CD Projekt announced its financial report on Monday that its profit in the first quarter dropped by more than half compared with the same period last year. The main reason was that its game Cyberpunk 2077 was compromised by Sony PlayStation. The store is removed. The company’s executives said that this matter will continue to affect its performance.
Cyberpunk 2077, starring Hollywood star Keanu Reeves, was one of the most anticipated games last year. However, the release time of this game was postponed three times, and a large number of loopholes appeared after its debut, and it was removed from the Sony PlayStation Store for more than 5 months.
CD Projekt did not disclose the sales of Cyberpunk 2077 in the first quarter. The company’s CFO Piotr Nielubowicz said on the conference call that about 60% of product sales in the first quarter came from cyberpunk, but he did not provide specific details. Analysts said that due to the PlayStation Store delisting and a major patch released at the end of March, sales of Cyberpunk 2077 may be low.
As long as we don’t go back to the Sony store, the overall situation will not change. This is one of our most important markets, and most of our sales come from PC/digital channels. The company’s executives said on a conference call.
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Affected by the depreciation of Cyberpunk 2077 development expenditures and game repair costs, the company’s net profit in the first quarter fell by 64.7% to 32.5 million Polish zlotys (approximately US$8.78 million), far below analyst expectations of 80 million Polish zlotys. Revenue for the quarter fell 2% to 197.6 million Polish zlotys (approximately US$53.94 million).
Cost of sales for the quarter increased by 79.6% to 62.1 million PLN. Affected by Cyberpunk 2077, CD Projekt plans to start high-budget development in 2022 and seek opportunities for mergers and acquisitions. But future sales growth depends on its ability to re-attract Cyberpunk 2077 players. The company confirmed that it will release free downloadable content in the second half of the year and will upgrade Cyberpunk and Witcher 3 to the next generation of game consoles.
The company’s share price hit a record high of 464.2 Polish Zloty when it was about to release Cyberpunk 2077 last year but has since fallen by more than 60%. Although the performance is not as good as expected, we believe that most of the negative news related to this quarter has been reflected in the stock price. Credit Suisse analysts wrote in the research report.
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