All right. I think we are ready to start, so good morning. My name is Janusz Maruszewski. I would like to welcome you to a meeting with representatives of CI Games. The purpose of this meeting is to discuss CI Games' financial results for the first quarter of 2024. I am pleased to welcome to our meeting Mr. Marek Tymiński, CEO of CI Games. Good morning.
Hello. Hi, good morning.
Katarzyna Sermanowicz-Giza, Financial Director at CI Games. Good morning.
Good morning.
The meeting will be divided into two parts, a presentation and a Q&A session. I would like to invite to participate, and also to ask questions during the presentation. That is all for the introduction. Marek, the floor is yours.
Thank you. Welcome everyone to financial results investor call for the first quarter of 2024. We will go rather briefly through the presentation, and look forward to answering as many questions as we can. As usual, CI Games, as most of you know, we have been around for 20 years. We have two major IPs, Lords of the Fallen and Sniper Ghost Warrior. Both together, we sold over 25 million copies. Experienced global team, mostly across Europe. 100% remote organization working currently on two new projects, that is Project Three and Project Survive. Our company culture is a culture of best talent. We basically hire where the best talent is available, regardless of the geographic location for as long as this is within Europe, if possible. 20+ years of experience as a company in developing AAA and AA+ games, two evergreen IPs. As previously said, 25 million copies sold.
100% remote. We are currently targeted at 150+ headcount across our organization, mostly in Europe, and 18 years of experience in average for the management team. This is our C-suite management team across marketing, development, HR, and more. Soon, as we just announced, would welcome at the management team, the Senior VP for development who will run all internal and external projects for CI Games as a group. This is a split between the disciplines. Majority of our talent was development, obviously, across design and code, art and animation. Key company milestones.
Company was founded in 2002, and this is all through listed on stock market and having Sniper Ghost Warrior in 2010, then Lords of the Fallen, first one in 2014, up until the launch of last year, Lords of the Fallen. Currently, we have been developing games based on one technology, that is Unreal Engine 5, and obviously, we share the expertise and knowledge between our studios. We see that platform as absolutely the right choice for future. It is way more polished currently than when we started to work on that platform before it was even launched to the market. We think we also learned a lot in the last couple of years, and I think it is a great match for what we want to achieve across all platforms, consoles and PC going forward across our IPs. A brief summary of Hexworks.
The studio was established in early 2020, so hired all its team and developed Lords of the Fallen in three a nd a half years. Currently 86 people. Underdog, this is the studio that is in development of Project Survive. That studio has the extension for the vertical slice that will come later this year, but we don't specify exact date. Strategic pillars and timeline. There's no really a change here on that slide since last presentation. We had a thing, again, highlight is Project Three, Project Survive, and then all our potential projects that we have, including Sniper Ghost Warrior, that is still performing well for the group. Q1 key events. Obviously, this was we have informed the investors within different current reports. I think first we paid the loan to the bank in beginning of 2024. We went through the first round of redundancies in January 2024.
We got through EGM. We got the approval from the shareholders for the capital raise that is currently, as we informed this morning, is on hold. We announced Tails of Iron 2 as a sequel to Tails of Iron, the best and most successful game from United Label portfolio. We followed that with Beyond Galaxyland, another new IP for United Label. Both games are doing really well in terms of the wish list and in terms of the interest, so we are absolutely happy from their early performance. Sniper Ghost Warrior Contracts 2 exceeded 2 million units. Monetization is over for that game.
We got a bank loan from PKO Bank Polski of PLN 15 million. End of April, we launched Lords of the Fallen, the version 1.5, after 30 post-launch updates with new content, Master of Fate and a lot of other additional content that we launched post release. We definitely see improvement of the sentiment for the franchise. That is very important to us, and we look forward to further improvement of that sentiment with another major content update coming very soon. Obviously, the launch of the game across Game Pass, and same with Sniper Ghost Warrior Contracts 2, that game will also be launched on Game Pass in the next couple of months. That is important not just financially for us, but it's also important from the standpoint of popularity, bringing the popularity for those two games and establishing further those franchises for the next installments.
