How is CD Projekt doing financially (based on their reports for shareholders)?

[jerf.674]

How is CD Projekt doing financially (based on their reports for shareholders)?

CD Projekt Group posts quite detailed financial reports for the sake of their shareholders, here.

They are, however, written as your typical financial reports, i.e. they are practically unreadable for the untrained eye.

I was wondering, is there anyone here with financial/accounting/legal background, who would be willing to translate at least some portion of what is said there into something understandable to laymen such as myself? I'm quite curious about what is happening with CD Projekt's finances, and although I managed to understand some bits and pieces from their reports, I would really appreciate a comment on that from a professional, if there are any among the forumites.

Here is the link for the summary table. There I don't really understand, for instance, what do they mean by "Liabilites", and why are they always (although, for some reason, not for H1 2013?) equal to "Assets".

Here you can find links to reports, and here links to financial presentations. Is it possible to deduce from these documents e.g. how much do they spend on salaries, and how much money are they still getting from continued sales of Witcher 1 & 2 (and from preorders of 3)?

 

[Garrison72]

*reviews report*

They're fucked. Iwinski has blown everything on Fisstech and whores.

 

[freakie1one]

*reviews report*

They're fucked. Iwinski has blown everything on Fisstech and whores.

Well, that would explain the big "D" word that has been going around of late...

 

[Gilrond-i-Virdan]

Also, they used to publish their business plans (for example they mentioned some R&D projects one of which was Linux support on GOG). Did they do it for 2015 as well?

---------- Updated at 01:58 AM ----------

https://www.cdprojekt.com/resources/document/ENG/2013/2013_-_CEO_address_to_shareholders_.pdf

This one is from one year ago and it has some important points (read the whole thing). Is there anything more recent?

---------- Updated at 02:01 AM ----------

This is an important piece of information:

 

[CostinRaz]

It seems CDPR has some debt to pay off which is what liabilities means, but overall their current financial situation looks fairly stable.

 

[Gilrond-i-Virdan]

Looks like CDPR founders own 35.81% of company shares. 19.95% are owned by investment firms. And the rest 44.24% are owned by whoever. I wonder if CDPR founders will be able to retain their company values with such percentage (i.e. is it a controlling interest?).

 

[dragonbird]

Here is the link for the summary table. There I don't really understand, for instance, what do they mean by "Liabilites", and why are they always (although, for some reason, not for H1 2013?) equal to "Assets".

I'm not into doing a full financial analysis breakdown, but that's why it's called a Balance Sheet. Assets should ALWAYS equal Liabilities. I'm not sure why they didn't in H1 2013, but it's presumably explained somewhere in the detail.

The reason it should balance is because the shareholders own the company, which means, in the simplest form, that Equity = Assets - Liabilities. On a Balance Sheet, the equation is the same, but it's rephrased as Assets = Equity + Liabilities. (Equity is considered a "debt" to the shareholders, even though it can only be recovered if the company closes down)

Here you can find links to reports, and here links to financial presentations. Is it possible to deduce from these documents e.g. how much do they spend on salaries, and how much money are they still getting from continued sales of Witcher 1 & 2 (and from preorders of 3)?

Not unless it's in that Polish-only CF (Cash Flow) sheet. The P&L doesn't give sufficient breakdown.
A company can't count pre-orders as a sale. If they've received the money but not supplied, there's a liability equal to the revenues received.

---------- Updated at 10:12 AM ----------

It seems CDPR has some debt to pay off which is what liabilities means, but overall their current financial situation looks fairly stable.

All companies have debts to pay off, even if it's only this month's electricity bill. A better indicator of problems is usually the proportion of long-term to short-term liabilities. Long-term tends to include things like bank debts, short-term is day-to-day expenses. I'm not that much of an expert, but theirs looks OK. Most companies have SOME long-term liabilities, it's only a sign of problems if it's high relative to the total.

---------- Updated at 10:14 AM ----------

Looks like CDPR founders own 35.81% of company shares. 19.95% are owned by investment firms. And the rest are owned by whoever. I wonder if CDPR founders will be able to retain their company values with such percentage (i.e. is it a controlling interest?).

Yes, it would be considered an adequate controlling interest. They're a listed company. I don't know how legislation works in Poland, but in other countries, if a single shareholder or related group of shareholders own more than 40%, the relevant authorities would be expressing concerns about minority shareholder interests, and suggesting that they either sell shares or buy-out and de-list.

---------- Updated at 10:16 AM ----------

Well, that would explain the big "D" word that has been going around of late...

I'm sure you realise this already, but he was joking

 

[GuyNwah]

You read financial reports back to front. Usually all the interesting stuff is in the management's analysis and the footnotes. The most recent report they have published is for third quarter 2014. Fourth quarter and annual should be available in due time.

Adam is paid to sound confident, but he's doing a good job of it. The key point he makes is that they were able to fund all of their R&D on current games from their own capital. They are not trying to get the game out on borrowed money. This is important. It means they do not have banks telling them to deliver the game or else.

They lost money in the quarter. This is fallout from the first time the game was delayed. They had continuing development and marketing costs for TW3, but no sales of TW3. But the loss does not put them in any kind of financial bind.

Two important ratios that let you see how stable they are financially are

current ratio (current assets to short-term liabilities), this tells you whether they would have any trouble paying bills as they came due. Businesses buy everything on credit; nobody makes them pay cash. When they buy something, they incur a short-term liability until it's paid for. They are 171M PLN in current assets to 90M in short-term liabilities. This is not quite 2:1; 2:1 would be very good, and 3:1 would be golden, but it's not any kind of trouble.

shareholder's equity to long-term debt, this tells you whether the company is owned by the shareholders or the bankers. Bankers tend to want their money back in first when things start looking bad. Equity is 164M to 6M long-term debt, a long-term debt ratio of less than 4%. That's exceptional.

