CD Projekt Red: FY25 Results Review — Memo Update No. 1

Thesis Refresher

The central question under evaluation is whether CD Projekt Red (CDR PW) can convert restored credibility into disciplined execution on The Witcher 4, and whether that execution can translate long-cycle creative investment into durable value creation. Credibility was hard-won through the multi-year rehabilitation of Cyberpunk 2077, and our primer concluded that the conditions for a successful inflection cycle are present.

The investment horizon remains 36–48 months. Value creation is concentrated around a single flagship release event rather than smoothed across annual cycles, and the thesis asks for patience in exchange for the potential of an outsized inflection. The monitoring framework established in the primer reflects this structure, tracking directional signals across development execution, capital discipline, management communication, marketing posture, and organisational continuity rather than quarterly revenue momentum.

This memo covers the FY2025 reporting cycle, incorporating the annual results released 19 March 2026, the accompanying earnings presentation, the investor chat session of 20 March 2026, and the April 2026 fact sheet. Two refinements to the analytical frame are proposed. The first reflects the group's structural simplification following the disposal of GOG, which makes CD Projekt a pure-play game developer and publisher for the first time. The second reflects the emergence of a Cyberpunk-specific ecosystem strategy that was not fully legible when the primer was written, and which has a direct analogue in the multi-format franchise management approach documented in our Capcom coverage.

FY25 in Brief

FY2025 was the second most profitable year in CD Projekt's history by net earnings, surpassed only by the Cyberpunk 2077 launch year of 2020. Group revenue reached PLN 867m, up 9% year-on-year, with EBIT of PLN 471m, rising 28%, and net profit from continuing operations of PLN 521m, up 18%. Net profitability from continuing operations came in at 60.1%. These are not interstitial-year numbers in the pejorative sense. They are the financial output of a studio that has learned to monetise its back catalogue with unusual discipline while simultaneously running the most intensive development investment programme in its history.

One framing note before reading any of these figures. The disposal of GOG, completed 31 December 2025 for PLN 90.7m, means the group's reported net profit of PLN 595m includes PLN 74m from discontinued operations, the majority of which represents the after-tax disposal gain. The analytically relevant base for ongoing performance assessment is the continuing operations figure of PLN 521m. All subsequent references in this memo use that figure unless otherwise stated.

The IP revenue split carries the most analytical weight in the period. Cyberpunk IP revenue grew 12% to PLN 672m, now constituting 77% of product revenue. Witcher IP revenue declined 19% to PLN 155m. The divergence has a clear mechanical explanation rather than a structural one. Cyberpunk 2077 received a series of meaningful platform expansion events during 2025, including its release on Nintendo Switch 2 and Apple devices, inclusion in the PlayStation Plus Extra and Premium catalogues, and continued strong engagement following the 2.0 overhaul. The Witcher IP had no comparable catalyst in the period. Witcher 3 is now a decade-old title generating PLN 155m in annual revenue without a new release, a major expansion, or a subscription catalogue event — a figure that speaks to franchise durability. The decline is interstitial. The coil is compressing rather than unwinding, and the release of The Witcher 4 is the event that releases it.

The group invested PLN 513m in development projects during 2025, the largest development outlay in its history, while simultaneously paying PLN 100m in dividends and conducting PLN 22m in share buybacks. That combined deployment of capital was substantially absorbed by PLN 512m in cash generated from ongoing operations, leaving cash, deposits and bonds — the group's own composite liquidity measure — modestly lower at PLN 1.325bn against PLN 1.472bn at the start of the year. The group ended 2025 with over PLN 1.3bn in reserves, zero leverage, and equity up 19% to PLN 3.29bn. This is optimal capital discipline for a studio entering a phase of expansive development across multiple AAA projects, just as the primer described.

The sharpest leading indicator in the period is the behaviour of capitalised development expenditure relative to research costs. New development capitalised during 2025 reached PLN 512m, while the capitalised development balance on the balance sheet rose 65% to PLN 1.148bn. Research works costs fell 51% to PLN 39m. The interpretation of that combination is not ambiguous. Projects that were in research phases are crossing into full development, generating capitalised rather than expensed spend. The pipeline is explicitly advancing through to production. That transition is one of the clearest leading indicators available to external observers of a studio whose development timeline is otherwise opaque.

