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Ladies and gentlemen, welcome to the conference call of CD Projekt Group. At our customers' request, this conference will be recorded. [Operator Instructions] I may now hand you over to Adam Kicinski, who will lead you through this conference. Please go ahead, sir.
Good afternoon, everyone. Welcome to CD Projekt's conference call dedicated to Q3 2020. My name is Adam Kicinski, and I will run this call together with Piotr Nielubowicz, CFO.
Please note that the presentation is posted on our corporate website, cdprojekt.com. After the call, we will also post the audio recording of the call and its transcript.
First, let me start with a short pandemic update. As the COVID-19 situation is definitely better than -- not better now than it was in July. We have decided to extend the studio's home office mode until the end of March 2021. Of course, the well-being of our team remains our top priority. And we'll take additional measures to ensure everyone's safety.
In spite of this extraordinary and difficult circumstances, our team is giving it their very best at this final development stretch of Cyberpunk 2077. I'm truly grateful to them for their incredible work and dedication to the Projekt. Thank you. Thank you. Thank you.
Please move on to Slide 3 and 4. Even though the circumstances are less than perfect, we continue to work hard on delivering top-quality content for our funds. The game went Gold in early October and will hit stores around the world in 15 days.
Please move on to Slide 5. The game will be launched on PC, Xbox One, PlayStation 4 and Stadia. Just days ago, next-gen consoles were released and our title will run great on Xbox Series X and S as well as PlayStation 5. From the very beginning, thanks to their backward compatibility. We are excited to be able to bring our game to more players than ever before.
Please move on to Slide 6. In the past few days, we released 2 trailers presenting gameplay on current and next-gen consoles. The extra time gained by postponing the release is being used to further optimize the game. And we feel that it was the right decision.
In the next few slides, starting with Slide 7, I would like to tell you more about Cyberpunk's promotion campaign. Here, we present an updated chart showing our promotional activities between September and today. The thickness of each bar represents the intensity of activities. As you can see, we are already in an advanced phase. But the crucial most intensive period will begin in the first days of December. We want to reach as many fans as possible. Which is why our app appear in 55 countries and 34 different languages.
Our goal is to be wherever gamers are and we want to talk to them in their mother tongues. As for the game itself, it has been localized into 18 languages, including 10 fully dubbed versions, Slide 11. What's even cooler mimics and facial performance are unique and fully natural in every voice-overed language.
Let me now briefly summarize the key events of the past weeks. Starting with Slide 12. We begun October on a high note at the opening game of this year's NBA finals, we aired new Cyberpunk commercial, staring Keanu Reeves, which kick off our TV marketing campaign. We also carried on with the Night City Wire series.
Please move on to Slide 13 and 14. Each episode presents new faces of Cyberpunk, including trailers, behind the scenes footage, the game world and key character. Interest has been huge, with each episode attracting more and more viewers. The gameplay trailer aired during the final 5th episode last week was viewed a record 23 million times over just 3 days following its release.
Moving on to Slide 15. We recently announced our collaboration with brands such Porsche, NVIDIA, Adidas, Rockstar energy drink and Sprite. Each such collaboration is carefully tailored and fits into the Cyberpunk game world.
We now have far greater capabilities of this -- in this respect than in the case of the Witcher universe. And we intend to exploit this potential to improve awareness of our new IP.
Please move to Slide 16. Earlier this month, we organized a second wave of hands-on of Cyberpunk. This time extended ones, focused on just a handful of gaming media outlets representing key global markets, the U.S., the UK, France, Germany, Japan and Russia.
Each guest we invited played Cyberpunk 2077 for about 15, 16 hours. And the feedback is really encouraging. Let's move on Slide 17. Piotr, the floor is yours.
Thank you, Adam. Let's go to the first financial slide. Profit and loss account. Between July and September, we focused on Cyberpunk, but our Witcher products continued to entertain people around the world. Group revenues reached nearly PLN 105 million, which technically is only 13% above the results for the previous year, but the structure of our sales change in a favorable way.
Sales of products, which is the most profitable part of our business, increased by nearly 1/3 this is thanks to the great performance of the Witcher 3 on 4 platforms, but also strong performance of Gwent operated on iOS since last October and Android since March. This summer, we had lower revenues from services as last year, we had some exceptional revenues related to cooperation with our marketing partner.
