Cd Projekt Sa Unsp/Adr

Ladies and gentlemen, thank you for standing by and I would like to welcome you to CD Projekt first half 2026 earnings conference call on the 2nd September. At this time, all participant lines are on 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 like now to pass the line to Mr. Michał Nowakowski, the Joint Chief Executive Officer. Please go ahead, sir. Good evening.

Thank you for joining us today. My name is Mihał Nowakowski. I'm the joint CEO of CD Projekt Red. And I'll be hosting today's earnings call concerning the first half of 2026. Presenting alongside me is our CFO Piotr Milubowicz. And after the presentation, we'll open the floor for Q&A, where we'll be joined by Karolina Gnasch, our VP of Investor Relations. If I were to sum up this half year in one sentence, I would say this. Both our franchises are stronger than ever, and we are ushering in the next chapter in the growth. So let me show you what I mean, starting with Cyberpunk. Nearly six years after the launch of Cyberpunk 2077, it has sold over 14 million copies and continues to sell well. This reflects deliberate lifecycle management, platform expansion, broadening player reach, and continuous support for the game itself. The results speak for themselves. In the first week of July, the peak concurrent player figure on Steam exceeded 100,000, the highest value observed since October 2023. Meanwhile, Phantom Liberty has reached its own milestone in July, crossing the 15 million copies sold threshold. Today, Cyberpunk is an evergreen franchise, and, as you'll see in a moment, its value compounds well beyond the game itself. We keep expanding the Cyberpunk ecosystem through selective license-based partnerships that fit our world. In the first half of the year, Night City was featured, among others, in Wuthering Waves and Apex Legends. For its part, the Cyberpunk trading card game raised $28 million, becoming the most funded tabletop game project in Kickstarter's history. These partnerships generate visible revenue while maintaining global brand engagement between our core game releases. The new season of the Cyberpunk Ed Runners anime series is launching on Netflix on October 20th. In 2022, the release of the first season drove a resurgence of interest in Cyberpunk 2077 among players, which led directly to a visible spike in game sales. With Hydronus 2, we want to re-engage audiences with VIP and encourage players to come back to Night City. Now, let me turn your attention to the Witcher franchise. The Witcher 3 Wild Hunt has now sold over 65 million copies. They created one of the best-selling games of all time. Across the whole franchise, we have now sold over 90 million Witcher games. These numbers provide us with a solid foundation for upcoming releases in the universe. And the first one comes on September 29, 2026, when we are launching The Witcher 3 Wild Hunt Remastered. This new edition brings a slew of upgrades and enhancements to visuals, performance and gameplay. Remastered also includes a dedicated edition of the game for Nintendo Switch 2. Existing owners will receive Remastered along with both expansions Hearts of Stone and Blood and Wine at no additional cost. With this move, we're reactivating players' interest in The Witcher franchise and attracting new ones to The Witcher 3 Wild Hunt. Remastered builds momentum ahead of the release of Songs of the Past and The Witcher 4. In 2027, we're launching Songs of the Past, the third full expansion for The Witcher 3 Wild Hunt, with a scope comparable to Blood and Wine. It acts as a natural bridge, keeping player engagement high and directly leading into the launch of the next saga. And we're also gearing up for The Witcher 4, with a target release window in 2028. The game marks the beginning of a new saga and is the biggest All this in most ambitious projects in our history so far. To sum up, three subsequent years, three major releases, each bigger than the one before, in one unified universe. And I want to be clear, this is not the full list of what we are working on in this universe. In this context, it is encouraging that a recent experience of Gamescom only reaffirmed my conviction, players do want more Witcher content. Our hands-off demo gameplay showcase of Songs of the Past attracted nearly 9,000 players, alongside 1,500 media representatives and industry professionals. During the event we conducted over 50 interviews with global media outlets, securing broad coverage for the coming weeks. The reception of our materials presented during Gamescom confirms that player enthusiasm for The Witcher remains strong. Taken together, the Songs of the Past teaser trailer, its Gamescom demo supercut, and the announcement trailer of The Witcher 3 Wild Hunt Remastered generated 26 million views across our own channels, of course not counting opening night livestream views. Additionally, our games became the two most hotly discussed releases announced during the opening night live, according to data from tracked social media platforms, within the first 12 hours of the event. CD Projekt Red also took home three official Gamescom Awards, Best Trailer for the Songs of the Past reveal and Best Merch, all voted by the Gamescom community, and the Jury Award for the Best Booth. This momentum translated into measurable results. 900,000 players added Songs of the Past to their wishlist within a week. Getting back to our growth plans for both franchises, we continue to expand our teams to deliver this ambitious pipeline. As of the end of July 2026, our total development team grew to 1,045 people. The Witcher 4 team remains our largest unit, with 519 developers on board. Over the last three months, we expanded the Cyberpunk 2 team to 184 developers to support the game's current development phase. With the other projects, We aligned our headcount with the project's current needs. And now we'll hand over the floor to our CFO, Piotr Niewoldowicz, who's going to walk you through the financial results for the period. Piotr, it's your turn. Thank you, Michał. And good evening, everyone.

