Cd Projekt Sa Unsp/Adr

Dear ladies and gentlemen, welcome to the conference call of CD Projekt Group. At our customer's request, this conference will be recorded. As a reminder, all participants will be in the listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. We now hand you over to Adam Kuczynski, who will lead you through this conference. Please go ahead, sir.

Good afternoon, everyone. Welcome to CD Projekt's conference call dedicated to Q3 2020. My name is Adam Kiciński, and I will run this call together with Piotr Nielubocz, CFO. Please note that the presentation is posted on our corporate website, cdprojekt.com. After the call, we will also post the audio recording of the call and its transcripts. Let me start with a short pandemic update. As the COVID-19 situation is definitely not better now than it was in July, we have decided to extend the studio's home office mode until the end of March 2021. Of course, the well-being of our team remains our top priority and we'll take additional measures to ensure everyone's safety. In spite of these extraordinary and difficult circumstances, our team is giving it their very best at this final development stretch of Cyberpunk 2077. I'm truly grateful to them for their incredible work and dedication to the project. Thank you, thank you, thank you. Please move on to slides three and four. Even though the circumstances are less than perfect, we continue to work hard on delivering top quality content for our fans. The game went gold in early October and will hit stores around the world in 15 days. Please move on to slide five. The game will be launched on PC, Xbox One, PlayStation 4, and Stadia. Just days ago, next-gen consoles were released and our title will run great on Xbox Series X and S as well as PlayStation 5 from the very beginning thanks to their backward compatibility. We are excited to be able to bring our game to more players than ever before. Please move on to slide 6. In the past few days, we released two trailers presenting gameplay on current and next-gen consoles. The extra time gained by postponing the release is being used to further optimize the game. And we feel that it was the right decision. In the next few slides, starting with slide seven, I would like to tell you more about Cyberpunk's promotional campaign. Here we present An updated chart showing our promotional activities between September and today. The thickness of each bar represents the intensity of activities. As you can see, we are already in an advanced phase, but the crucial, most intensive period will begin in the first days of December. We want to reach as many funds as possible. which is why our apps appear in 55 countries and 34 different languages. Our goal is to be wherever gamers are and we want to talk to them in their mother tongues. As for the game itself, it has been localized into 18 languages including 10 fully dubbed versions . What's even cooler Mimics and facial performance are unique and fully natural in every voiceover language. Let me now briefly summarize the key events of the past weeks, starting with slide 12. We began October on a high note. At the opening game of this year's NBA Finals, we had new cyberpunk commercial starring Keanu Reeves. which kicked off our TV marketing campaign. We also carried on with the Night City Wire series. Please move on to slides 13 and 14. Each episode presents new facets of Cyberpunk, including trailers, behind the scenes footage, the game world, and key character. Interest has been huge, with each episode attracting more and more viewers. The gameplay trailer during the final fifth episode last week was viewed a record 23 million times over just three days following its release. Moving on to slide 15. We recently announced our collaboration with brands such Porsche, Nvidia, Adidas, Rockstar Energy Drink and Sprite. Each such collaboration is carefully tailored and fits into the cyberpunk game world. We now have far greater capabilities in this respect than in case of the Witcher universe. And we intend to exploit this potential to improve awareness of our new IP. Please move to slide 16. Earlier this month, we organized a second wave of hands-ons of cyberpunk. this time extended ones, focused on just a handful of gaming media outlets representing key global markets, the US, the UK, France, Germany, Japan, and Russia. Each guest we invited played Cyberpunk 2077 for about 15, 16 hours, and the feedback is really encouraging. Let's move on slide 17, Teotr, the floor is yours.

