Ladies and gentlemen, thank you for standing by. I would now like to turn the conference over to Adam Kiciński, President of the Board and Joint CEO. Please go ahead. Good afternoon. Thank you for joining us today at the CD Projekt Strategy Update Q&A. I hope you had a chance to watch our strategy video presenting our long-term product output. We have also prepared a number of deep dives that will broaden your knowledge about important company topics. You can find them all on our corporate website at cdprojekt.com. Over the next 45 minutes, together with Piotr Nielubowicz and Michał Nowakowski, we'll do our best to answer any questions you may have. Let's start our Q&A session. Ladies and gentlemen, at this time we will begin the Q&A session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. The first question is from the line of Nick Dempsey with Barclays. Your question please. Yeah, good evening, guys. I've got three questions. First of all, can you give us a sense of when we might see Polaris in very broad terms? I'd understand if you wouldn't wanna put it on a particular month or a particular year. But in very broad terms, because you said that the six-year period that we'll see the other two games come along starts with Polaris. We'd love to get a sense of when Polaris might arrive. Second question, also on timing really. Can you just give us a sense of how Project Orion might fit around the plans for the Witcher trilogy in terms of timing? Is it likely that you could launch Project Orion in the middle of that six-year period, that you discussed? The third question. Yeah, will the creation of the North American studio mean that cash spending will ramp up in the next couple of years, in those years out until Polaris is launched? Could it be that the group will have negative free cash flow in some of those years because of that new expense? Thank you for the questions. I'll take the first and the second. Adam Kiciński speaking. In terms of detail, today, we decided to share our long-term outlook mostly in terms of direction. We said that there were three Witcher games in our pipeline, released in the first place, and two of them are already in the works. That was Polaris and Sirius. For Polaris, we are preparing technology. This is the first project to be released on a new engine, Unreal 5. There is a need of some extra work, making this technology feasible for huge open world story-driven games. For this project, for sure, we need some extra effort to deliver. As we said in our strategy, the next games in the second and the third installment should go smoother as technology will be there, and the toolset and pipelines will be there. This is all what I can say as for now. For Orion, that's the game we are not started yet. In terms of Cyberpunk franchise, we are finishing our works on Phantom Liberty, and once this expansion is released, we'll start initial works on Orion. This is all what I can say as for now. Piotr Nielubowicz, I will take the third question. The answer is as much as I can without guiding on future results or future cash flows of the company. In general, deploying more projects that we plan for the future will naturally increase cash spending, increase investments in the developments we will be working on. At the same time, carrying out a project in North America will be more expensive compared to doing a comparable project in Poland. We believe it's the only way to tap into the American talent pool, which we need to deliver on our ambitious production plans. Can I have a quick follow-up on the first one? Listening to your answer there about the timing for Polaris. I mean, if the second and third games in the trilogy will appear over a six-year period beyond Polaris, therefore three years each on average, we're saying that this one takes more effort. From the point where you are fully focused on that game, we're saying it could be certainly more than three years because you're saying that the second and third should be faster. Is that an accurate way of reading what you said? Yes, it is. Okay. Thank you. I'll let someone else ask questions. Thank you. The next question is from the line of Matthew Walker with Credit Suisse. Your question please. Oh, thanks a lot, and thank you for the strategy update. I guess, yeah, just going back to, first of all, to Polaris. Would it be accurate to say based on your previous answer that it would be at least three years from now until we see Polaris come out? Then do you have a timeframe for Sirius? 