Let's start with our consolidated profit and loss account on slide 16. Our sales revenue for the first half of 2026 reached over 435 million zloty, an impressive 23% increase compared to the first half of 2025, when Cyberpunk 2077 premiered on Nintendo Switch 2. The majority of sales came from our own products, particularly the Cyberpunk family. In Q1, we also recognized revenue from the inclusion of the base edition of Cyberpunk 2077 and the Witcher 3 Wild Hunt Complete Edition in Xbox Game Pass Premium and Ultimate subscriptions. But what really made a difference in the first six months of 2026, compared to a year ago, were revenues from IP licensing. A new line in our presentation and report We booked almost 95 million zloty here, which included licensing revenues from some of the already announced and mentioned by Michal products and partnerships, like cyberpunk trading card game developed by WordCo, the CoLab with Wuthering Waves, as well as some other initiatives that are still unannounced. With cost of sales being a bit lower year on year, our gross profit on sales reached nearly 406 million zloty, up 28% compared to the first half of 2025. Operating costs slightly increased by 6%, reaching over 160 million zloty, driven mainly by administrative expenses, while selling expenses remained pretty stable. Finally, our net profit for the first half of 2026 reached nearly a quarter of a billion zloty, a solid 37% increase year on year. We're also very satisfied with the net profitability we've achieved, which is why I'd like to share a slightly longer-term view with you. On the next slide, you can see CDPK's semi-annual simplified financial results along with the net profitability for each period over the last four years. This year's net profitability of 57%, combined with an increasing revenue stream, have allowed us to achieve a nearly threefold increase in net profit over three years. The next slide, number 18, presents our consolidated balance sheet on the asset side. The main position remains the expenditure on development projects, which grew by 364 million zloty to surpass 1.5 billion zloty. During the first half of 2026 alone, we invested nearly 385 million zloty in new development work. Main investments for the period are related to the development of Witcher 4, Cyberpunk 2 and the Sons of the Past expansion. We also recorded an increase in property, plant and equipment and investment properties altogether by 69 million zloty. It was driven mainly by investments in our campus expansion and ongoing construction works on it. On the current asset side, trade receivables increased to 160 million zloty due to high sales at the end of the reporting period, while other current assets decreased to 102 million zloty, primarily following the settlement of receivables from the sale of GOG shares and historical prepayments. At the bottom of the table, you can see our total liquid reserves, combining cash, bank deposits and bonds, which stood at nearly 1.29 billion zloty at the end of June, maintaining a resilient financial buffer. As usual, I will discuss this in more detail on the dedicated cash flow slide. Moving to slide 19, equity and liabilities. Driven by the strong net profit for the period, our total equity grew by 8% to surpass 3.5 billion zloty as of the end of June. Total liabilities remained stable at 227 million zloty. Now please move to slide 20, our expenditures on research, works, development and cost of product maintenance, presented here on a quarterly basis over the last six quarters. The chart clearly illustrates the steady ramp-up in our production effort. Investments in our projects, mainly publicly announced alongside some unannounced, are constantly growing. The vast majority of what we present here, shown in blue, relates to capitalized development projects. The increase comes both from projects developed internally and those created in cooperation with our partners. And finally, let's look at our aggregated cash flow drivers on slide 21. Cash-wise, the 249 million Zloty book net profit from continuing operations was supported by 47 million Zloty in amortization, depreciation and non-cash costs of our share-based incentive programs. At the same time, 59 million Zloty was spent on the acquisition of tangible and intangible assets as discussed on the balance sheet slide. The overall changes in working capital decreased our cash flows by 21 million Zloty, driven mainly by increased level of receivables related to high sales, decreased provisions mainly related to 2025 annual bonuses being paid out in Q2. Summing it all up, we generated an estimated positive cash flow of 229 million zloty from our ongoing business in the first half of 2026. Additionally, in January, we received a payment for the sale of GOG shares, which, after transaction costs, bolstered our cash position by 87 million zloty. And last but not least, our cash outflows associated to progressing development expenditures. These amounted to 356 million zloty in the first six months of this year. All in all, during the reporting period, our financial reserves capped in cash, bank deposits and bonds decreased by 39 million zloty, standing up at nearly 1.3 billion zloty at the end of June. To conclude my part of the presentation, let's look at slide 22. which tracks our progress towards the earnings conditions of incentive program B. The goal for the first tranche for financial years 2023-2026 requires generating 2 billion Zloty in cumulative net profit from continuing operations over four years. Thanks to the 249 million Zloty net profit booked in the first half of 2026, we have now completed 86% of this target. This is 14%, or approximately 273 million zloty, to be realized over the remaining two quarters. This is more than we earned during the first two quarters of this year. With strong back catalogue performance, the upcoming Witcher 3 Remastered Edition, planned also for Nintendo Switch 2, the Edronis II Premier, and other partnerships and initiatives, we believe in reaching this ambitious goal. At the same time, I would like to add one key remark regarding the Incentive Programme. Taking into account the company's current release schedule, the Group will most likely not meet the performance conditions set for the second stage of Incentive Programme B for the years 2024-2027, which was set at 3 billion PLN. Consequently, 70% of the entitlements granted to participants under this tranche will most likely not vest. As a result, we reversed the previously recognized non-cash costs of Stage 2 of the program in the portion corresponding to these entitlements in the amount of 11 million PLN. I should note, however, that assuming things go in line with our plans, we remain optimistic about the prospects of achieving the third and fourth earnings targets under the incentive program, respectively four and five billion zloty in subsequent four-year periods. Thank you. We are now ready for the Q&A session.