Watch Condition Assessment

Development milestones and resource allocation

Verdict: Affirmed — headcount progression and organisational continuity consistent with full-scale production

The clearest and most granular development signal available from public disclosures is the headcount data published in the FY25 earnings presentation. As of 28 February 2026, CD Projekt's internal development workforce stood at 933, up from 707 twelve months prior. The Witcher 4 team has grown from 411 to 499 developers over the same period, now representing 53% of the entire internal workforce. That concentration is not incidental. It is the company's most explicit organisational statement about where its development priorities lie.

The project-level allocations across the rest of the pipeline are also instructive. Cyberpunk 2 has grown from 84 to 149 developers, nearly doubling in twelve months as it transitions from concept into pre-production. Project Sirius, the multiplayer Witcher universe title being co-developed with The Molasses Flood, has grown from 49 to 71. Hadar, a new proprietary IP, sits at 26 after completing its IP foundations phase, expecting to expand to 40–50 developers by end of 2026. The research costs decline of 51% to PLN 39m corroborates what the headcount data implies. Projects are advancing through their development phases in an orderly and sequential manner rather than stalling or cycling back into pre-production.

No abrupt restructuring signals are visible in any of the disclosed data. The absence of senior leadership departures, project cancellations, or mid-cycle team reallocation is consistent with organisational continuity, even if the granularity of public disclosure does not permit direct observation of individual creative and technical leadership stability. The primer identified mid-cycle attrition at senior levels as a specific risk; nothing in the FY25 materials or subsequent disclosures provides evidence that this risk has materialised.

Capitalised development versus cash discipline

Verdict: Affirmed — record investment absorbed without balance sheet strain

The mechanics of this condition are covered in detail in the FY25 in Brief section and are straightforwardly positive.

The capitalised development balance now stands at PLN 1.148bn on the balance sheet, up 65% from PLN 695m at the prior year end. That figure will continue to grow as The Witcher 4 advances through production, and the amortisation charge of PLN 57m in FY2025 reflects the IFRS convention of deferring amortisation to the commercial release window. The balance sheet is therefore absorbing an increasing development load, but it is doing so from a position of genuine financial strength rather than managed fragility. The primer's central concern under this condition was whether management would maintain financial flexibility through the development cycle without resorting to external financing or aggressive monetisation pivots. At this stage, the answer is unambiguous.

Management communication consistency

Verdict: Affirmed — specific on pipeline structure, appropriately guarded on timing

The FY25 earnings materials and the investor chat session of 20 March 2026 provide the richest management communication dataset since the primer. The overall quality is consistent with what was identified as the baseline expectation: specific where specificity is possible, guarded where it is not, and absent the defensive or justificatory language that characterised the Cyberpunk 2077 period.

The pipeline disclosure was the most substantive new communication in the period. CFO Piotr Nielubowicz confirmed in the investor chat that eight projects are currently being capitalised, of which four have been publicly announced. These are The Witcher 4, Cyberpunk 2, Sirius, and Cyberpunk: Edgerunners 2, alongside four unannounced projects including one non-gaming title. That level of pipeline transparency is more granular than prior disclosures and reflects a management team comfortable with the state of its development organisation. The Hadar update, framed by co-CEO Michał Nowakowski as an "important development update," was accompanied by specific language around the completion of IP foundations and the transition toward active game development — again more precise than prior communications on the project.

On timing, the company maintained its established position of not guiding beyond a confirmed 2026 non-launch for The Witcher 4. The refusal to narrow the release window is consistent with the company's stated communication strategy of initiating product campaigns at the most appropriate marketing moment rather than providing rolling development updates. The primer identified vague or inconsistent commentary as a thesis-weakening signal. What the materials show is the opposite: a consistent, specific narrative on what is happening and a deliberate, principled silence on what has not yet been decided.

One passage from the investor chat warrants specific attention. When asked about the 2023–2026 incentive programme tranche, management acknowledged that achieving the remaining PLN 527m net profit target across four quarters is possible "if everything goes according to plan" and referenced the possibility of new content launching in 2026. This was not a release confirmation and should not be read as one. It is however language that is difficult to reconcile with a purely inter-release year. The incentive programme mechanics require roughly a full year's worth of continuing operations profit in the next four quarters to vest, making a material 2026 release event an implicit condition of achievement. Management's willingness to reference that possibility in a public investor forum is a directional signal rather than a commitment and should be treated accordingly.