Next important line, revenues from good and materials, which consists of 2 major ingredients: first, revenues from sales of physical elements of our products. Last year, we had an increase of such revenues due to shipments of Nintendo Switch cartridges for the October release of the Witcher 3 on Nintendo. This position at the prior period decreased from PLN 15 million to PLN 5 million year-on-year. It's a low-margin part of the business as all revenues recognized as royalties, which constitute most of our gross profits are included in our products revenue slide.
Second ingredient of our goods and materials sales, core revenues of GOG.com, which grew nicely by 1/4 versus the third quarter of last year. The change of structure of our sales caused a slight decrease of our cost of products, goods and materials sold parallel to an increase of overall sales.
This resulted in an increase of our gross profit on sales up to PLN 68 million by nearly 1/4 versus last year. Our total operating costs remained fairly steady. Among them, selling costs increased mostly due to promotional expenses related to Cyberpunk and G&A costs decreased mostly thanks to [ earning ] the recognition of the cost of our previous incentive program valuation at the end of June.
Next line, financial revenues less expenses. Recently, we see lower interest on bank deposits and at the same time, surplus of negative FX differences on the more volatile market. All in all, despite having no major releases and accelerating internal engagement in the Cyberpunk launch, our net profit increased 57% versus last year and reached over PLN 23 million.
Moving to the next page. Graphic presentation of our quarterly revenues for the last 3 years. The third quarter is usually the quiet part of the year for us and so it was this year. Even so, it was the best third quarter in years. On the next page, the same revenues are decomposed into costs and expenses, light gray color and net profits for each quarter presented yellow. As I mentioned before, despite being focused on Cyberpunk, we maintained popularity of the Witcher franchise during the typically dry summer season and also profit wise, it was the best-performing third quarter in recent years.
Next page, #21, our balance sheet. As usual, a major change on the asset side is visible on the expenditures and development projects, which increased by over PLN 39 million. This is mainly related to Cyberpunk works, and I will have a dedicated chart for this in a moment.
After the strong sales of the second quarter, during the summertime, we decreased our receivables balance by PLN 25 million, which added to our cash flow of the third quarter. Speaking of cash, our cash reserves are currently diversified between banks and bank deposits and T-bonds included in both short and long-term other financial assets.
Overall value of our cash reserves decreased by PLN 7 million over the 3 months of the third quarter. I will go into more details on that with a dedicated chart in a moment.
Equity. It decreased by PLN 179 million due to the buyback of own shares we run in July and August. And among short-term receivables, 2 big changes happened. First, so the product was paid in the capital contributions by the participants of the previous incentive program. The new share issue is not registered yet. So the received capital contribution is presented as our liabilities towards the program participants.
Second change, the nicest of all liabilities deferred revenues growth by over PLN 77 million, mainly related to Cyberpunk royalties on selected preorder sales and advances on minimal guarantees from our distributors. This is the biggest increase of deferred revenues we ever experienced.
Let's go to the next Page #22. Our quarterly expenditures on development projects in a cash flow perspective. In the third quarter, we were still working full force on Cyberpunk. The decrease of spent cash in Q3 versus the previous quarter comes mostly from annual bonuses for developers being paid out in the second quarter.
Next page, #23, cash flow. We started July with PLN 642 million on our bank accounts in bank deposits and invested in T-bonds. In July and August, we run our share buyback and spent PLN 214 million on it. Afterwards, the shares we bought were sold to our incentive program participants, plus we received from them additional capital contribution prepayment for the new shares issued.
All of that amounted to PLN 126 million inflows. Effectively, our net cash contribution in the settlement of the previous incentive program, via share buyback was PLN 88 million so far. At the same time, on our core business, we spent PLN 52 million on development projects. Parallel to that, our deferred revenues increased by over PLN 77 million.
The deferred revenues increase comes in the vast majority from selected Cyberpunk preorders and received tranches of minimal guarantees. On top of that, we brought PLN 23 million of net profit to the equation and enjoyed flows, mainly driven by decrease of receivables in the total amount of PLN 32 million.
All in all, having financed our incentive program settlement via buyback of own shares and investing into Cyberpunk development, the total value of our cash deposits and T-bonds decreased by PLN 7 million [indiscernible]. And overall, during the first 3 quarters of this year, our cash reserves increased by over PLN 152 million. As you know, the main dish of the year is yet to come.