Thank you, Adam. Let's go to the first financial slide, profit and loss account. Between July and September, we focused on Cyberpunk, but our Witcher products continued to entertain people around the world. Group revenues reached nearly 105 million zloty, which technically is only 13% above the result for the previous year, but the structure of our sales changed in a favorable way. Sales of products, which is the most profitable part of our business, increased by nearly one-third. This is thanks to the great performance of the Witcher 3 on four platforms, but also strong performance of Gwent, operated on iOS since last October and Android since March. This summer, we had lower revenues from services, as last year we had some exceptional revenues related to cooperation with our marketing partner. Next important line, revenues from goods and materials, which consists of two major ingredients. First, revenues from sales of physical elements of our products. Last year we had an increase of such revenues due to shipments of Nintendo Switch cartridges for the October release of the Witcher 3 on Nintendo. This position at the Projekt Red decreased from 15 to 5 million zlotych year on year. It's a low margin part of the business as all revenues recognized as royalties, which constitute most of our gross profits, are included in our product's revenues line. second ingredient of our goods and materials sales, core revenues of GOG.com, which grew nicely by one fourth versus the third quarter of last year. The change of structure of our sales cost a slight decrease of our cost of products, goods and materials sold, parallel to an increase of overall sales. This resulted in an increase of our gross profits on sales up to 68 million zlotych by nearly one fourth versus last year. Our total operating costs remained fairly steady. Among them, selling costs increased, mostly due to promotional expenses related to cyberpunk, and G&A costs decreased, mostly thanks to ending the recognition of the cost of our previous incentive program valuation at the end of June. Next line, financial revenues less expenses. Recently, we see lower interest on bank deposits, and at the same time, surplus of negative FX differences on the more volatile market. All in all, despite having no major releases and accelerating internal engagement in the Cyberpunk launch, our net profit increased 57% versus last year and reached over 23 million zloty. Moving to the next page, graphic presentation of our quarterly revenues for the last three years. The third quarter is usually the quiet part of the year for us and so it was this year. Even so, it was the best third quarter in years. On the next page, the same revenues are decomposed into costs and expenses, light gray color, and net profits for each quarter, presented yellow. As I mentioned before, despite being focused on Cyberpunk, we maintained popularity of the Witcher franchise during the typically dry summer season, and also profit-wise, it was the best performing third quarter in recent years. Next page, number 21, our balance sheet. As usual, a major change on the asset side is visible on the expenditures on development projects, which increased by over 39 million zloty. This is mainly related to cyberpunk works, and I will have a dedicated chart for this in a moment. After the strong sales of the second quarter during the summertime, we decreased our receivables balance by 25 million zloty, which added to our cash flow of the third quarter. Speaking of cash, our cash reserves are currently diversified between banks and bank deposits and keybots, included in both short- and long-term other financial assets. Overall value of our cash reserves decreased by 7 million zloty over the three months of the third quarter. I will go into more details on that with a dedicated chart in a moment. Equity. It decreased by 179 million zloty due to the buyback of owned shares we run in July and August. and among short-term receivables, two big changes happened. First, the project was paid in the capital contributions by the participants of the previous incentive program. The new share issue is not registered yet, so the received capital contribution is presented as our liabilities towards the program participants. Second change, the nicest of all liabilities, Deferred revenues grossed by over 77 million zloty, mainly related to Cyberpunk royalties on selected pre-order sales and advances on minimal guarantees from our distributors. This is the biggest increase of deferred revenues we ever experienced. Let's go to the next page, number 22. Our quarterly expenditures and development projects in cash flow perspective. In the third quarter, we were still working full force on Cyberpunk. The decrease of spent cash in Q3 versus the previous quarter comes mostly from annual bonuses for developers being paid out in the second quarter. Next page, number 23, cash flow. We started July with 642 million zloty on our bank accounts in bank deposits and invested in T-bonds. In July and August, we ran our share buyback and spent 240 million zloty on it. Afterwards, the shares we bought were sold to our incentive program participants, plus we received from them additional capital contribution prepayments for the new shares issue. All of that amounted to 126 million zloty inflows. Effectively, our net cash contribution in the settlement of the previous incentive program via the share buyback was 88 million zloty so far. At the same time, on our core business, we spent 52 million zloty on development projects. Parallel to that, our deferred revenues increased by over 77 million zloty. The deferred revenues increase comes in vast majority from selected Cyberpunk pre-orders and received tranches of new guarantees. On top of that, we brought 23 million zloty of net profit to the equation and enjoyed other flows, mainly driven by decrease of receivables in the total amount of 32 million zloty. All in all, having financed our incentive program settlement via buyback of own shares and investing into Cyberpunk development, the total value of our cash deposits and t-bonds decreased by 7 million zloty only. And overall, during the first three quarters of this year, our cash reserves increased by over 152 million zloty. As you know, the main dish of the year is yet to come. Thank you. That's all from me. For now, please move to the next page.