'Cause Sirius is being started, presumably a little bit, maybe a bit earlier, by the studio. Then on Hadar, can you give us a bit of a feel? Obviously, you say it's still in conceptual stage. Can you give us a feel for what that really is? You know, even if it's a really sort of vague and general feel. Finally, in terms of employees, how big do you think the US studio is gonna be? I know you didn't really answer on the costs, but in terms of your near-term results, you know, what are we talking about in terms of additional expenses? Hi, Adam again. I'll take the first and the second. As I said, we are not ready to guide any more about dates today. I won't narrow the timeframe, but what we said, we started pre-production this year, actually at the very beginning of this year in Q1. It's already in development, the first phase of development. In terms of Sirius, we just said there are two games in production, so we are not guiding whether Sirius will be before or after. Of course, we'll say it once we'll be ready. All right. Now, this is Michał Nowakowski. I'm gonna respond to the third one. When it comes to Hadar, we're at the stage, early stages of creative process of creating the foundation of the new setting. That foundation is gonna be the place where we're gonna be developing a new game at some point, but we're not at this stage yet. We're not developing the game yet. The very conceptual phase began in the second half of 2021. We're in the exploration phase of creation of the setting, of the new foundation for the future line of games. Piotr Nielubowicz. The last question. The North American studio will consist of teams working from Boston and a team working from Vancouver, the existing team of CD Projekt RED Vancouver. The team or the project will also be supported by developers from Poland. As far as the total headcount required for such a production is concerned, I believe the best reference is Cyberpunk 2077, our most recent release and a good reference point when thinking about development headcount for future projects of this scale. I think it's safe to assume that between 350 and 500 developers should be required at the peak of such production in our development process. Of course, the final team size will depend on the scale of a particular project, but in this case, we are thinking of a significant AAA plus continuation of Cyberpunk. All right. Thank you. Mister- Thank you. Thank you. As a reminder, for further questions, please press star and one on your telephone. At the moment, we do not have any questioners on the phone, and we continue with the written question. I can read the first written question from Piotr Poniatowski, mBank. Is the tools that prepared for Polaris, and also meant to be used for project Canis Majoris already created or is it still being made? How long usually does it take to create such a tool set? It's not ready yet. We started working on this, but we signed with Epic half year ago, and we are working on it. Of course, some tools we already have because we were using them in our REDengine, and we'll implement them and prepare to work with Unreal, but some other tools have to be created. We are in the initial phases of this process. How long usually does it take? For the past productions when we were preparing technology for each product, maybe not from scratch, but we were doing a lot of things in technology. It usually took the technology and the game together 4-5 years. That was in the past. This time we're not guiding how much time we will need for this development. Next question I'll read. Are you considering returning to the idea of Cyberpunk online multiplayer as a standalone product due to noticeable improvement in Cyberpunk sales last couple of weeks? Will the Project Orion from Cyberpunk franchise have online multiplayer features? Multiplayer or multiplayer elements, depending on the project and the scale of those elements, depending on the project, we are referring to the future games. Of course, in the core of our business and creations are story-driven, open-world role-playing games. We are working on extending them to multiplayer. We've just said that most of projects we announced, the codename project, will have multiplayer, but we are not ready to specifically say whether this or that will have it. The next question from Kacper Koproń. Are you going to propose to the general meeting of shareholders a change to the general meeting of shareholders a change in your financial goals for 2020 - 2025 ESOP regarding strategy update? Yes, we are close to wrapping up internal work on new incentive program formula, but I would say it's not directly related to the strategy update we've just published today. We rather believe it should be a permanent part, important part of the remuneration scheme that we plan for future years after the product. So stay tuned, and soon we will be able to share our concept on how it should look with you in form of the resolution for the general meeting. Here's the operator. We have another questioner on the phone. I would like to introduce Matti Littunen from Bernstein. Your question, please. Thank you very much, and good evening. First, a couple of questions on Canis Majoris. First of all, you say it's a fully fledged project, so should we take that to assume it's a AAA game, so to speak? The second is that, considering the tool set is still being built, should we assume that the milestone payments or the CapEx on the project might not start until you know, some time from now, say you know, over a year from now? The third one, I understand that you announced that there will be some DLCs to coincide with The Witcher next-gen console release, thematically tied to the Netflix series. Now, would these be free DLCs, or would these be sort of small kind of micro transactions, for example? Thank you. Hi. Thank you for