The last point here, very important, early June, we will have a very experienced industry professional taking over the position of senior vice president of development. We want to further improve the efficiency of game development and quality of our products going forward, and this person will be a very strong, important upgrade for the structure of the organization and for the teams to help make better games and help make more efficiently. A snapshot of key numbers of Lords of the Fallen. We shared that before. Just to remind, the strong sales in North America, big percentage coming from deluxe edition. 1.3 million copies sold until the end of last year, being top 10, top 20 across different charts in Europe, in the U.S. Very strong marketing campaign, with very strong numbers. That is obviously a strong platform for potential future installments across that franchise.
Lords of the Fallen post-launch development. We inform about that. We shared that information. Over 30 major updates. That, again, was what I already said, led to the version 1.5 that we launched end of April. There is more content to come that will for sure please a lot more players and help further strengthen the sentiment to that franchise. Project Three is action RPG game, capitalizing on recognition and success achieved by Lords of the Fallen, but also from the standpoint of the experience in developing, experience of the team working on the next big game, in a very similar genre. We believe that's the natural progression for the team, and the team started that project already some time ago, being a full-scale team and not from the scratch like we started Lords of the Fallen.
I think we are very well-positioned for that project with that team. Obviously, it's going to be a single player, but also a co-op campaign will be very important feature for that game when it's launched. Project Survive is the game that is developed currently by Underdog. That studio has been basically working on the vertical slice, and the vertical slice will be further extended from the deadline standpoint, just to make sure that we have the right quality before we really move into a full production. I think the game has a lot of potential. It's a mix of realistic survival game with supernatural elements and aspects. Again, this is a single player and co-op experience. Katarzyna, the numbers are yours.
Yes. Let's move into financial results. As you can see that in the first quarter this year, our revenues were almost PLN 22 million , which is over double compared to 2023. Of course, this is the result of the release of the Lords of the Fallen in October last year. Lords of the Fallen accounted for 59% of total consolidated sales, while remainder was generated by back catalog. Cost of goods sold increased due to amortization of Lords, which is the major portion of this cost item. Other costs included amortization of Contracts 2 and two games from United Label portfolio. Other costs included also costs of Unreal Engine and Crytek, and also some small portion of not capitalized costs related to post-launch work on Lords.
As CEO mentioned before, in April, we achieved, actually not achieved, but exceeded 2 million of sold units of Contracts 2, and we finished amortization of Contracts in April. Which means that from May, there will be no amortization cost in the profit and loss, which would have positive impact on the profitability of the company. Selling costs were lower compared to the previous quarter. The main reason is that in 2023, we already started marketing campaign, so 2023 selling costs including some marketing related to promotion of Lords. G&A cost increased compared to the previous year quarter. The main reason is one of costs related to dismissal of the board member. The reported EBITDA amounted to 11 million, with 51% of profitability. Net profit was PLN 37,000. Let's move to the balance sheet structure. Total assets decline as at the end of March.
This relates to generally the structure of the balance sheet, which changes after the release of the game. The main reason is movement in working capital. This was attributable to decline in trade receivables, because we converted majority of our receivables into cash. The decline in cash resulted from the fact that we repaid our two loans in the bank. In terms of the intangible assets, which is the major item of the balance sheet structure, the net increase was 3 million, which is the net result of the amortization of Lords. On the other hand, still continuous CapEx on Project Survive and Project Three. The group net debt was 29 million, which is connected with the bonds, the major item, and around 2 million of finance lease liability, which relates to office rental.
In terms of the cash flow, you can see that operating cash was PLN 31 million , which is basically conversion of receivable into cash and after paying operating cost. Net cash flow from investment activities, this is the reflection of the continuous development of two project, Survive and Project Three. Negative cash flow from financing activities, basically this is the repayment of two bank facilities to PKO BP . The cash balance as at the end of March was PLN 15 million . Thank you.
Thank you, Katarzyna. Just moving to questions. I'm just trying to-- There are different questions on different topics. What plans do you have in relationship to United Label? It's very straightforward. We were always selective on projects that we were taking on board to publish and to help developers make the best games they can make. Because obviously publishing is only part of that, but we act really close to developers. All of the projects that we published were financially successful for us. There was one game that we decided to unfortunately, not to continue working with the developer, and we didn't publish that game. We look at that game, we don't know the details, but it didn't work well. I think we made the right decision. It was a hard decision. We made the right decision.