Thank you. That's all from me for now. Please move to the next page.
Thanks, Piotr. We are 15 days away from launch. We are entering the most intensive phase of our marketing and PR campaign. On top of that, in the next 2 weeks, we'll be sending review copies of the game to journalists around the world. Enabling them to publish their impressions and reviews of Cyberpunk before its release.
We are very excited, and we eagerly await the moment gamers can finally lay their hands on the game. That's all from us. That's all for me. We'll now proceed with the Q&A session.
[Operator Instructions] The first question is from Omar Sheikh of Morgan Stanley.
I've got 3 questions, if I could. The first is on preorders, pre-sales. 15 days out, I guess you have some visibility on a meaningful kind of view, I guess, on preorders at this stage. I wonder if you could maybe, first of all, tell us what you think about the overall numbers that you're seeing? And then also maybe about the mix between console, PC and GOG? That's the first question.
Secondly, I wonder if you could give us a sense of what impact going on to home office mode until March '21, will have on your -- I guess, your schedule for next year, in particular, for releases of things -- expansions in 2021. So specifically, could you give us a sense of how many expansions you expect to publish next year?
And then finally, a question for you, Adam. I mean, we all know you're a perfectionist. The whole is full of perfectionists. I guess the question is, how satisfied are you with the quality of the gamers you see it today? And where you expect it to be in terms of quality by the time you release it on December 10.
Thanks very much Omar, this is Piotr Nielubowicz. Yes, thanks for trying to get some extra info on pre-orders. As you know, we are not revealing much information on that. We believe, at this stage, we do not have full and complete data that we could share and it's not easy to say how any data should be applied on final sales.
Therefore, unfortunately, I can't give you any more details than the total increase of deferred revenues that was presented in the financial statement I just referred to.
All right. Adam on this end, I'll take the second and the third one. So it seems that home office mode will not impact our schedule. We haven't revealed any dates regarding expansions, but so far, so good. So none of -- I mean, nor [indiscernible] to know that the last delay is impacting our schedule in this regard. And bear in mind that part of the team is working from the office -- I mean, smaller part, but it helps a bit as well, so we can organize things here internally and then collaborate with people who are at homes.
And the last question, well, it's tricky. It's tricky to share our impressions before reviews and before gamers are able to play the game. Well, we are satisfied, but we are never fully satisfied. And don't get me wrong. It's not like we are not sure, but less wait just 15 days. Let's wait again, even less because reviews will be published earlier. So let's wait for the external judgment and then everything will be clear.
The next question is from Matthew Walker of Crédit Suisse.
The first question is on the release. Can you update us on what your thoughts are on the percentage, which will be digital for December quarter and then for the other quarters after that, if you could give us a feel for what you think that will be helpful.
The second question is on the multiplayer. Do you think that's still coming in 2022? And would you say your monetization levels because you care about the gamers, it's going to be at the same level as peers for online games? Or do you think it's going to be below or significantly below in terms of monetization to keep the gamers happy?
And then the last question is on the PS 4, I think there was some press stuff saying that maybe it wasn't working quite as well as it could on PS 4. Have we seen any game play on PS 4? Maybe you could give us a bit of an update on how it performs on PS 4.
Piotr Nielubowicz. First, the expected ratio between digital and physical on our sales. As we see it on preorders, digital is very strong. So definitely, we are more into moving potential split digital physical, more on the digital side. How far we'll go? We, honestly speaking, do not know, definitely father than we had on the Witcher 3 and definitely more than 50% should come from the digital channels.
And then the history of Witcher 3 shows, and the longer the game is on the market, the more the split shifts towards digital again.
On Witcher 3, its vast majority and on Witcher 2 and 1, it's, let's say, 99% of the revenues we generate are digital. So this is the only direction that can be expected in mid and longer term?
All right, Adam again, and I'll take the second and the third one. Regarding multiplayer. We haven't announced any date so far. And actually, right now, it's not the -- I mean it's not the moment to talk about any business model for multiplayer. Even though we had discussed it before, but to avoid any fuss in our gaming community I will skip it because we'll share our thoughts about next year's once we'll update our strategy, it will happen in Q1 next year, and that will be after releasing Cyberpunk, and that will be the right moment to discuss deeper all key aspects around future releases.