questions. I'll take the first one, Adam Kiciński. Yeah, it's we are thinking about fully fledged AAA story-driven RPG. Today we said almost nothing except this, but soon, really soon, we'll talk more about this project, so stay tuned. Thank you. Ladies and gentlemen, as a reminder. As far as the second. Sorry, please go ahead. Yes, go ahead. Yeah, go ahead. The third question, yeah. The second question. As soon as we move from the research phase to the development phase, we will obviously start capitalizing this project, if I understood your question correct. Yes. That's correct. There's nothing to say on the timeframe when that might happen. No, not yet. We've not released any info on that today. Got it. Thanks. On the third one, about the DLCs to coincide with The Witcher next-gen launch, tied to Netflix. These are free DLCs. We're not planning any microtransactions within The Witcher 3 next-gen. Everybody who will upgrade or purchase the new copy will get them free of charge as part of the package. All clear. Many thanks. At the moment, we do not have any questioners on the phone. Ladies and gentlemen, if you would like to ask a question via phone, please press star followed by one. I hand back to written questions. Another question from Kacper Koproń. The Hadar project, when do you plan to start pre-production of this title? Is the game supposed to be in the RPG genre? Michał, maybe you. We're not providing any specific date in terms of the start of the pre-production of the title. We're still at the phase of building that setting, and this is the part that's preoccupying the you know the core team working on it. However, when it comes to the genre. We do certain kinds of games, and I think it's safe to assume we wanna continue to, you know, do the games within that kind of genre. You can imagine what kind of games to expect, I guess. We have a follow-up question from the line of Matthew Walker with Credit Suisse. Your questions, please. Thanks a lot. Yeah, just a couple of follow-ups, if that's okay. Is there any update on timing and pricing for the expansion pack? Like, when in 2023 are we likely to see the expansion, and will it be priced like a, you know, like a normal new AAA title? And the other thing is just to give us a bit of a clue. I think I've asked this before, but just to try and get a bit more feel. In terms of your profitability, basically your EBIT for 2021, you know, was around PLN 200 million. In terms of the development cost for the new studio and for the new titles over the next few years, is that gonna be basically go to zero or below zero, as you ramp up expenses? When it comes to the update on timing and pricing for the expansion pack, you know, that information is part of the marketing campaign, really. When the time for that campaign comes, when we're ready to reveal that information, we'll, you know, come forward with that. I don't really have specifics to share here. It's kind of the same when it comes to answering when in 2023 we'll see the expansion. It's set to release next year, and again, we'll share more details as we are ready to, you know, share those details within the marketing campaign. I'm not sure I understood the last part, whether the expansion is gonna be priced like a normal new AA A title or the following titles. I mean, the expansions traditionally are cheaper than the full price games. If you could, like, specify what you meant here, unless- Yeah, no. That. I misunderstood. No, I guess that answers it, 'cause you're saying it's an expansion. It's not a full AAA pricing. Yeah. The expansion pack is gonna be an expansion. It's big, it's sizable, and we're very happy with you know what we're offering to the gamers. It's not a full triple A new title. Mm-hmm. The second part of the question related to our future cash flows, which, as you know, we are not guiding. Therefore, I'm afraid I cannot directly answer the question. Okay. All right. Thank you. The next question is from the line of Nick Dempsey with Barclays. Your question, please. Yeah, I've got a couple more follow-ups, please. First one. As The Molasses Flood is clearly a pretty small team, is it fair to say that Project Sirius will be a much smaller game than your major AAA efforts that you've been describing? And the second one is just the business model of Project Canis Majoris. How is that gonna work with an external partner? Is this a question of you funding it, and then taking the revenues, but giving them some royalties or a fixed payment only? Can you just describe how the business model will work with an external partner? Okay. When it comes to Molasses Flood, actually the team is right now more than 60 people because that project is not only in Boston, it's also team members working on that project in Europe and in Vancouver, as a matter of fact. We also intend to keep growing that team. It's sizable team, and it's gonna be bigger by the time the project launches. No, the project is definitely not a smaller game. We intend to fully go behind that game when it launches. I guess that answered. When it comes to the second one, Adam wants to chime in here. I'll just add one thing, because we clearly say that it's