We will have two releases from United Label this year. Obviously this is Tails of Iron 2: Whiskers of Winter and Beyond Galaxyland. We are also working on further expanding the portfolio of United Label. We will be bringing more games, we will be signing more games, but we will stay very selective. We want to make every game successful, and we want to make that success not just for United Label, but also for our developers that we work with. I think, there's a question about the marketing and how do you see your marketing competencies can bring more value to you.
I mean, this is very connected to United Label because obviously it's commonly known that the team behind marketing for Lords of the Fallen and previously for Sniper Ghost Warrior Contracts 2, but especially for Lords of the Fallen, for that project, have done great job. That same team at its core is working currently on United Label titles, and I think that's the value of having a great team, a great marketing team we have, that we can really deliver great marketing campaign for United Label titles and just be on the sweet spot of the communication of each given game that we have. This is even clearly seen through the latest trailers for Tails of Iron 2 or Beyond Galaxyland. I think Beyond Galaxyland, that trailer, the first trailer that we announced that game is fantastic.
It's fresh and it made great benefit for the game to be established and to start being promoted. Who is the new senior VP of development? What will he be responsible for? We will have a separate announcement next week on the new person. I can only say today that this person, this manager, he has been responsible for larger projects that he had been running simultaneously, a number of different projects for one of the biggest publishers, developers globally. I think that this is very important step for CI Games to upgrade the structure in terms of the game production management. Again, in terms of helping to get the efficiency further up for game development and helping make even better games. I think that it's very clear that the company has been developing games and delivering games, and there is a consistency in delivering those games.
Even if you compare us to other developers and publishers even listed on Warsaw Stock Exchange, we have been developing and delivering games over and over, right? That was every second year we've been delivering the next game, and each game has been a big release in terms of the sales. Where we can improve, we can further improve in terms of the efficiency and the quality to improve the further sales of those games and make those games in more efficient way. But there is a lot to like, we believe, with what the company has been doing, especially in the last five, six years, and there is a clear pattern of how the company improved its efficiency and the quality of products that it brought, right? We are aware of Lords of the Fallen.
It wasn't all perfect at the launch in October, but we have worked very hard to make that game as good as it can be right now. For those of you who are playing games from time to time, I really think you should definitely play Lords of the Fallen to see yourself how enjoyable that game can be obviously. It's not an easy game, but it's absolutely enjoyable, very high quality game that you can play on all the platforms. What makes CI Games prepare for challenging times in the video game industry? I think it's true that the times for the gaming industry are very challenging, and you can clearly see that started 2022, and 2023 was very saturated in terms of the launches. Most of the games perform under their expectations. I would say big majority of the games perform under their expectations.
As you also clearly see, as we all can clearly see, most of the companies, the big ones especially, they started to make changes in their organizations, closing studios, laying off people. That's a common thing now because, yes, the industry is more challenging than it was ever been in the last, I would say, two decades. What makes us prepared for that and what makes us having strong chance to be successful going forward is everything what we have done in the last year. So bringing the quality higher, bringing stronger teams together, and if things are not working as they're supposed to work, then we take actions, and we improve that further, and we improve and optimize the business from the inside. We know we're not perfect, but we are aspiring to be better and better.
I think with what we have delivered in the last six months, in terms of the improvements and changes in the business, you clearly see that we take actions, and we make company better and stronger for future. I think we are absolutely well prepared for the next years with the projects that we have and the current structure of the company that we have. Can you please share the details of the agreement with Microsoft on Gam e Pass? We cannot share details because obviously it's all very confidential and under confidentiality agreement. I can only say that obviously huge majority of that came for Lords of the Fallen and the smaller part came for Sniper Ghost Warrior. Much, much smaller part came for Sniper Ghost Warrior. But I cannot provide further details on that. Question on what are the further plans for Sniper Ghost Warrior?
We have it in our plans, and we clearly said to investors we want to develop that franchise further. The problem we have here is that developing first-person shooters is expensive, and it's only more expensive than it was couple of years ago. So before we kick off that project, we have plans, we have different directions or one direction that we like the most for the project. We understand the genre very, very well. But before we kick off that project, we need to find the right way to take that project in terms of the right team, internal or external, and with the right setup, so when we have that game launched, that game can be really financially successful. It's not simple, not easy, because again, first-person shooters are expensive to develop, right?