And PS 4, yesterday, we released the gameplay, both on PS 4 and PS 5. So you can see the difference. And on both, I mean, PS 5 is great. PS 4 is still very good. I mean we had those extra 3 weeks, and we achieved a lot in this final stretch so we believe that the game is performing great on every platform. Of course, accordingly to platform capabilities, but every platform should be great.
A lot. Best of luck with the launch.
Excuse me?
I was saying, best of luck with the launch.
Thank you very much. Thank you very much.
The next question is from Ken Rumph of Jefferies.
Understanding your point about not wishing to distract anybody. But could you comment, obviously, not everybody and the team is working on Cyberpunk, some obviously on Gwent and so on, but also on future projects.
Could you give us an idea of the extent to which you've been able to begin work on non Cyberpunk projects?
Ken, well, rather not. Of course, there are teams who have been finished with Cyberpunk. And obviously, those teams are the first or, are the first who starting the next things, but we were discussing this call before, and we decided to really be focused on the release because gamers are listening to us a lot, and we don't want to struggle them really.
I mean, now everything is focused on Cyberpunk. We have 2 weeks everything will be clear by then, and then we'll start talk -- maybe not right after, but...
Yes, take your holidays.
I think in Q1 next year. But of course, anything what was said before, is still valid. I mean, nothing has changed. I mean we are just trying to avoid communicating too much about the further future. And there's 1 more thing. After the third delay, we believe that some gamers can be a bit frustrated, waiting for the game.
So talking about future things might make them even more frustrated. So we are delivering the game, full stop, then I mean and right after this, we'll talk about the future. That's our communication terms.
Okay. I understand that. It's important to get the communication around the game itself, right. Again, this is something that maybe a little early, but you were asked about it perhaps at the time of the delay. What -- I'm sure after the game comes out, you'll look back at this, but my suspicion is that the day you announced the next release date for the next AAA single player game, everyone will say to themselves, well, we can expect that to be delayed 2 or 3x. What at this stage, lessons do you think, if possible, you can learn from this?
We are aware of that. Our -- of course, our goal is to deliver on time. But on this -- at the same time, we are delivering unique experience in many parts, very innovative. And this process, it's always not fully predictable, but don't get me wrong. I mean it can be planned, but there is always a part of things which can be predicted precisely.
But we can change some methods. We can change some ways of communicating. And our goal will be to deliver on time, full stop. And we'll try next time to be on time without any delays. That's the goal.
Does it mean that you potentially change your attitude to how far and ahead of release that you would give a date for a game? I mean, you also mentioned regarding the kind of strategic plan for the company, but you weren't sure whether you would kind of put dates and deadlines in in the way that you did back in 2016.
So one way you can avoid, in a sense, taking the risk of a delay, is by waiting until the game is closer until you give a date. So are there any thoughts about that?
Yes, it's one-off ways. It's not decided yet. Finally, I mean, before we release the date has to be announced in some advance because you have to start the final PR campaign, you have to start collecting preorders and the date has to be set by then.
But maybe earlier, we'll be not sharing thoughts about date. But of course, we'll be guiding. I mean, I can't imagine that investors will have no fairly clear picture what's going to happen. So let us rethink after release, how to put this in the future strategy update. It's not decided yet, as I said.
The next question is from Vladimir Bespalov of VTB Capital.
My first question will be on Cyberpunk. As I read the hands-on reviews that were revised recently. One of the most frequent comments was that the game was quite buggy, even though not critical, but still. Could you maybe provide some color, how different is the current version of, I would say, from what you provided to the reviewers and how many of those bugs have been fixed because you were pretty aware of those bugs, as far as I understood from the preview.
And the second question, maybe you could give have some color on Monster Slayer? What is the current status what's going on when the release is planned for that?
So in terms of bugs, we are aware of them, of course. Such a big game can't be just bug free, that's the kind of obvious. But we believe that the level will be -- as low to let gamers not see them. And fortunately, some bugs in extended previews were caused by some general, I would say, general features and many of them are already fixed. So what gamers will get will be different from what -- and what reviewers will get in this final review, it's better than what pre-viewers got.
Piotr, can you take the second?
I can take the second.