the Molasses Flood Project Sirius is different from our past productions. Don't expect another open world story-driven RPG like The Witcher 3. It's a different project targeted for broader audience. That's why we decided to acquire The Molasses Flood with their expertise and to run this project by them. Regarding the business model of our cooperation with external partner working with us on Canis Majoris, what I can say is that the project will be based on our IP, and we will be the party financing. However, I wouldn't like to dive any deeper into details of our cooperation with our external partner. Thank you. As a reminder, for further questions, please press star and one. The next question is from the line of Tomasz Rodak with DM BOŚ. Your question, please. Yes. Hi, good afternoon. Thank you for taking my question. First question is regards the Polaris project. As you said, the games will be released in a six-year publishing cycle, which make it like basically three years per second and the third game. I just wanna ask if they're gonna be a full AAA experiences, like for several dozens of gaming hours, 'cause it seems that the three-year production cycle is rather short for a triple-A project. The other question regards the Sirius game from The Molasses Flood. You said that it targets broader group of players than your previous games. However, it seems that action games, shooter games are the most popular genres, and you did those. I wonder what can be more popular unless we talk about, I don't know, mobile game. Maybe just two questions for now. Hi, Tomasz. Thank you for questions. Adam Kiciński. I'll take the first one. I know it's a bold statement that we are going to release three full-fledged AAA open-world story-driven RPGs in six years. We really mean it because we believe we have a plan for this. We are currently working on a solid technological foundation for all our future releases, and especially, releasing Polaris, we'll have all tools to continue streamline development on successive parts of the trilogy. Still, of course, we want to approach each game with a great ambition. We are not cutting corners. I mean, there's no plan, any plan for this. We believe that changing our pipelines from the past ones, when we were really very much into deep technological processes for each game, to start games with almost ready technology. Of course, we'll have to add some because some technologies are always needed to create something new, but this is very different from what we had, what we've had in the past. I'll take the second one, Michał Nowakowski. I can definitely say Sirius, Project Sirius is not a mobile game. When we were talking about it, I think we actually were talking about, like, broader demographics, which means we wanna reach to people that we were not necessarily efficiently reaching through The Witcher games that we've been making so far. Imagine people who maybe watch the TV show, but are not necessarily into playing very dark themes, hardcore RPG games. This is more the kind of thinking behind it. That's unfortunately as deep as I can go, but I hope this gives you a little bit more, a bigger, better picture of what we're trying to do. Obviously, we're gonna be talking much more about that project as that time, as the right time comes. Yes. Great. I would like to have two follow-up questions, if I may. Are some of the games mentioned in the strategy a mobile game? The last question, just to make things more clear, Orion will be developed by this North America studios, CD Projekt RED North America, that consists of Boston and Vancouver. I understand that both of them are making, like, Sirius right now. Does it mean that I mean, Molasses Flood is making Sirius right now. Does it mean that after Molasses Flood ends Sirius, it will start working on Orion? Okay, I can start with the first one. None of the games mentioned in strategy are mobile games. Let's set this clear. Having said that, you know, when it comes to mobile, we did mention that we are opening up also on that front to external corporations. You know, when we're ready, we'll tell you more, but that's the part we've been covering when it comes to the strategy and mobile games. I will take the second one, Adam here. No. The Orion will be developed by CD Projekt RED North America, which will consist of already existing Vancouver team and totally new team, which we are building in Boston next to The Molasses Flood. Actually, next door, but it's totally separate from The Molasses Flood. Molasses Flood will stay focused on Sirius, and we are building another team in Boston to lead together with Vancouver to consist to build CD Projekt RED North America, and to lead production on Orion. Thank you very much. Thank you. As a reminder, for further questions, please click star and one on your telephone. I hand back to written questions. All right. I'll read the first question from Omar from Morgan Stanley. Your plan for future releases are much more ambitious than your last strategy update. What has changed? Why are you more confident you can deliver a fuller slate of content? First and foremost, in our previous strategy update, we were not very much