Wednesday, February 1, 2023

How Much Does Cloud Imperium Games Need To Sell In 2023?

In January, Cloud Imperium Games sold $7.7 million worth of virtual goods for Star Citizen and Squadron 42. The figure was a year-over-year increase of 12.7% over 2022's record sales level. But the question arises, how much is enough? How much does CIG need to sell in order to operate as planned in 2023?

We only have CIG's spending through 2021. To estimate the company's spending in 2023 will take a little guesswork, but I think is doable to a fairly general way. 

CIG Spending From 2012-2021

Two years ago, CIG spent a little over $100 million, a 24.2% increase over 2020's spending. We know that CIG expanded its workforce by 15% in 2022, with job postings indicating another 15% increase planned in 2023. With some capital expenditures pushed from 2021 to 2022, I suspect the percentage increase in spending in 2022 matches the increase in 2021. If so, then CIG spent approximately $124.7 million in 2022. We know that CIG recorded $113.6 million in sales in 2022. Add in an estimated $15 million for subscriptions and other sources of revenue and I estimate CIG made a profit of around $4 million in 2022. We'll find out how off I am when the 2022 financial report comes out in December.

Now to estimate the amount this year. As mentioned before, the number of job postings at the end of 2022 indicates plans to increase CIG's workforce 15% in 2023. Capital expenditures should decrease a bit, but the world is now undergoing a period of high inflation. I will assume spending will increase 15-20% in 2023, meaning the company will spend an estimated $143.4 million to $149.6 million. 

The final amount of estimated increased sales required to keep up with spending doesn't seem so wild, especially considering from 2018 to 2022 CIG's sales have averaged an increase of 28.2% per year. After accounting for another $15 million in sub fees and other sources of income, CIG only needs to increase sales somewhere between $15 million and $21 million. The total sales figures needed are somewhere between $128.6 million and $134.6 million. In percentage terms, CIG needs to increase sales somewhere between 13.2% to 18.5%.

January's 12.7% YoY sales increase falls a little short of the low end of the range calculated above. But just a little. Also, we only have one month of sales figures. The figures at the end of the first quarter will provide a better indication of the type of year CIG is having in 2023.

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