Thank you. Thank you very much for the presentation. We are now opening the Q&A session. If you are connected via the phone and you would like to ask a voice question, please press star 2 on your phone keypad and wait for a name to be prompted. If you are connected via the web, you can also request to ask a voice question or send your question as a text. I'll just wait a moment or two for the questions to come in. Okay, we have our first voice question coming from Nick Dempsey from Barclays. Nick, go ahead, your line is now open.

Yeah, good evening, guys. I've got two questions, please. So, first of all, your expenditure on development project in Q2, just over 200 million zloty, as Piotr just flagged, that's a decent step up versus Q1. Now, as you ramp up towards delivering Songs of the Past and The Witcher 4, should we expect that quarterly amount to move up again, or is this a kind of quarterly normal peak level ahead of those games being released? And second question, When thinking about the remaster of The Witcher 3, what extent should we hope for a decent uplift in revenue around that in Q4? I understand that many people will receive The Witcher 3 because they've bought the game already, but I'm also thinking that there will still be new players interested in buying at full price the combination of the remaster and the two previous expansions. So how should we think about that in Q4?

So the increase of our expenditures on dev projects is rather something that we do quarter by quarter by growing our dev teams and getting into more advanced phases of all of the development projects we work on, like I presented on one of these slides. So getting closer to the launch of Songs of the Past will rather not influence it significantly, As we will continue on all of the other fronts and projects we currently work. Where is the end of the increases? I don't know. We are not guiding, but as you may imagine, the dream of the management of the company is to continue growing, getting bigger, having more projects in the pipeline and one day having even more releases.

As for the second question about the remaster and the extent of the potential uplift in revenue for Q4, you're correct in your assumption that, you know, we're counting on both, you know, old players coming back, but also on the new players buying the, which are free for the first time, you know, both on the existing platforms and also the new platform which was just added, which is the Switch 2. However, we are not guiding exactly on the extent, I cannot help here, but what we've been flagging before, this is one of the elements that is supposed to help us, you know, reach the goals of the Motivational Program this particular year, but we're not guiding specifically on the revenue attached to pre-mastered.

Thank you. Thank you.

Okay, thank you. Thank you very much. So, I see the rest of the questions are text questions, so I'll pass the line to CD Projekt team to read them out and answer them.