Thanks Piotr. We are 15 days away from launch. We are entering the most intensive phase of our marketing and PR campaign. On top of that, in the next two weeks we'll be sending review copies of the game to journalists around the world. enabling them to publish their impressions and reviews of Cyberpunk before its release. We are very excited and we eagerly await the moment gamers can finally lay their hands on the game. That's all from us. That's all from me. We'll now proceed with the Q&A session.

Thank you. So we will now begin the question and answer session. If you have a question for our speakers, Please dial 0 and 1 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask the question. If you find your question is answered before it is your turn to speak, you can dial 0 and 2 to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is from Amal Sheikh of Morgan Stanley. Your line is now open.

Good evening, everyone. I've got three questions, if I could. The first is on pre-orders, pre-sales. 15 days out, I guess you have some visibility on a meaningful kind of view, I guess, on pre-orders at this stage. I wonder if you could maybe first of all tell us what you think about the overall numbers that you're seeing. and then also maybe about the mix between console, PC and GOG. That's the first question. Secondly, I wonder if you could give us a sense of what impact going into home office mode until March 21 will have on your schedule for next year, in particular for releases of expansions in 2021. Specifically, could you give us a sense of how many expansions you expect to publish next year? And then finally, a question for you, Adam. I mean, we all know you're a perfectionist. The whole company is full of perfectionists. I guess the question is, how satisfied are you with the quality of the game as you see it today and where you expect it to be in terms of quality by the time you release it on December the 10th? Thanks very much.

Hello Omar, this is Piotr Sierubowicz. Yeah, thanks for trying to get some extra info on pre-orders. As you know, we are not revealing much information on that. We believe at this stage we do not have full and complete data that we could share. And it's not easy to say how any data should be applied on final sales. Therefore, unfortunately, I can't give you any more details than the total increase of deferred revenues that was presented in the financial statement I just referred to.

All right, Adam on this end. I'll take the second, the third one. So it seems that home office mode will not impact our schedule. We haven't revealed any dates regarding expansions, but so far so good. So none of, I mean, nor home office know that the last delay is impacting our schedule in this regard. And bear in mind that part of the team is working from the office, I mean, smaller part, But it helps a bit as well so we can organize things here internally and then collaborate with people who are at homes. And the last question. Well, it's tricky. It's tricky to share our impressions, you know, before reviews and before gamers are able to play the game. Well, we are satisfied, but we are never fully satisfied. And don't get me wrong. It's not like we are not sure, but let's wait these 15 days. Let's wait even less because reviews will be published earlier. So let's wait for the external judgment and then everything will be clear.

Okay, that's clear. Thanks, Adam.

Thank you.

The next question is from Matthew Walker of Credit Suisse. Your line is now open.

Thanks a lot. Good evening. The first question is on the release. Can you update us on what your thoughts are on the percentage which will be digital for the December quarter and then for the other quarters after that? If you could give us a feel for what you think, that would be helpful. The second question is on the multiplayer. Do you think that's still coming in 2022? And would you say your monetization levels, because you care about the gamers, is going to be at the same level as peers for online games? Or do you think it's going to be below or significantly below in terms of monetization to keep the gamers happy? And then the last question is on Piotr Nielubowicz

First, the expected ratio between digital and physical on our sales. As we see it on pre-orders, digital is very strong, so definitely we are more into moving potential split digital-physical, more on the digital side. How far we'll go, we honestly speaking do not know. Definitely farther than we had on The Witcher 3 and definitely more than 50% should come from the digital channels. And then the history of The Witcher 3 shows that the longer the game is on the market, the more the split shifts towards the digital again. On Witcher 3 it's vast majority and on Witcher 2 and 1 it's let's say 99% of the revenues we generate are digital. So this is the only direction that can be expected in a mid and longer term.