Marketing posture

Verdict: Monitoring — substantive campaign not yet initiated

No product marketing campaign for The Witcher 4 has been initiated beyond the Unreal Fest tech demo shown in late 2025, which demonstrated technical capabilities rather than communicating gameplay substance. The primer identified marketing activity focused on mechanics and design coherence as a thesis-strengthening signal, and the absence of that activity at this stage is not a concern. It is consistent with the company's stated approach of timing campaigns to maximise market impact. Summer Game Fest in June 2026 is the next event at which a showing would be consistent with industry convention for a title at a comparable stage of production, and it is the next meaningful read on this condition.

Pipeline Developments

The primer described CD Projekt's pipeline as anchored by The Witcher 4, supported by early-stage work on a Cyberpunk sequel, and supplemented by GOG as a strategically useful but economically modest distribution business. Each of those three characterisations requires updating. The pipeline is now materially wider than the primer assumed, the Cyberpunk franchise is being managed with greater strategic ambition than the game sequel alone implied, and GOG is no longer part of the group. None of these developments weaken the thesis. Taken together they suggest a company that is executing its interstitial period with more deliberate purpose than the primer gave it credit for.

The pure-play repositioning

Jettisoning GOG removes the group's only non-development business and leaves CD Projekt as a pure-play game developer and publisher for the first time in its listed history. Management's stated rationale was focus. The parallel development of multiple AAA projects demands full organisational attention and resources, and GOG's strategic value as a distribution platform was insufficient to justify the distraction at this stage of the company's ambitions. GOG remains a distribution partner for future CD Projekt titles, preserving the commercial relationship without the operational burden.

The analytical consequence is straightforward. Future reported revenues, margins, and cost structures will reflect only the game development business, making period-on-period comparisons cleaner and the thesis monitoring framework more direct. The GOG segment was never large enough to materially distort the group's economics, but its removal eliminates a source of noise from the reporting structure at precisely the moment when the development pipeline is entering its most intensive phase.

The Cyberpunk ecosystem

The more consequential development is the emergence of a coherent, Cyberpunk-specific ecosystem strategy. CFO Nielubowicz confirmed in the investor chat that Cyberpunk: Edgerunners 2 is among the eight projects currently being capitalised on the group's balance sheet. This is a material disclosure. It means CDPR is not passively licensing the Cyberpunk IP for ancillary content. It is financing and coordinating a second animated series as a direct balance sheet investment within its own franchise.

The significance of that distinction is best understood through the precedent set by the first Edgerunners series. Released on Netflix in September 2022, Edgerunners was critically acclaimed and generated a documented and immediate spike in Cyberpunk 2077 player engagement, with concurrent player numbers on Steam rising sharply in the weeks following release. The series is widely credited with materially accelerating the rehabilitation of the Cyberpunk brand at a pivotal moment in its post-launch recovery. Management referenced the cumulative revenue generated by Cyberpunk tie-in products — approaching PLN 70m — in the FY25 earnings release, though the animated series itself is the most culturally potent of those contributions rather than the most financially direct.

The broader Cyberpunk franchise flywheel presented in the FY25 earnings materials extends beyond Edgerunners. Comics, board games, merchandise, and cross-IP collaborations with properties including Fortnite and Guilty Gear illustrate an IP being managed across multiple consumer formats. The Cyberpunk Trading Card Game, developed under licence by WierdCo and launched on Kickstarter in March 2026, was described by management as the biggest success in its category, consistent with a franchise management posture rather than a purely transactional licensing approach.

This pattern has a direct analogue in our Capcom coverage. Capcom's multi-format franchise strategy functions as a deliberate franchise lifecycle management tool, extending IP relevance between game release cycles, expanding the addressable audience, and reinforcing brand premium without compromising the single-player identity of the core games. CD Projekt appears to be constructing a comparable architecture around the Cyberpunk IP specifically. This is a pattern becoming legible rather than a proven strategy, and Capcom's model is more mature and more deliberately systematised than what CD Projekt has built so far. But the direction is recognisable, and the Edgerunners precedent gives it empirical rather than merely theoretical support.