about timelines, about future product plans. We were mostly or solely focused on transformation and how we are willing to approach development, what we called RED 2.0? From that moment, which was the last strategy update was 1.5 years ago, we started transformation. We are more confident, of course, because we are after the phases of transformation, we see first positive results. We see how we can work in Azure, how we can deliver. We have new technology, a new Unreal Engine 5, of course, with its challenges, but ultimately, at the end of the day, we believe that it will help streamline our development. On top of that, we are opening CD Projekt RED North America, which should significantly grow our capabilities in terms of recruitment. Okay, I will read the second one. How are you thinking about the use of the third-party outsourcers to help deliver your development ambitions? Michał, maybe that's for you. When it comes to third-party, it's not even outsourcing, it's partner because outsourcing suggests that these are companies that help us do like a portion of the game. In some cases, they're actually working on a game per se. We're looking for people who share our ambitions, who share our drive for quality, and who we believe are not gonna deliver experience that would be inferior to, you know, to what the fans of that given IP, that given franchise deserves. We definitely don't want to cut corners with any of the games that would be done in cooperation with third-party development teams. The third question from Omar is definitely for Piotr. How much cash do you think you need to maintain on the balance sheet during this accelerated phase of game releases? Yes. As of the last reporting quarter, we had slightly above PLN 1 billion on our bank accounts. What I can share with you is that we definitely aim at having decent safety buffers. We want to be self-financed, and the safety buffer in our cash was with us for years till now, and we do not want to change the situation. Having said that, we will balance between the revenues generated on a daily basis, continuing to sell our products, releasing new products like the ones to come in the shortest time are The Witcher 3: Next Generation Edition, Phantom Liberty expansion, and other products later on announced during the strategy, and at the same time, continuously and gradually financing development of future games. However, we are not sharing precisely the outgoing or incoming future cash flows, and therefore the future cash balances as per different future balance dates. Okay. I can read the next question from Konrad Krasuski. What is the difference between Sirius and Polaris? And there is also second part of that question. And what is the future for targets in incentive plan? I'm gonna take the first part of the question. We sort of spoke about that in one of the previous questions. Polaris is the next Witcher game you may think similar to what we've been doing, you know, in the past with Witcher three, two, one and so on. Like a continuation of the core series, and Project Sirius is the one reaching out to broader demographics through the means I discussed before. To people who are interested in the franchise, interested in the IP, but are not necessarily into playing a hardcore role-playing game, like the Witcher series we presented so far. The second question from Konrad Krasuski, Bloomberg News, is and what is the future for targets in the incentive plan? As I already mentioned, we continue working on next iteration of our incentive plan. However, we plan to change it. It will not be a direct continuation or the direct multiplication of the historic programs. We plan to change a bit of the logic of it, make it more comparable with incentive plans offered by our top competitors in the global scale. As soon as we have all the details, we'll share them with you. The next question from Morgan Stanley. Just a point of clarification, what are the two games being developed in parallel now? Would you consider the Cyberpunk DLC as one of the two games? Cyberpunk DLC and Sirius are the two ongoing development. First and foremost, Phantom Liberty, we don't call it the DLC. It's a huge expansion. From the development perspective, from how you organize the production, it's very similar. It's actually the same as you produce a full-fledged game. The first AAA project, the first AAA content we are working on, yes, this is Phantom Liberty, and the second one is pre-production of Polaris. Sirius is on top of this because we were talking about CD Projekt RED working on two AAA content developments, and Sirius is on top of that. It was run in the month of July. The next question from Maria Mickiewicz, WOOD & Company. Taking into account your development plans, where would you see the size of your development team in, let's say, three-year horizon? To double-check, are there around 800 developers now? We are constantly looking for talent and developers, that's for sure. We have to grow. The group currently employs over 1,200 people, including nearly 800 developers, but this includes GOG. In our studios, we have over 700 developers. Those are developers working on the game itself. I'm not