All right, Adam again and I'll take the second and the third one. Regarding multiplayer, we haven't announced any dates so far and actually Right now, it's not the moment to talk about any business model for multiplayer, even though we had discussed it before, but to avoid any fuss in our gaming community, I will skip it, because we'll share our thoughts about next year's, once we'll update our strategy, it will happen in Q1 next year. and that will be after releasing Cyberpunk and that will be the right moment to discuss deeper all key aspects around future releases and PS4 yesterday we released the gameplay both on PS4 and PS5 so you can see the difference and on both I mean PS5 is great PS4 is still very good I mean We had those extra three weeks and we achieved a lot in this final stretch, so we believe that the game is performing great on every platform. Of course, accordingly to platform capabilities, but every platform should be great.

Best of luck with the launch.

Excuse me? I was saying best of luck with the launch. Thank you very much. Thank you very much.

The next question is from Ken Roome of Jefferies. Your line is now open.

Hi, gentlemen. Understanding your point about not wishing to distract anybody, but could you comment, obviously not everybody in the team is working on Cyberpunk, some obviously on Gwent and so on, but also on future projects. Could you give us an idea of the extent to which you've been able to begin work on non-cyberpunk projects?

Hi, Ken. Well, rather not. Of course, there are teams who have been finished with cyberpunk and obviously those teams are the first are the first who are starting the next things but we were discussing this call before and we decided to really be focused on the release because gamers are listening to us a lot and we don't want to distract them really I mean now everything is focused on Cyberpunk we have two weeks everything will be clear by then and then will start talking. Maybe not right after, but as I said, in Q1 next year. But of course, anything what was said before is still valid. I mean, nothing has changed. I mean, we are just trying to avoid, you know, communicating too much about the further future. And there's one more thing. After the third delay, we believe that some gamers can be a bit frustrated waiting for the game. So talking about future things, might make them even more frustrated. So we are delivering the game, full stop. And right after this, we'll talk about the future. That's our communication plan.

I understand. It's important to get the communication around the game itself right. Again, this is something that may be a little early, but you were asked about it perhaps at the time of the delay. What, I'm sure after the game comes out, you'll look back at this, but, you know, my suspicion is that the day you announce the next release date for the next AAA single player game, everyone will say to themselves, well, we can expect that to be delayed two or three times. What, at this stage, lessons do you think, if possible, you can learn from this?

We are aware of that. of course our goal is to deliver on time but at the same time we are delivering unique experience in many parts very innovative and this process is always you know not fully predictable but don't get me wrong I mean it can be planned but there is always part of things which can be predicted precisely but We can change some methods, we can change some ways of communicating and our goal will be to deliver on time, full stop, and we'll try next time to be on time without any delays. That's the goal.

Does it mean that you potentially change your attitude to how far and ahead of release that you would give a date for a game? I mean, you also mentioned regarding the kind of strategic plan for the company, that you weren't sure whether you would kind of put dates and deadlines in and the way that you did back in 2016. So you know, one way you can avoid in a sense, taking the risk of a delay is by waiting until the game is closer until you give a date. So are there any thoughts about that?

Yes, it's one of the ways. It's not decided yet. Finally, I mean, before release, the date has to be announced in some advance because you have to start the final PR campaign, you have to start collecting pre-orders and the date has to be set by then. But maybe earlier we'll be not sharing thoughts about dates, but of course we'll be guiding. I mean, I can't imagine that investors will have no fairly clear picture what's going to happen. So let us rethink after release how to put this in the future strategy update. It's not decided yet, as I said.

Okay, that's fair. Thank you very much.

Thank you, Ken.

The next question is from Vladimir Bespolov of B2B Capital. The line is now open.

Hello, thank you for taking my questions. My first question will be on Cyberpunk. As I read the hands-on reviews that were released recently, one of the most frequent comments was that the game was quite buggy, even though not critically, but still. Could you maybe provide some color? How different is the current version, I would say, from what you provided to the reviewers? And how many of those bugs have been fixed? Because you were pretty aware of those bugs as far as I understood from the previews. And the second question, maybe you could give some color on Monster Slayer. What is the current status? What's going on when the release is planned for that? Thank you.

So in terms of bugs, we are aware of them. Of course, such a big game can be just bug free. That's kind of obvious, but we believe that the level will be as low as to let gamers not see them. And fortunately, some bugs in extended previews were caused by some general I would say, general features, and many of them are already fixed. So what gamers will get will be different from what, and what reviewers will get in this final review is better than what previewers got. Piotr, can you take the second? I can take the second.