It is important to note that this ecosystem strategy appears to be Cyberpunk-led rather than franchise-agnostic. The genre fit is a natural explanation. Cyberpunk's neon dystopian aesthetic, transhumanist themes, and corpo-noir narrative texture translate readily across animation, film, tabletop, and cross-IP collaboration in a way that the Witcher's grimdark Slavic folk fantasy register does not. The Witcher flywheel shown in the FY25 presentation is active but reads as brand maintenance. The Witcher IP's primary cultural vehicle beyond the games has been the Netflix adaptation, a property over which CD Projekt does not appear to exercise creative control or from which it derives direct revenue. The series drew significant criticism across its run for its creative direction and was cancelled after three seasons, raising a legitimate if unresolved question about whether its net effect on brand perception among audiences unfamiliar with the games was positive. That question does not impair the Witcher 4 thesis, which rests on the game's own merits rather than media adjacency, but it does reinforce the analytical logic of treating the Cyberpunk and Witcher franchises as operating on different ecosystem trajectories.

Hadar and the third IP

Project Hadar received its most substantive public update to date in the FY25 earnings materials. Nowakowski described the project as having completed its IP foundations phase, with the team having established clearly defined distinguishing features of the world and the key pillars that will underpin both the game and potentially other future products. The team currently stands at 26 developers and is expected to grow to 40–50 by end of 2026 as the project transitions from world-building into active game development and prototyping.

Hadar's relevance is long dated rather than immediate. Management has been explicit that the ambition is to build a third IP of comparable standing to The Witcher and Cyberpunk universes, providing a foundation for future high-budget titles. That ambition, if realised, would materially alter the group's long-term earnings profile by reducing the binary concentration risk the primer identified as a structural feature of the model. That transition is measured in decades rather than quarters, and Hadar remains immaterial to the 36–48 month thesis horizon. It is noted here as a strategic optionality development rather than a near-term analytical input.

The expanded pipeline

The confirmation that eight projects are currently being capitalised — with four unannounced including one non-gaming title — represents a pipeline of breadth that was not fully anticipated in the primer. The non-gaming capitalised project is being developed externally but financed and coordinated by CDPR within one of its franchises. Management confirmed the live-action project is announced but not capitalised, meaning the non-gaming capitalised project is a separate and as yet unidentified initiative. It is flagged here as an open item rather than an analytical input.

Thesis Standing

The thesis is affirmed. Three of the four watch conditions return positive verdicts, with the fourth appropriately held in monitoring given the absence of evidence. The balance sheet has absorbed the most intensive development investment in the company's history without leverage or compromise to shareholder returns. The pipeline is advancing in an orderly and sequential manner, with headcount data providing the clearest external validation available for a studio whose internal milestones are not publicly disclosed. The core question posed in the primer — whether CD Projekt can convert restored credibility into disciplined execution on The Witcher 4 — is being answered in the affirmative.

Two refinements to the analytical frame are proposed. The first is structural. The disposal of GOG makes CD Projekt a pure-play game developer and publisher, and the monitoring framework should be read accordingly. Future revenue, margin, and cost data will map directly onto the game development business without the modest noise of a separate distribution segment. The thesis was always a game development thesis; the reporting structure now reflects that cleanly.

The second refinement is more substantive. The primer described CDPR's forward opportunity set as narrow by design, organised around The Witcher 4 as the anchor of the next value creation cycle. That description remains accurate but understates what is now visible in the Cyberpunk franchise. The capitalisation of Edgerunners 2, the active management of the Cyberpunk flywheel across multiple consumer formats, and the documented precedent of the first series directly accelerating game engagement together constitute a franchise management strategy more deliberate and structurally coherent than anticipated.

The burden of proof in the periods ahead lies in execution consistency. The financial and organisational foundations are in place. What remains is the cadence of their delivery.

What to Watch

The thesis asks one question above all others: whether CD Projekt Red can deliver The Witcher 4 at a quality and scale that justifies the credibility rebuilt since 2022. Every signal in FY2025 points toward a studio that is organised, financially resilient, and strategically coherent enough to do exactly that. What the next twelve months must demonstrate is that the organisation behind the balance sheet and the headcount chart can translate preparation into product.

Source note: Financial data drawn from CD Projekt Group FY25 earnings release, FY25 earnings presentation, and investor chat session transcript (19–20 March 2026) via Marvin Labs. Development team data from CD Projekt Group FY25 earnings presentation, slide 11, 19 March 2026. April 2026 fact sheet published 1 April 2026 via CD Projekt investor relations. Cyberpunk: Edgerunners player engagement data corroborated via Steam concurrent player records and industry reporting. All visuals to be produced by Marvin Labs from company filings unless otherwise noted.