ready to talk about the targeted numbers of people, but for sure our North American teams will grow, and we will grow our European forces as well, because those ambitious plans are based on the assumptions that we'll keep growing our creative forces. The next question from Piotr Łopaciuk, PKO BP. Do you consider potential equity issue to finance the ambitious plans? For now, we do not have such plans, and we do not consider issuing new equity. As you know, today, we've announced a buyback program, so the direction is rather the opposite. What would be your role in Canis Majoris project? Purely the publisher? This was the second question from Maria Mickiewicz, WOOD & Company. Michał, that's for you, I guess. We obviously would be publisher for the Canis Majoris project. Having said that, there's also certain development and technology overlaps. There will be parts of the project where we would be participating in development of the project with the team that is developing this project. However, vast majority of that project will be done by that team specifically. Like I said, participate but not really make it. It's external but published by us. There is another question actually, the follow-up question from Maria Mickiewicz. In terms of the size of the projects, would it be fair to assume that Polaris, Orion, Hadar will be a large AAA game while the remaining two, Sirius and Canis Majoris, relatively smaller productions? Michał, maybe you? Sure, I can take that. You're correct that Polaris, Orion and Hadar will be large AA A games. Having said that, we would definitely not call Sirius, Canis Majoris, smaller games. Canis Majoris is a AA A standalone project. Sirius, project Sirius is also an ambitious project. It's different than what you got used to in The Witcher series. However, as I mentioned earlier, we're fully going behind it, and it's a big project for us as well. We have another question from the telephone. Next question is from Rafał Wiatr from Citi. Your question, please. Good evening. I would apologize for repeating other questions. I have to say that I'm still confused a little bit about the sort of timing and the scale of the games. If you can sort of confirm that four projects would be AA A projects, that's what I sort of understand, and please correct me if I'm wrong. If you can comment on Polaris project, which will take six years on publishing that, when that will sort of start? Or should we count from now that six-year period? If you can say, Hadar, will it be earlier, or let's say, released earlier than six, seven years from now? Thank you. Thank you. I'll take probably all of it. Adam Kiciński speaking. Starting from Polaris. Polaris is the next full-fledged open world, story-driven RPG in The Witcher universe, and it will start the saga. The saga, which means, in this case, three games. This six-year window is starting from the release of Polaris. We are going to release Polaris, and then within six years, the second and the third game in the saga, and all of them full-fledged true play RPGs. Hadar, we just started last year conceptual work, not on the game itself, but on the set. For the first time, we are working on our own IP. We are incubating it internally. We need some time to be ready to start working on the game. Can you still hear me? Yes. Yeah. I do apologize that the question might, you know, sound bizarre, but I do understand that it's a six-year period. That the six-year period can start 10 years from now or three years from now. That's sort of more if you can just give us a little bit of insight. If that is the case, then Hadar is gonna be a long way project from here, from today. We are not talking about release dates. We've just said that we've started development as a pre-production. This is the first phase of development of Polaris in Q1 this year. Once we'll be ready to talk about dates, of course, we'll talk. In the past, our developments of big games together with technology were between 4-5 years. Once Polaris is released, then we are going to release the second and the third game in the saga, counting the time from the moment of release of Polaris, and then within six years, we believe that we'll deliver another two big games. Hadar, really way too early to talk about dates. I do assume that the projects that are presented here are more in a sort of chronological order? Is that correct? No, they are not. No, they are not in chronological order. We've just said that the first three games in our pipeline, which means that will be released not in chronological order, but will be released to the market first are Polaris, Sirius, and Canis Majoris. This is the only sneak peek to our thinking about order. Those three should be first on the market without saying which first, which second and third, and the rest, on the rest, we are not guiding. Okay, thank you. Thank you. As a reminder. Yeah, yeah. Please go ahead. I think we are running out of time, and I would like to thank you again for joining us today. If you have any follow-up questions, do not hesitate to contact our IR team directly by email. Have a nice evening. Goodbye. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day.