Yeah, sure.

All right, so go ahead.

Witcher Monster Slayer is planned for release next year. Right now we are in soft launch. We are in a couple of territories including Russia which is the biggest territory. So far the soft launch goes well. The game is very well reviewed or judged by gamers on iOS as the soft launch is run on iOS. IOS devices so everything looks promising and we are looking to next year to release it full force to gamers.

One more comment on my end. We were thinking about announcing the date this year but having the Cyberpunk release on 10th of December we might probably skip this original plan because There is a lot of communication around Cyberpunk and we don't want to be lost the communication of Witcher Monster Slayer. So we need some more quiet time for this. Okay, thank you very much. Thank you.

The next question is from Mathilde Dorazano of Barclays. Your line is now open.

Hi, good evening. Thanks for taking my question. I apologize if this question has already been asked, but I was disconnected earlier. I just wanted to know if you could give us any color on how pre-orders have been going in the past weeks, now that we're so close to the launch date and it's when we expect them to pick up. Thank you.

Yeah, so as I already answered, We are not really going into revealing more details on pre-orders right now, more than we included in our financial report in the deferred revenues section. However, nothing changed from our previous meeting. We are really happy about the pre-order level right now. It's visibly higher than anything we achieved on the Witcher. and it keeps increasing at the expected pace comparing to the Witcher sales historically. So from this perspective, everything goes according to the plan and the results are really good.

Thank you. The next question is from Robert Berg of Bernberg. Your line is now open.

Hi, thanks. Just one left. One of the advantages, I guess, of going last or after your peers is that you can actually see their reception, the reception of the hardware sales, et cetera. I'm sure you have some good contacts in the industry, get to hear, Carla, of how things have been progressing. Without talking about any particular games or consoles, which I'm sure you won't want to do, how are you feeling about the health of the video game industry this holiday season, perhaps compared to what you might have thought last time we spoke? Thanks.

It seems the industry is very healthy even though circumstances, pandemic circumstances are generally tough for most industries. Our industry seems to be healthy and for us releasing on the actually previous current slash previous gen and the current slash next gen and PC and Stadia at the same time is a unique opportunity. I mean we are reaching Unsp Unsp Unsp Unsp Unsp Unsp Unsp Unsp Okay, thank you. Thank you.

As a reminder, if you would like to ask a question, please press 0 and 1. The next question is from Mark of Bernstein. Your line is now open.

Good evening. First question on back catalog sales. It looks like the year-on-year growth rate has slowed down quite a bit from H1, but the revenue drivers you listed seem to be pretty similar. Could you give us a bit more colour as to why that growth rate has slowed down year-on-year and sequentially as well from Q2? And the other one relates to the marketing effort you mentioned there. So as advertising spend kicks off properly in the start of December, I was specifically asking about the TV investment between your sales and your publisher partners. On an absolute level, will this part of the marketing mix be much higher than it was for Witcher 3? Thank you very much.

So first answering about back catalog sales, I would say that the first and the second quarter were spectacularly strong, especially the time by the end of April-May and I see three major reasons behind it. First of all, the Witcher franchise got more popular thanks to the Witcher series release on Netflix. Secondly, we had the pandemic situation which in general supported sales of video games and that was one of a few forms of entertainment available to people being locked down at home. And thirdly, at the end of last year, we brought The Witcher 3 on Switch. That was a nice revenue driver for us, and it performed really well comparing to the previous times. The third quarter is always the dry season, as I mentioned already. The lockdown ended, people finally, and thanks God, were able to leave homes. and probably this is also somehow affected the sales we had, like it affects every year I would say, but this time it also included the effect of finishing the lockdowns all over the world basically. So I would say this is the major reason behind the disproportionality between the first and the second quarter and the third one finally. But what's worth mentioning, this was the best third quarter in recent years for us, both on the revenue side and on the net profitability side. So I would rather say that we are happy about it, especially that the whole company was focused on Cyberpunk, on preparing the launch of this game, and definitely that's what most people were thinking about and being involved in. I'm not sure if I properly understand the second question the standard scheme for our marketing campaign arranged by us together with our distributors is that we are responsible for preparing most of the assets so in case of TV commercial we create it we we finance it and then this TV commercial is broadcasted territory by territory and this is pre-financed by local distributors and then this expense on promotion of our game is deducted in our royalty reports or in the royalty reports that the distributor sends us after each quarter and it's one of the deductible costs so it's pre-financed by them but the final calculation We will be made liable for all of the costs of the marketing, supporting the revenues on our games.

