CD Projekt RED profits up 183% in first half of 2020

CD Projekt Group's six-month earnings for the 2020 calendar year sees high triple-digit spikes in operating and net profits, driven by strong sales of GOG titles, Witcher 3 on consoles, PC, and Nintendo Switch, and merchandise.

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CD Projekt just announced its 1H'20 results to strong fanfare. As with most games companies, CD Projekt saw a sharp uptick in net sales and overall revenues during COVID-19.. The company made $38.15 million in net profits (+183%) on the back of $94.6 million in net sales (+70%). Six-month net sales are at their highest point since Witcher 3's release in 2015. Operating profit was up 160% from last 1H'19 to $40.58 million.

The Witcher 3, which has been re-released three times now (once in 2015, again in 2016 as the complete edition, and once more on Switch), was the biggest contributor to earnings.

"In the first half of 2020 the CD PROJEKT Group's results were primarily affected by sales of The Witcher 3: Wild Hunt and its expansions (Hearts of Stone and Blood and Wine), sold separately as well as in the Game of the Year Edition bundle for the PC, Xbox One, PS4 and Nintendo Switch,"reads the report.

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• Net Sales - 363.99 PLN ($94.6 million), up 70% YoY
• Operating Profit - 156.08 million PLN ($40.58 million), up 160% YoY
• Net Profit - 146.75 million PLN ($38.15 million), up 183% YoY
• EPS -1.53 PLN, up 0.99 PLN and 183% YoY

As a result of this performance, CD Projekt's earnings per share jumped 183% and sat at 1.53 PLN basic EPS as of June 30, 2020.

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Operating activity cashflows were 285.876 million PLN, up 529%.

Strong royalties helped offset trade receivables, which resulted in a 75 million PLN gain in receivables.

CDPR also enjoyed 46.7 million PLN from deferred revenues from Cyberpunk 2077 preorders.

Investment expenditures created a loss of 168.96 million PLN, primarily from continued investment into game dev projects like Cyberpunk 2077.

In H1'20, CDPR spent 114.27 million PLN on dev projects, most of which was for Cyberpunk 2077. CDPR is also spending big on new projects and development of new tech. CDPR has spent 448.51 million PLN (roughly $121 million) on in-development projects to date.

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Read Also: CDPR has spent over $121 million on Cyberpunk 2077's development

2020 will be likely be CD Projekt RED's biggest year yet.

The company will release Cyberpunk 2077 in November, the first new release in five years. Up until now CDPR has relied on The Witcher 3 to buffer sales by strategically re-releasing the game across multiple platforms in various formats. History says that every time CDPR releases a new game, sales and profits skyrocket.

Case in point: CDPR's earnings hit historic highs when The Witcher 3 released in May 2015.

This year stands to beat The Witcher 3's historic launch for two big reasons: Cyberpunk 2077's launch, and another re-release of The Witcher 3.

CDPR announced The Witcher 3 is getting a PlayStation 5 and Xbox Series X re-release, marking the fourth time the game has been launched altogether. Anyone who owns a copy of The Witcher 3 gets free next-gen upgrades on PS5 and Xbox Series X. This move will help spark Witcher 3 sales ahead of the re-release as gamers buy the RPG while it's still on sale and cheap.

The company hasn't outlined total-year guidance, but expect 2020 to be astronomical for CD Projekt RED.