Yes. Sure. All right. So go ahead.
Yes. The Witcher: Monster Slayer is planned for release next year. Right now, we are in soft launch. We are in a couple of territories, including Russia, which is the biggest territory. So far, the soft launch goes well. The game is very well reviewed or judged by gamers on iOS as the soft launch is run on iOS devices. So everything looks promising. And we are looking to next year to release it full force to gamers.
One more comment on my end. We were thinking announcing the date this year, but having the Cyberpunk release on 10th December, we might probably skip this original plan because there's a lot of communication around Cyberpunk, and we don't want to communicate -- we don't want to build off the communication of Witcher: Monster Slayer. So we in some more quieter time for this okay.
The next question is from Matilde Durazzano of Barclays.
I apologize if this question has already been asked, but I was disconnected earlier. I just wanted to know if you could give us any color on how pre orders have been going in the past weeks now that we're so close to the launch date and this when we expect them to pick up?
Yes. So as I already answered, we are not really going into revealing more details on pre orders right now, more than we included in our financial report in the deferred revenues section. However, nothing's changed from our previous meeting. We are really happy about the preorder level right now. It's visibly higher than anything we achieved on the Witcher. And it keeps increasing at the expected pace comparing to the Witcher sales historically. So from this perspective, everything goes according to the plan, and the results are really good.
The next question is from Robert Berg of Berenberg.
Just one left. One of the advantages, I guess, of going last or after your peers that you can actually their reception, the reception of the hardware sales, et cetera. I'm sure you have some good contacts in the industry, you get to hear color of how things have been progressing. Without talking about any particular games or consoles, which I'm sure you won't want to do. How are you feeling about the health of the video game industry, this holiday season, perhaps compared to what you might have thought last time we spoke?
It seems the industry is very healthy. Even though; circumstances, what pandemic circumstances are generally tough for most industries, our industry seems to be healthy. And for us, releasing on the actually previous -- current/previous gen and the current/next-gen and PC and Stadia, at the same time is a unique opportunity.
I mean, we are reaching unprecedented number of potential of gamers, potential customers. So for us, the window seems to be very sweet.
Great. And there's nothing so far you would say as if there's any evidence of a weaker economic climate or the opposite in terms of versus what you previously thought?
Nothing I am aware of.
[Operator Instructions] The next question is from Matti Littunen of Bernstein.
First question on back-catalog sales. So it looks like the year-on-year growth rate has slowed down quite a bit from H1, but the revenue drivers you listed seemed to be pretty similar. Could you give us a bit more color into as to why that growth rate has slowed down year-on-year and sequentially as well from Q2?
And the other one relates to the marketing efforts you mentioned there. So as advertising spend kicks off properly in the start of December, I was specifically asking about the TV investment between yourselves and your publisher partners.
On an absolute level, will this part of the marketing mix be much higher than it was for Witcher 3?
So first answering about back-catalog sales. I would say that the first and the second quarter were spectacularly strong. Especially the time by the end of April, May. And I see 3 major reasons behind it. First of all, the Witcher franchise got more popular. Thanks to the Witcher series release on Netflix.
Secondly, we had the pandemic situation, which in general, supported sales of video games. And that was one of a few forms of entertainment available to people being locked down at home.
And thirdly, at the end of last year, we brought the Witcher 3 on Switch that was a nice revenue driver for us, and that performed really well comparing to the previous times.
The third quarter is always the dry season, as I mentioned already. The lockdown, and that people finally and things got were able to leave homes. And probably this is also somehow affected the sales. We had -- like it affects every year, I would say. But this time, it also included the effect of finishing the lockdowns all over the world, basically.
So I would say this is the major reason behind the disproportionality between the first and the second quarter and the third one, finally. But what's worth mentioning, this was the best third quarter in recent years for us, both on the revenue side and on the net profitability side.
So I would rather say that we are happy about it, especially that the whole company was focused on Cyberpunk on preparing the launch of this game. And definitely, that's what most people were thinking about and being involved in.
I'm not sure if I properly understand the second question. The standard scheme, for our marketing campaign, arranged by us together with our distributors, is that we are responsible for preparing most of the assets. So in case of TV commercial, we created, we have -- we financed it. And then this TV commercial is broadcasted territory by territory. And this is pre financed by local distributors.