By the way, in ordinary accounting, Assets = Liabilities + Equity. Always. Maybe there's a difference in Polish-standard reporting that makes Equity a category under Liabilites. But that's why they're equal. Literally, what you have, less what you owe, equals what you own. Praise be to the Florentines, who were able to put it that simply.

 

[freakie1one]

I'm sure you realise this already, but he was joking

Hmm does this mean I should stop working on the "thug lyfe" Iwinski compilation video?

 

[Gamewidow]

I'm really saddened that this situation is leading to them screwing over people who have supported them from day one. I've worked tirelessly for years on the wiki, and even moved away from wikia to Curse .. which CDP endorsed at the time. But now they are screwing us over daily with their deal with wikia despite the fact that all the active users are at Curse.

It really breaks my heart

 

[dragonbird]

I'm really saddened that this situation is leading to them screwing over people who have supported them from day one. I've worked tirelessly for years on the wiki, and even moved away from wikia to Curse .. which CDP endorsed at the time. But now they are screwing us over daily with their deal with wikia despite the fact that all the active users are at Curse.

It really breaks my heart

I feel your pain. I *REALLY* feel your pain, but it's off-topic, so maybe best discussed elsewhere?

 

[Phinnway]

*reviews report*

They're fucked. Iwinski has blown everything on Fisstech and whores.

And I'm sure Damien played no small part in that.

 

[Sardukhar]

Oh good. More off topic.

YOU KNOW HOW WE HATE THAT.

Well some of us. <Winks at Phinn>.

Now, that's multiple off-topic posts in a row, one which amusingly argued with a moderator doing their job.

MOST NAUGHTY.

 

[dragonbird]

Now, that's multiple off-topic posts in a row, one which amusingly argued with a moderator doing their job.

... and has now been deleted. Anyone wishing to discuss wikis can do so here:
http://forums.cdprojektred.com/threads/17065-The-Official-Witcher-Wiki-has-moved

 

[TheEvilChris]

I'm sorry you feel that we are "screwing over" Curse. We are not, but I feel sorry you feel that way. If you want to explain to me how you think we are screwing over Curse, please send me a PM so I can be aware of your complaints and what we may be able to do to change them. Thanks.

 

[Gilrond-i-Virdan]

I'm sorry you feel that we are "screwing over" Curse. We are not, but I feel sorry you feel that way. If you want to explain to me how you think we are screwing over Curse, please send me a PM so I can be aware of your complaints and what we may be able to do to change them. Thanks.

Not to go into off-topic, but just to avoid confusion - this was about the community, not Curse. Dedicated thread is here.

 

[jerf.674]

According to the new announcement (in Polish) on the CD Projekt Group website, in 2014 CDP had $25 million in revenues and $2.5 million net profits.

Presumably, this comes from continuing sales of TW1 and TW2 and from GOG operations, and also from cdp.pl retail games distribution (cdp.pl, however, was sold in November 2014 and is no longer part of CD Projekt Group).

I think that this is very impressive that they continue to have quite considerable profits while developing such a large projekt () as TW3. I can only wonder what will the profits be when the sales of TW3 commence.

 

[gab96]

So how many pre-orders of TW3 do you think they have so far? My guess is 2 or 3 million copies.

 

[jerf.674]

So how many pre-orders of TW3 do you think they have so far? My guess is 2 or 3 million copies.

Probably less than that. In the US (the largest market), as of late February combined PS4, X1 and PC preorders of retail versions of TW3 stand at 280 000, according to vgchartz. Since Witcher was historically strong in Europe, I believe (as a very rough estimate) that the total worldwide number of retail preorders would be 2-2.5x the US number, i.e. ~600k-700k copies. Then you need to add digital distribution. On consoles, as far as I know, most people still prefer retail versions, so this wouldn't add much. On PC, on the other hand, most people buy digital versions, but it's very hard to estimate the number of preorders. I'd guess that the number of digital PC preorders is 5x-10x the number of retail PC preorders, i.e. 500k-1 million. In total we get something in 1 million -- 2 million range, though the estimates are very rough.

EDIT: vgchartz info is quite interesting in that the console preorder numbers in the US of TW3 are practically on par with e.g. Batman: Arkham Knight (which is a highly anticipated game coming from a much more established franchise), while the PC retail preorder numbers of TW3 are THREE times as large as Batman's. Retail PC preorders of TW3 even dominate the retail PC preorders of GTA V (!). And keep in mind that all of this is the US situation, where Witcher wasn't historically a very strong franchise, compared to Europe. So in Europe TW3 would probably totally dominate the preorder charts.

I think that this tells us something about future total sales of TW3, Something good.

 

[Gilrond-i-Virdan]

According to the new announcement (in Polish) on the CD Projekt Group website, in 2014 CDP had $25 million in revenues and $2.5 million net profits.

Presumably, this comes from continuing sales of TW1 and TW2 and from GOG operations, and also from cdp.pl retail games distribution (cdp.pl, however, was sold in November 2014 and is no longer part of CD Projekt Group).

GOG sales will probably become their biggest piece of income in the future.

---------- Updated at 05:33 PM ----------

Probably less than that. In the US (the largest market), as of late February combined PS4, X1 and PC preorders of retail versions of TW3 stand at 280 000, according to vgchartz.

Amazing, how much retail distribution is still alive and kicking. I expected it to recede way more already.