If you want to make it right, that requires further consideration before we kick off that project. But absolutely, we have plans to do that, and it's important to us. When can Project Survive go on sale? We're saying it's 2025, but we also made it very clear that there is a substantial risk for that game to be released in 2025. We don't have more information that we can share right now. Once we have that information, we will share with investors. Is the company hiring new talent people right now? Yes, we have open recruitments on both projects, and you can easily check it out yourself on various positions, but we are very selective, right? So we're not trying to grow substantially now. We're trying to be very selective.
If we find somebody who is a good fit for what we really need in each given project, or in terms of the organization outside of the development, then we are hiring. Obviously, we are hiring, and the new person who will run the development is also a new hire, right? The company wants to grow, but wants to grow in a bit more conservative way from the standpoint of the increase of talent. Yes, but we are hiring, absolutely hiring. What are the strengths of CI Games versus other gaming companies listed on Warsaw Stock Exchange? I think we're not trying to compare directly to others, but I think, again, our strength is that we are fully global, fully international. We are 100% remote, and whenever we need a person on any given position, we are looking for that person across the whole of Europe.
It's easier to find a strong candidate when you are not just looking at any given location, like say Warsaw, Poland, but you're looking everywhere in Europe. From the standpoint of compensations, the compensations are getting close to each other. Obviously, there is still a difference between how much you have to pay, between the salaries in, say, the U.K. or France versus some of the Eastern European countries. But the difference is getting smaller and smaller, so we believe it's really about the best talent, the best person you can find on any given position. That is our strength. The strength is also from the standpoint of we have very experienced team in publishing, marketing, and we understand this industry, not just from the standpoint of development, but also from the standpoint of publishing, including marketing, and we can deliver.
Lords of the Fallen marketing campaign is again a proof that we can absolutely deliver at the highest level on that side. I think, as I said previously, we deliver projects. We deliver projects, we deliver games, we release games, and we release those games pretty much every second year in the last five six y ears. So even we delay sometimes our projects, they come to the market, and they have at least relative success. We generate strong revenue when we release our products. As I said, there is a room to improvement we are aware of, but we are absolutely still delivering and have the frequency of that delivery of our products to the market. Then back to the investors. Why is the issue resolution on hold for the capital raise?
As we clearly communicated several times before, we have number of different options to finance the growth of the business, and one of that is the capital raise. As we clearly said, we also have been into contact with the publishers and in further more advanced conversations with some of them. So we absolutely see a possibility of teaming up with one of the biggest publishers, and them helping to finance one of the projects. Another thing is, obviously, we absolutely see a possibility to increase the level of facility with the banks. Katarzyna, do you hear me? We see other options for financing, including the bonds. So, currently the capital raise is on hold. There is another question on capital raise that I want to answer. Right.
Why the issue of new shares was held up, what interest there was during the conducted issue at the end of April? Supposedly there was not enough interest. Some people I heard that said, supposedly there was not enough interest. That's not true, because there was a lot of interest. I don't want to go into further details, but not having interest is not true. Where is the company relation to review of strategic options? Briefly, we are continue talking to several strategic investors, large publishers, and we have been into that relationships already for a couple of years. It's very difficult to say whether and which one will end up in some sort of agreement. But we have been talking to pretty much all the important parties that are globally recognized in that industry.
If we have something to communicate to investors specifically, we will do obviously, but there's nothing yet. Are you optimistic about the future of studio in the next years? Yes, of course, we are absolutely, and I am absolutely optimistic about the studios and the future for the next couple of years. I think, again, the company is very well positioned for further growth in that industry that is more challenging than it was a few years ago, but we're absolutely well positioned, and I'm absolutely optimistic. I think those are the all questions, and some were similar to others, so I think we answered all the questions at this moment. Thank you very much. Give the mic to you.
Yes. Thank you for the presentation, and thank you for answering the questions. That's all for today. My and your guests were Marek Tymiński, CEO of CI Games. Thank you, Marek, and goodbye.
Thank you very much.
Katarzyna Sermanowicz-Giza, Financial Director at CI Games, also thank you and goodbye.
Thank you. Bye.
Greetings, and have a nice day. See you next time.
Thank you.
Thank you. Bye.
Bye-bye.