And then this expense on promotion of our game is deducted in our royalty reports or in the royalty reports that the distributors -- sellers sends us after each quarter. And it's one of the deductible costs. So it's prefinanced by them, but the final calculation, we will be made liable for all of the costs of the marketing supporting the revenues on our games.
And I said can add some about comparing Witcher 3 to Cyberpunk. Obviously, this time, we are gravitating to online, definitely. So that's the major change. In terms of TV, it depends on territory because we are not only creating assets. We are those who create whole campaigns. I mean we are those who decide where money is spent.
So depending on the territory, working with professionals, we decide what would give us the best effect. So for example, TV is fairly strong in the U.S., not necessarily across Europe.
And the whole campaign of Cyberpunk, it's a [ multiple ] of Witcher campaign. But it's hard to generalize how to compare; TV -- of the TV campaign of Cyberpunk to Witcher 3.
If there are no further questions, I hand back to the speakers.
So we have a couple of questions on chat. The first one from [indiscernible] is, could you tell us what are your plans for the multiplayer mode?
So first, we don't call it mode. It's separate dedicated production, a big production, and we plan we think about it as a stand-alone product. Obviously, it's not entirely stand-alone as it comes from the universe of Cyberpunk. And it's very much related to the concept of single player Cyberpunk, we came up with.
But from our perspective, it's -- it's another independent production and independent team of people who works on it.
And as Adam said already, we are not focusing right now on talking too much about other future products, products that are to be released after Cyberpunk. So please be with us in the first quarter of next year when we plan to share some strategy update. And I believe Cyberpunk multiplayer will be part of it.
The questions from [indiscernible] when exactly embargo no reviews will be lifted. Before release, but we are not reviewing the exact date -- the exact day actually, so far, but definitely before we release to let gamers read about the game before they buy the game.
And I can take the next one from [ Piotr ] as well. The game has been not presented on basic, not pro consoles, PS 4 and Xbox 1 so far. What is the performance of the game on these machines.
Of course, a bit lower than on pros, but surprisingly good, I would say, for such a huge world. So a bit lower, but very good. That's the answer.
Another question comes from [ Albert Longerm ], what percentage of CP preorders comes from GOG.com? And how many more CP preorders were sold compared to preorders of Witcher are percentage-wise?
So first, GOG operates on just one platform on PC. And among PC; we will have some physical sales and some digital sales. And within the digital sphere Steam is definitely the dominant platform. So from the perspective of all our expected sales, GOG is representing some single number percent of all of the sales, including preorders. But in general, I may say that GOG's representation in preorders of our Cyberpunk is naturally higher than GOG's market share in the global video gaming business.
How many more CP preorders were sold comparing to the Witcher, we were not revealing this info. But as I said, we are very happy and Cyberpunk preorders are visibly higher than anything what we achieved on the Witcher 3 for comparable time.
The's next question from --
We can't hear you at the moment?
The next question from company [ Baird ], company Baird. Has Keanu Reeves played the game?
Yes, yes. He played the game. But as far as I know, haven't finished yet. So -- but definitely, he played the game and he loves it.
Next question are QA testers in demands now, Embracer acquired a Romanian based company, which is specializing in this segment?
Yes, we still QA the game. We both -- we do it both internally and externally. We used to 2 or 3, I'm not sure external teams. So we cooperate with some companies, and the game will be tested by the launch dates, and that's a natural part of the process.
[ Maraca Zimeta ], Aviva investors, Poland [indiscernible]. Are QA testers in demand now. So that's -- I basically answered this question already.
All right. [indiscernible], when do you plan to announce and start selling season pass for CP2077.
The initial plan was to -- before release, but after the recent delay, we decided to wait for the release to provide gamers with the game and then to start talking about future projects. So after release.
Another question comes from [Marcin Harbor] [indiscernible]. The question is in Polish so, I'll try to translate it on the fly. What profit did the company generate on Cyberpunk preorders? What was the level of canceled preorders due to the delayed release date? And what cost -- what part of cost is to be allocated to the international advertising campaign of Cyberpunk.
So first, what profits did we make on Cyberpunk before release? All the revenues we generate on Cyberpunk are not booked directly into our profit and loss account. All of them are presented in our balance sheet as deferred revenues, and we will show them up on release of the game. So the first quarter when we will start generating revenues on Cyberpunk will be the fourth quarter of this year.
