Q&A

CI Games' latest results, for H126, showed revenues of PLN38.1m, down 7.5% on H125, with the decline attributed to the natural fall in Lords of the Fallen (LotF) revenues as the title, launched in October 2023, matures. LotF still accounted for 73% of total H126 revenues. EBIT was PLN11.2m (H125: PLN8.2m), EBITDA PLN21.8m (H125: PLN24.3m) and net profit PLN8.6m. The operating margin rose to 29.5% (H125: 19.9%), helped by a 35% y-o-y fall in production costs to PLN7.5m on lower LotF amortisation. Operating cash flow was an outflow of PLN15.2m, mainly due to the repayment of advances received from Epic Games after the buyout of its prior distribution agreement for LotF2. Net cash flow was still positive at PLN19.1m, as loan drawdowns and the placing of 28m series M shares at PLN2.50, raising PLN70m, balanced development outflows.

In our note of June 2025, we suggested that CI Games could be valued at PLN740–900m, based on European developer multiples applied to illustrative 2026 financials: the average implied valuation was PLN740m using smaller developers' multiples and PLN900m using larger developers' multiples. The release schedule has a significant impact on that implied valuation, and our forecasts then assumed the next major franchise release in 2026. That release, Lords of the Fallen 2, has since been postponed to Q127. The delay has a short-term effect on approaches such as discounted cash flow analysis, but in our opinion the long-term value creation potential of the business is unchanged. After the H126 results, the consensus target share price of PLN4.2 implied a valuation of PLN919m, at the top end of the range we suggested in June 2025. In our view, those results contained no information that might affect our current valuation approach.

The investment case for CI Games centres on Lords of the Fallen 2 (LotF2), due in Q127, whose launch we regard as a critical element of future value creation; a better-than-expected launch is the single most significant factor that could create further upside. In our opinion, the postponement of LotF2 leaves the long-term value creation potential of the business unchanged. By October 2026, launch preparations continued to generate strong interest: the live broadcast of the LotF2 trailer released during Summer Game Fest attracted 62m viewers worldwide. The key risk is execution: delivering successive titles of increasingly higher quality, to budget and on time. With a relatively narrow portfolio, any single failure would likely have a material financial impact, and Lords of the Fallen accounted for 73% of total H126 revenues. CI Games also has significant exchange rate exposure, as revenues are mainly in US dollars, euros and sterling while results are reported in Polish zloty.

We assume that the uplift in CI Games' revenues and profitability expected in FY26 from the Lords of the Fallen 2 (LotF2) launch will now be deferred into FY27. We consider consensus forecasts at 7 October 2026 unreliable, as they do not reflect the postponement of LotF2 to Q127, so they still assume the original launch timing. As of October 2026, we also anticipate marketing expenditure increasing towards the end of Q4 and in the period immediately before the launch in Q127.