Cloud Imperium Games Posted A $14.3 Million Loss In 2024

Less than a week after announcing having reached $1 billion in community funding, Cloud Imperium Games posted its worldwide accounting report for the year 2024. For the year, the developer of the upcoming games Squadron 42 and Star Citizen recorded $146.6 million in corporate income while spending $160.9 million, including just under $8 million in capital expenses and investments. Overall, CIG recorded a $14.3 million EBITDA loss when including CAPEX costs.

Financial positions from 2012-2024

The 2024 financial accounting finally confirms some things that up until now were just speculation. Poor performance in the form of recording losses of $34.5 million and payments of $3.1 million to minority investors in 2023-2024 is now very likely to explain the leadership shakeup at Cloud Imperium at the end of 2024 and beginning of 2025. The cumulative net position of -$28.2 million is proof that digital ship and vehicle sales were not enough to fund the development of Squadron 42 and Star Citizen alone.

Perhaps more importantly is the information that CIG needs to keep approximately $40-$45 million cash on hand to ensure uninterrupted operation. At the end of 2024 the company was down to only $27.1 million on hand which equaled 2 months of spending in 2024. CIG began the process of restoring its financial position by selling $5 million in shares in January 2025 to Keith Calder's Indus Management Ltd. In March the company borrowed £10 million ($12.6 million) from an existing shareholder, who I believe was Indus Management. In addition to seeking investment from outside sources, the financial issues probably put pressure on the marketing department to sell more virtual goods.

Income from the 2024 financial accounting

Having had my say let's hear from Cloud Imperium's Chief Financial Officer Simon Elms about income.

Total income grew by 3% to $147M reflecting the ongoing loyalty and engagement of our community. Pledges and counter income fell slightly by 3% to $116M – reflecting a year of fewer headline releases for much of the year as we concentrated on the significant technical features needed for the future of Star Citizen – the results of which we only delivered in the final quarter of 2024. However, subscriptions rose by 14% to $7.3M and other income (incentives, partnerships and credits) increased by a very significant 34% to $23M. The latter reflects the growing scale and value of our international development operations and the corresponding incentive and partnership income they generate, bolstered further by the third-party income arising from Turbulent’s existing external clients.

The other income category proved critical in 2024, accounting for the entire growth in the company's income in 2024. Turbulent, purchased in 2023, still required $1.2 million in 2024, but more than made up for the cash outflow by bringing in revenue from non-game development sources. 

Turbulent no longer counts as a contractor

Other income grew strongly by $5.9M (35%) to $23.0M. This reflects the maturing of our international development operations, with UK development credits and related incentive income continuing to grow, as well as expanding partnership and hardware/software vendor income. This income line was further bolstered by a full year of Turbulent income including their local incentives and their existing web service business. This other income represents an increasingly important and diversified income stream, for the Group.

One significant fact I need to highlight is the actual reduction in spending by CIG in 2024. From 2020-2023 spending rose by over 100%, from $80.9 million to $163.1 million over the course of 3 years. Let's return to the CFO for an overview on the company's spending.

2024 was the year in which the cost rationalisation implicit in our 2023 strategic decisions began to crystallise. Total trading costs fell by $3.1M (2%) to $152.9M, a modest reduction in absolute terms but one that masks some significant and deliberate shifts in cost composition.

The dominant structural feature of the 2024 cost base is the sharp fall in contracted game development costs, which fell by $7.0M (56%) to $5.5M as the Turbulent team, fully integrated into the group from the second half of 2023, replaced what had previously been externally contracted development services. This was always the intended outcome of the Turbulent acquisition and represents a significant return on that investment.

Salary and overhead costs in the Rest of World segment continued to grow as Manchester consolidated its position as the hub of our development operations, but the rate of growth moderated compared to prior years. US costs across all categories either held flat or reduced, reflecting the ongoing transfer of development activity out of the United States and the consolidation of publishing activities out of Los Angeles and into Austin.

One of the surprising facts is that labor costs increased even while headcount decreased.

Labor costs continue to increase

Total employee headcount fell 5% in 2024, from 1085 down to 1031. Perhaps surprisingly, the number of developers fell by 4% down to 695. But the number of employees in the publishing ops, community events, and marketing departments rose by 24% up to 258. For those unfamiliar with gaming categories, publishing usually includes those tasked with keeping the servers physically running. I should also add that finding and keeping talented server and network techs is a lot more expensive that finding code monkeys. At least at the businesses I've worked at.

I do want to look at two paragraphs at the end of the report that might have some long time observers shaking their heads. Cloud Imperium has not had a great record in containing costs, instead choosing to acquire as much money as possible.

The improvement in the annual loss from ($20.2M) in 2023 to ($14.3M) in 2024 reflects the operational improvements achieved through cost rationalisation, partly offset by continued investment in our Rest of World capability. The pre-capex position improved more dramatically still, from ($13.1M) to ($6.3M), as capex remained broadly stable. The release of Star Citizen Alpha 4.0 in the fourth quarter of 2024 was a watershed moment for the project. The addition of the Pyro system and the initial phase of Server Meshing — technology first demonstrated at CitizenCon 2023 in Los Angeles — delivered on commitments made to our community and demonstrated the tangible return on the significant investment made over preceding years. As the Chairman noted in his 2024 letter, this is not merely the next iterative patch but a fundamental architectural advance: for the first time, the game runs across a mesh of servers covering the entire playable universe, with server boundaries invisible to players.

I have heard too many stories of broken promises and missed deadlines over the years. Even more recently I've seen the financial reserves slip to dangerous levels. I think in both 2025 and 2026 we've seen Cloud Imperium lean into the marketing department's ability to attract money from the player base. Then again, even with the spending restraint shown in 2024, Cloud Imperium needs to increase funding as I don't see the company able to actually reduce spending. If those in charge can just hold the line on spending perhaps the financial situation will stabilize.

I'll conclude with Mr. Elms' conclusion the the financial accounting posted on Monday.

Looking to 2025, we expect to maintain the cost discipline established in 2024 while continuing to invest in the capabilities and infrastructure needed to deliver Squadron 42 and advance Star Citizen toward 1.0. The investments made in 2023 and 2024 created the foundation for parallel progress on both titles, while also improving the player experience in Star Citizen. That progress has already contributed to stronger player growth and engagement, helping deliver our best top-line performance to date in 2025. Our next priority is to build on this momentum while working to balance the business through to the release of these two highly anticipated games.

How much of those final words are valid and how much is a fantasy I'll leave up to you.