And I can add some about comparing Witcher 3 to Cyberpunk. Obviously, this time we are gravitating to online, definitely. So that's the major change. In terms of TV, it depends on territory, because we are Not only creating assets, we are those who create whole campaigns. I mean, we are those who decide where money is spent. So depending on the territory, working with professionals, we decide what would give us the best effect. So for example, TV is fairly strong in the US, not necessarily across Europe. And the whole campaign of Cyberpunk It's a multiple of Witcher campaign, but it's hard to generalize how to compare TV campaign of Cyberpunk to Witcher 3.

Okay, very clear. Thank you both.

Thank you.

If there are no further questions, I hand back to the speakers.

So we have a couple of questions on chat. The first one from Lou Build is, good evening, everyone. Could you tell us what are your plans for the multiplayer mode? First, we don't call it mode. It's a separate dedicated production, a big production and we plan, we think about it as a standalone product. Obviously, it's not entirely standalone as it comes from the universe of cyberpunk and is very much related to the concept of single player cyberpunk we came up with. But from our perspective, it is another independent production and independent team of people who works on it. And as Adam said already, we are not focusing right now on talking too much about other future products, products that are to be released after Cyberpunk. So please be with us in the first quarter of next year when we plan to share some strategy update and I believe Cyberpunk Multiplayer will be part of it.

A question from Piotr Opaczuk, PKO BP. When exactly embargo? No reviews will be lifted. Before release, but we are not revealing the exact date, the exact day actually, so far, but definitely before release to let gamers read about the game. before they buy the game. And I can take the next one from Piotr as well. The game has been not presented on basic, not pro consoles, PS4 and Xbox One so far. What is the performance of the game on these machines? Of course, a bit lower than on pros, but Surprisingly good, I would say, for such a huge world. So bit lower, but very good. That's the answer.

Another question comes from Albert Longterm. What percentage of CP pre-orders comes from GOG.com and how many more CP pre-orders will sold compared to pre-orders of Witcher percentage-wise? So first, GOG operates on just one platform on PC and among PC will have some physical sales and some digital sales. And within the digital sphere, Steam is definitely the dominant platform. So from the perspective of all our expected sales, GOG is representing some single number percent of all of the sales, including pre-orders. But in general, I may say that GOG's representation in pre-orders of our Cyberpunk is naturally higher than GOG's market share in the global video gaming business. How many more CP pre-orders were sold comparing to The Witcher? We were not revealing this info, but as I said, we are very happy and Cyberpunk pre-orders are visibly higher than anything what we achieved on the Witcher 3 for comparable time.

We can't hear you at the moment.

The next question from built, company built, has Keanu Reeves played the game?

Yes.

Yes, he played the game, but as far as I know, haven't finished yet. So, but definitely he played the game and he loves it.

Next question, are QA testers in demand now? Embracer acquired the Romanian based company, which is specializing in this segment. Yes, we still QA the game. We do it both internally and externally. We use two or three, I'm not sure, external teams. So we cooperate with some companies and the game will be tested by the launch date. And that's a natural part of the process.

Marek Kazimierczak Aviva Investors Poland TFI. Are QA testers in demand now? I basically answered this question already. All right. Łukasz Kosiarski PKO, when do you plan to announce and start selling season pass for CP 2077? The initial plan was to do it before release, but after the recent delay, we decided to wait for the release to provide gamers with the game and then to start talking about future projects. So after release.