Therefore, there is no profit, which we could relate to. Obviously, we have certain costs. The expenses and developments are not costs that are put into the P&L directly. They are also capitalized on our balance sheet. However, all costs of the marketing campaign go directly into cost of each of the period. So from this perspective, so far, the result on Cyberpunk in our books was negative.
But each quarter, historically, the revenues and gross profits we generated on the Witcher franchise were much higher than Cyberpunk-related marketing costs on our side.
What was the level of canceled preorders?
I would say marginal, comparing to the number of preorders we collected. There were some people who decided to abandon the preorder. I hope we'll make them come back and we are really active in promoting and talking to our gaming community. But comparing this to the day-to-day sales or the cumulative number of preorders that was not really influencing the overall level of them.
What part of costs is to be allocated to international campaign of Cyberpunk?
I'm not sure how to understand it. I mean, absolutely, vast majority of our sales, 96%, 97% comes from export international sales. Poland, our domestic territory is responsible, usually for 2%, 3%, 4% of our revenues.
So by far, most of the expenses for Cyberpunk promotion are related to the international markets as we sell the game really on the global [ sphere ]. I hope I managed to answer all of the questions.
All right. I'll take the next one. Lukasz Kosiarski from Pekao, is asking. Did you receive conditional or full certification from Microsoft and Sony. If conditional did you fulfill all their conditions?
We got full unconditional certification from both platforms because we want gold. So the game is certified. But having said that, we have to bear in mind that every patch has to be certified. It's a simplified truck. So day 0 patch will go through simplified certification, but the game is already certified.
The next question, what are the general player feedback on the game trailer? Is the feedback in streamline with your expectations or above your expectations? What is the anticipated impact from recent alleged gameplay leak?
The next question probably is for you and the [ 30s ] for you. So I'll stop here for you, Piotr. So I'll stop here.
So the feedback is great. I mean, we are really happy. We're always happy with number of viewers. So it's a little above our expectations, I would say, but we try to stay humble. So -- but it's obviously great. And regarding the leak, fortunately, fortunately, there were not too many spoilers because this is the [ stag ] listing, I'm spoiling the game before it's is released. So it was not harmful. Even though every leak is bad. But as I'm concerned, there are no impact, no negative impact from the leak.
The second question of -- from [indiscernible] you mentioned Q1 next year to discuss future strategies, just to confirm. Do you mean at the financial year 2020 full year result in Q1 next year? The truth is we haven't decided yet, whether we will arrange a dedicated event specifically to just update on strategy or we will merge it together with the annual results. Please stay tuned. I mean, we will definitely announce it when the time comes. But right now, I can't precisely answer, except for the fact that, yes, I confirm we would like to share the update in Q1 next year.
And the next one is, are you considering providing the number of preorders before the release date?
Well, it's not decided yet. As we said before, it might be before release date, might be on a release date. We haven't decided yet. We are discussing the right moment for this.
Yes. And one more question from Lyra from Jefferies. Any update guidance on the marketing expenditures related to Cyberpunk?
We were not revealing any guidance on that, except for the fact that we confirm that the marketing campaign of Cyberpunk will be visibly grow -- bigger than what we had for the Witcher 3.
Some time ago, based on discussions with our marketing team, we confirmed that the scope of it should be approximately 3x bigger, 3x wider than what we had for the Witcher 3. But I believe that closer to the release, the bigger it seems to be. So I wouldn't say this is still an updated comparison as for now.
So it seems through all of the questions. If anyone wants to add additional one, that's last call.
All right. The last one, I'll take this. Piotr Lopaciuk from PKO BP. When after the release, are you planning to release the first sales numbers of Cyberpunk, same like with preorders? We will see what we'll have on the table in terms of reliable data. We have to have a global picture. And of course, in terms of digital, we have them almost on fly. In terms of physical, sometimes it takes some time.
Bear in mind that we use local distributors. So there is a middleman between retail and us. So we'll work on having as fresh data as possible and to release them as soon as possible, we'll have the whole picture.
All right. Thank you very much. Thank you for joining the call, and be ready to play the game in 15 days. Thank you.
Yes. Thank you very much. Thanks for joining, and a very good Thanksgiving to all our American friends. Goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.