FILE PHOTO: A bird flies in front of the Cd Projekt logo at its headquarters in Warsaw, Poland January 21, 2020. Picture taken January 21, 2020. REUTERS/Kacper Pempel/File Photo
(Reuters) -Poland's biggest game developer CD Projekt on Thursday reported an 8.9% fall in half-year net profit compared with the previous year due to higher selling costs and paying more tax.
BY THE NUMBERS
Its net profit was 155.0 million zlotys ($42.6 million), beating analysts' expectations of 152 million zlotys seen in a Reuters poll.
Revenue for the period rose 4.3% year-on-year to 443.0 million zlotys.
WHY IT'S IMPORTANT
CD Projekt has in its portfolio two blockbuster franchises - Cyberpunk and The Witcher.
"The Witcher 4", a successor to "The Witcher 3: Wild Hunt", is in the production phase, with the release date expected after 2026.
The sequel to Cyberpunk 2077, Cyberpunk 2, is in pre-production phase.
The most significant expenditure on development projects incurred during the first half of the year regarded The Witcher 4, Cyberpunk 2 and Sirius projects which were in the development phase.
The largest expenditure incurred on research related to the Hadar project.
CONTEXT
CD Projekt is facing now a period without a major game release and its revenue for the upcoming quarters will be mainly coming from the sales of existing games.
In November joint CEO Michal Nowakowski said that for the company it typically takes five to six years to develop a big ticket AAA game from the time early ideas are first discussed.
KEY QUOTES
"The group's revenue stream continues to be dominated by Cyberpunk 2077 together with its Phantom Liberty expansion", company's CFO Piotr Nielubowicz said in the statement.
"We also continue to ramp up investments in ongoing projects – our expenditures on development work associated with future releases exceeded 240 million zlotys in the first half of the year", he added.
($1 = 3.6405 zlotys)
(Reporting by Adrianna Ebert; Editing by Matt Scuffham)