Okay, I'll maybe read the first question. It's from Krzysztof Kot from Erste. And the question reads, I'd like to clarify what exactly you mean when you say that Witcher 4 is already running on every platform. Are we talking about a limited part of the game used mainly for technical testing, or is the current build already somewhat representative in terms of the game's scale and content? So what I meant in the interview, I know which interview you have on your mind, is we're launching the game on all platforms. Platforms, target platforms such as PC, PlayStation and Xbox. And I mean here the current build we have that we are working on. So it does not imply it's a full game, full scale, full content. You know, those things happen at later stages of development. But it just means that the build, the current build that the team operates on is maintained, is launchable on each target platform. This is very important for us in the development process.

How many unannounced game projects do you currently have in the pipeline? Was the Witcher 3 remaster previously included among those unannounced projects, or was it not capitalized? Classified as a separate development project. So maybe I'll refer to projects being currently capitalized, so those that are being in the development phase without touching the research earlier phase. In the development phase we still have two unannounced projects. And as far as The Witcher 3 Remastered is concerned, it was created along all the works on the expansion songs of the past, as a continuation of historic investments into updating and improving The Witcher 3. And this particular project was not capitalized. What we however did capitalized was the expansion Sons of the Past as well as the new Switch 2 version of The Witcher 3. As this is a port or this is an adaptation of the game for a new platform.

Okay, and the next one is from Piotr Poniatowski and Bank. Could you give us a bit more color on project series? What's going on there? So, as you probably know, we recently adjusted the size of the team according to the current needs of the project. The pre-production series is ongoing and at this stage we are focused on testing different solutions and ideas we develop and it's also worth mentioning that this project is very different from our other projects because it's focused on multiplayer so there's a lot of learning and testing in this particular one.

And the next question is from Grzegorz Balcerski from Trinon. And it reads, what pricing strategy are you considering for the expansion, particularly versus the previous two Witcher expansions or Cyberpunk 2077 Phantom Liberty? Could pricing also serve as a way to monetize the value created by the free remaster? So we're not reviewing the pricing strategy just yet. That would be, of course, part of specific marketing announcements when the time for that comes. We're not super far from that, obviously, but here and now is not the moment for that. As for the last part of the question, I'm not sure I got it completely, what is meant here, could pricing also serve as a way to monetize the body created by the free remaster, but obviously we do hope that a combination of, you know, the remaster and the Songs of the Past is going to rejuvenate the chapter, the interest in the Witcher universe as such, and thus that implies also the, you know, increased interest in the The next question comes from Piotr Poniatowski, mBank.

On the slide 16, you have listed revenues from IP licensing. Could you elaborate more on that line? Does it include anything from the Netflix cooperation? So, this line includes revenues we generated over the first six months of this year on licensing our rights either to Witcher IP or to Cyberpunk IP to external partners. And yes, it includes some revenue from Netflix. However, it's probably not the revenue you potentially ask for. We have a cooperation with Netflix on licensing merchandising rights. And these being sold by Netflix include royalty for us. and this is not the biggest news of the season I would say therefore it's not any of the major incomes we recorded within this line There is altogether over 100 partners with whom we cooperated over the first half of this year and from whom we included the revenues into this 95 million zlot we presented in the presentation.

And the next one is again from Grzegorz Balterski from Trigon. How would you describe the current stage of development of Songs of the Past? Are you still actively producing content, or has the project already moved into the publishing and optimization phase? Well, we're not getting into details of that, because if we did, we would have to narrow down the launch date very specifically, and this is something we're keeping for a specific moment in time. So for now, we're just saying 2027, and you will have to live with that for a moment in German. Thank you.

Okay, thank you. Thank you very much. We have a voice question from Ali from HFDC. Ali, please go ahead. Your line is now open.

Thanks for taking the question. Can I just ask what your sort of view is on Phantom Liberty in terms of detachment rate and how well that's performed and how does that sort of inform your view going forward in terms of a base case of, you know, Future Games and Future Expansions and what you think the expectations should be there now given the success of that. And then secondly, just looking at the developer numbers quarter on quarter or maybe year on year, is there any sort of efficiency gains that you can say have been made as a result of using new technology, AI? I can start with the first one maybe. So the Phantom Liberty attach rate, how well it performs. We had a very strong attach rate for Phantom Liberty.