Another question comes from Marcin Haber of Prost.pl. The question is in Polish, so I'll try to translate it on the fly. What profit did the company generate on Cyberpunk pre-orders? What was the level of canceled pre-orders due to the delayed release date? And what part of costs is to be allocated to the international advertising campaign of Cyberpunk? So first, what profits did we make on Cyberpunk before release? All the revenues we generate on Cyberpunk are not booked directly into our profit and loss account. All of them are presented in our balance sheet as deferred revenues and we will show them upon release of the game. So the first quarter when we will start generating revenues on Cyberpunk will be the fourth quarter of this year. Therefore, there is no profit which we could relate to. Obviously, we have certain costs. The expenses on developments are not costs that are put into the P&L directly. They are also capitalized on our balance sheet. However, all costs of the marketing campaign go directly into costs of each of the periods. So from this perspective so far, the result on Cyberpunk in our books was negative. But each quarter, historically, the revenues and gross profits we generated on the Witcher franchise were much higher than cyberpunk-related marketing costs on our side. What was the level of cancelled pre-orders? I would say marginal, comparing to the number of pre-orders we collected. There were some people who decided to abandon the pre-order. I hope we'll make them come back. and we are really active in promoting and talking to our gaming community, but comparing this to the day-to-day sales or the cumulative number of pre-orders, that was not really influencing the overall level of them. What part of costs is to be allocated to international campaign of Cyberpunk? I'm not sure how to understand it. Absolutely vast majority of our sales 96-97% comes from export international sales. Poland, our domestic territory is responsible usually for 2-3-4% of our revenues. So by far most of the expenses for cyberpunk promotion are related to the international markets as we sell the game really on the global sphere. I hope I managed to answer all of the questions.

All right, I'll take the next one. Łukasz Kosiarski from PKI is asking, did you receive conditional or full certification from Microsoft and Sony? If conditional, did you fulfill all their conditions? We got full unconditional certification from both platforms because we went gold, so the game is certified. But having said that, we have to bear in mind that every patch has to be certified. It's a simplified track, so Day Zero patch will go through simplified certification, but the game is already certified. The next question, what are the general player feedback on the game trailer? Is the feedback in line with your expectations or above your expectations? What is the anticipated impact from recent alleged gameplay leak? The next question probably is for you and the third is for you. So I'll stop here for you, Piotr. So I'll stop here. So, the feedback is great. I mean, we are really happy with the number of viewers. So, it's a little above our expectations, I would say, but we try to stay humble. But it's obviously great. And regarding the League, fortunately, fortunately, there were not too many spoilers because this is, you know, It was the ugliest thing, spoiling the game before it was released. So it was not harmful, even though every league is bad. But as I'm concerned, there are no negative impacts from the league.

The second question from Lyra is, you mentioned Q1 next year to discuss future strategies. Just to confirm, do you mean at the financial year 2020 full year result in Q1 next year? The truth is we haven't decided yet whether we will arrange a dedicated event specifically to this Update on strategy or we will merge it together with the annual results. Please stay tuned. I mean, we will definitely announce it when the time comes. But right now I can't precisely answer except for the fact that yes, I confirm we would like to share the update in Q1 next year.

And the next one is, are you considering providing the number of pre-orders before the release date? Well, it's not decided yet. As we said before, it might be before release date, it might be only release date. We haven't decided yet. We are discussing the right moment for this.

Yes, and one more question from Lyra from Jefferies. Any update guidance on the marketing expenditures related to Cyberpunk? We were not revealing any guidance on that except for the fact that we confirmed that the marketing campaign of Cyberpunk will be visibly bigger than what we had for The Witcher 3. Some time ago, based on discussions with our marketing team, we confirmed that the scope of it should be approximately three times bigger, three times wider than what we had for The Witcher 3. But I believe that closer to the release, the bigger it seems to be. So I wouldn't say this is still an updated comparison as for now. So it seems there are all of the questions. If anyone wants to add additional one, that's last call.

All right, the last one, I'll take this. from PKOPP. When, after the release, are you planning to release the first sales numbers of Cyberpunk? Same like with pre-orders. We will see what we'll have on the table in terms of reliable data. We have to have a global picture and of course in terms of digital, we have them almost on fly. In terms of physical, sometimes it takes some time. Bear in mind that we use local distributors, so there's a middleman between retail and us. So we'll work on having as fresh data as possible and to release them as soon as possible. We'll have the whole picture. All right. Thank you very much. Thank you for joining the call and Be ready to play the game in 15 days. Thank you.

Thank you very much. Thanks for joining and a very good Thanksgiving to all our American friends. Goodbye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.