustments related to historical taxes booked in Q1 this year, the net profit would be higher than last year and the net profitability ratio would amount to a comparable 39.9%. Now let’s take a look at the next slide, number 11, our consolidated balance sheet.

On the asset side, first, the core of our business, expenditures and development projects. The balance here increased by million. The new developments, mainly The Witcher four, Cyberpunk two and Sirius, but also some projects that are still unannounced, were responsible for PLN230 million increase, parallel to the PLN28 million decrease coming from amortization of the already launched games. We also continue investing in our local physical assets as visible in the nearly PLN40 million increase of the property, plant and equipment line item. This was mainly driven by the final phase of the construction and fit out of a new building at our Warsaw campus, where the Witcher four team has already moved in and continues development of the game.

Our trade receivables decreased as of the June, which is natural when we compare it with the year end value, which is usually quite high. Other current assets increased by nearly 22,000,000, mainly due to a higher balance of our prepayments, including prepayments for development projects. The total value of cash deposits and bonds included in the three asset items marked with an asterisk is summed up under the table and amounts to PLN $1,427,000,000 as of the June. Our financial position decreased by PLN 45,000,000 this time. Within this change, GOG was responsible for a decrease of PLN 11,000,000 driven by prepayments to its game suppliers, mostly related to Q4 sales.

At the same time, to the prior credits, reported PLN 34,000,000 decrease in its financial reserves, which corresponds to 2.4%. As usual, I will have a separate slide to provide some more insight on our main cash flow drivers this year. Moving forward to equity and liabilities, Slide 12. The decision of our general meeting adopted before the June to pay out a 99,900,000.0 dividend at the July was the main driver of the growth of our liabilities. This dividend payout obligation boosted our other liabilities line as of the June.

The decrease in provisions results mainly from payments of bonuses dependent on 2024 results, which depends which for which appropriate provisions had been created back then. Now please move on to the next slide, number 13, to the prior credits expenditures on research works, development and cost of product maintenance, presented here on a quarterly basis for this and last year. In line with our strategy, we continue to expand our development activity both internally and through collaboration with external partners. The visible increase in development expenditures is therefore a natural outcome of accelerating work on our projects. One of the key contributors to this growth was the strengthening of the Boston team, our main recruitment focus, which is responsible for developing Cyberpunk two.

This project, as Michal has already mentioned, entered the preproduction phase in Q2. And finally, our aggregated cash flow drivers on Slide 14. The million book net profit was supported by PLN55 million in amortization, depreciation and non cash costs of our share based incentive programs. The overall change in receivables, liabilities, provisions and deferrals boosted our cash flows by PLN 47,000,000. At the same time PLN 64,000,000 was expensed on the acquisition of tangible and intangible assets.

Putting investments into currently developed products aside, our ongoing business generated million during the 2025. During the same time, most of our team was engaged in working on new projects, hence the investment of million into new development projects. All in all, our financial reserves kept in cash, bank deposits and bonds decreased by the already mentioned PLN45 million over the reporting period reaching PLN 1,430,000,000.00 as of the June. That’s all from me for now. We can move on to the Q and A session.

Thank you.

Conference Operator: Thank you. Thank you very much for the presentation. So we are now opening the question and answer If you are connected via the web, you can also request to ask a voice question or send your question as a text. We just give a moment or so for the questions to come in. As we are seeing no voice questions, I will pass the line to the Citi product team to read out the text questions.

Piotr Nielubovic, Chief Financial Officer, CD Projekt: Okay. So the first question comes from Grzegorz Balzerski from Trigon. Expenditure on development projects jumped to over million in Q2 versus about million in Q1. Could you please explain the growth? Should we expect this amount to be repeated subsequent quarters or was there a one off element in this matter?

Actually, million is not just the development expenses, it’s altogether, So research, development and service. And therefore, for pure development expenses, the amount would be slightly lower. And to answer the core of the question, in general, as we progress with the development of our projects, the expenditures will naturally increase. And we also increase and we also expect the increase in the coming quarter. The expenses reflect both the growth of our internal teams, but also accelerating cooperation with external partners.

Michal Novakovsky, Joint Chief Executive Officer, CD Projekt: Okay. And I’ll take the second question also from Trigon from. And the question is, are you able to determine whether this year’s marketing beat so far related to the presentation of the Witcher Tech demo and the promotion of Cyberpunk on Switch and others were the most important market events this year. And there’s a second sub question. Are you planning any more communications related to yet undisclosed projects this year?

So whether these beats were important, yes. I mean, we felt that the Witcher tech demo was an important milestone also marketing wise. Of course, it was a tech demo first and foremost predominantly for from our perspective, but the way it resonated with with the players with the audience was was was a proof that it was impactful in terms of in terms of being a marketing beat as well. And as for Cyberpunk launch and switch to, it was also an important thing for us, especially, you know, taking into account that this was the first time we were launching day to day with the console debuts. So so, yes, this was also an important beat.

In terms of us planning any more communications on undisclosed projects, of course, that’s the part we cannot comment because, you know, we we we can’t share details ahead of something that would be a surprise. So it’s neither yes or no, basically. And I think there’s a second question which I can take, which comes from Mihael Wojciechowski from Ipopema. And the question is, are you going to make any decisions regarding HADAR future by the end of this year by the end of this year or 2026, I think. So HADAR is basically still an IP concept, so so not a game development yet.

We’re working on, you know, the game story, the bay the game’s background, so to say. There is some prototyping going on in terms of gameplay because because it’s hard not to do that when when, you know, the end goal is to make a video game, of course. But I’m not sure what you mean by the decisions. I mean, decision as in to progress into development or what is whether we’re gonna make one or not. I mean, we we wanna make this IP happen.

So that decision is sort of, you know, made in terms of where we’re gonna go with the development. We’re gonna we’re gonna announce that in in due time, I think. There’s actually another question. This one is from Konrad Krasowski from Bloomberg. Can you reveal number of copies of Cyberpunk two sold to Switch platform?

Unfortunately, no. This is this is not information we’re sharing. Alright. Since it seems there are no more questions in text form or on the call in voice, I think I think we would like to thank you for joining us today. And of course, as always, if you have any follow-up questions, feel free to get in touch with our marvelous Investor Relations team.

And we wish you a very pleasant evening and goodbye and till the next call. Thank you.

Conference Operator: Thank you. This concludes the

Michal Novakovsky, Joint Chief Executive Officer, CD Projekt: call for

Conference Operator: today. We are now closing all the lines.

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