and we were super happy with its performance. In fact, we had a pretty strong catch rate for all our expansions, meaning that quite a few fans who decided to play the main game beat, which the three of Cyberpunk 2077 decided to reach for the expanded content. So, of course, it does influence thinking about the expansions, because if we thought nobody's gonna try them, then there would be little point in in making them, but again, we are not guiding on specific expectations, but for sure you can have a look at the past performance of Phantom Liberty and the previous expansions and have some conclusions from that place. The development numbers, the question, I think there was a question about what is our gain from using new technology like AI. Is it the false economy? I believe there was a statement about that. Well, we're not judging AI as such. I mean, AI is definitely becoming a thing in the games development as well. We are still predominantly using people and this is our plan, you know, to make games where we're not walking away from that. AI, if anything, is a tool like many others that's helping in places that can maybe become more helpful in the future, but we're not planning to Great, thank you.

Okay, thank you. I will pass the line back to the CD Projekt team for the next questions.

And the next question is from Krzysztof Tkocz Ersta. Could you give us some indication on when work on the Witcher 3 remaster started and what level of investment had been involved in the project so far? Are we talking about several tens of millions of PLN? So, most of the work was carried over the last year as a continuation of our ongoing development of The Witcher 3. I wouldn't like to comment on specific figures, however, I would like to note, as I already said, that these development costs were not capitalized.

So the next question is from David Mack from Pereth Research. And it says, you know 2028 is a target release window for The Witcher 4, but that is your most ambitious project ever. Any update on its stage of production and what are the key milestones you are looking for to assess progress? As we have stated quite a few times before, we're in the full production stage of The Witcher 4, which roughly means, in very broad strokes, that we know pretty well, we know what kind of game we're making with elements and so on, and then it's filling the game with content and so on. We're not going into specific details, there's a lot of milestones we have internally, there's a pickup of specific batches, pickup of specific milestones, and so we're not announcing all of them, because a lot of them are very technical, very internal, and actually wouldn't really mean a lot to, you know, the external audience, but this is what is happening right now, the actual, you know, making of the game till its release date. And, you know, every milestone is a moment for us, you know, to look at it and ponder where we are, how well we are progressing with the development, is anything hindering us, is there any iteration that is required and so on and on. So, I'm not sure if this is a fully satisfactory answer, but that's without getting into super weird details as clear answers I can provide here.

Okay, and the next one is from Piotr Poniatowski, mBank. And how about Haider? So Haider is still in the concept phase. We currently have there over 30 people and expect to hire more, up to 50 developers by the end of this year. Right now the team is mostly focused on testing different approaches, ideas and prototyping some gameplay elements. And this is it.

The next question comes from Rafał Wiartr, City. Please provide the amount of provisioning that was released in Q2 2026. Oh wow, that's a pretty broad question as we have a number of different types of provisions set in our books, but you can find all of the details divided per different categories in Note 2022 and 2023 of our consolidated financial statement. The next one is from Grzegorz Malczewski from Trigon.

Do you have a specific attachment rate Target in mind for the next year's expansion. Would Phantom Liberty be the more relevant benchmark, or are the previous two Witcher expansions a better reference point internally? So, of course, we're not getting on specifics. I mean, we of course have various scenarios of what happens, but honestly speaking, both Phantom Liberty and the Witcher expansions have really, really good attach rates. So, you know, even based on that, we do believe that we have a really solid shot at having a very strong at that rate, you know, for the songs of the past. But I'm not going to throw a specific number here on this goal, but we're optimistic in general.

The next question from Rafał Wiabr City. What licensing revenues should be looking for the second half of 26? As you know we are not guiding future results so I'm sorry I cannot give an answer to this question. And the next one from Piotr Poniatowski, mBank. How much revenues from IP licensing have you booked in the first quarter of 26? So what I can say is that most of the licensing revenue actually happened in the second quarter of 2026. and the minority of the amount came from the first quarter although this is part of the business that we continue for years so there was some licensing revenue last year there was some licensing revenue first quarter of this year however the second quarter was kind of spectacular

The next one from Piotr Poniatowski and Bank. How much deaths are working on Songs of the Past right now? So right now we have 220 people at this project, 170 out of Full Theory, 10 from Soda Play Threat and the rest is outsourced.

Okay, since we don't seem to have any more questions, I'd like to thank you for your attention today, tonight, and should any further questions arise, you know, our lovely investor relations department remains at your disposal. I wish you all a wonderful evening and goodbye until the next time. Thank you. Thank you.