Foreward

It is that time of year again when we follow our usual practice to set out our basic accounting for the 2021 Financial Year. For consistency, I am adopting the same format as prior years and follow the same simple cost accounting rules, without the requisite formats and disclosures required in our financial statements. There are no revenue recognition adjustments, intellectual property amortization or other accounting adjustments that would depart from the more simple and understandable cash entries that this accounting is aimed to deliver.

The Accounting is intended to be simple and understandable, showing “income,” net of sales taxes, as invoiced or accrued, and costs as incurred whilst adding capital expenditure as “spent.”

As usual, we aim to give more information regarding how the income and revenue is classified compared to what we would be required to do in published financial statements, and the numbers used in the analysis are the same numbers given to our auditors, upon which they perform their work for the annual audit.

Overall

The 2021 accounting shows that Cloud Imperium grew again with total income up 14% on the record-breaking 2020 reviewed last year. As explained last year, 2020 was exceptional due to the worldwide lockdowns that created a new audience craving an entertaining and escapist outlet, with limited choices available due to the restrictions. We were fortunate and well-positioned to be able to engage this new audience in 2020. But in 2021, without those same lockdown-induced factors, whilst growth this year was not as dramatic, the ability to continue growing above and beyond the 2020 performance was an even bigger achievement than the prior year, and one that several other video game companies did not achieve. The regular and improving game deliveries and increased content and playability was a key part to our success in 2021, particularly during the second half of the year, and this momentum has continued into 2022, with even more focus on stability and quality of life fixes for this early access game.

Income

Summary

2021 was another record year for income with sales, up 12% to $86M. As a result of the record number of new players joining the game, and existing and lapsed players returning to the game due to the strong content delivery throughout the year, we experienced a commensurate rise in purchases of starter packs that granted early access to the Star Citizen Alpha, as well as purchases of ships and digital items for immediate use in the Persistent Universe. Subscriptions were up 6% to $5M. Other income increased 45% to $9.4M, in part driven by the associated local incentives programs resulting from the growth of development staff in the UK.

To recap: the top three lines describe our revenue sources:

Pledges / Sales (from Counter)

This line is taken directly from our daily published Funding Stats Counter, showing the net receipts from our backers and customers. The vast majority of sales are of starter pack sales granting access to the Star Citizen Alpha, as well as space ships and digital items immediately delivered and playable in the game. A smaller fraction of sales came from pledges for concept ships, which all come with an included “loaner” ship for immediate use and playability within Star Citizen Alpha. Due to exchange differences and small items that are not included in the counter, such as shipping costs charged on physical goods, the counter does not completely represent all revenue received. Other than subscriptions (referred below) these differences are included in the final income line, to give an accurate representation of total revenue received.

Subscriptions

The subscriptions line is the value of our subscriptions using standard exchange rates. Again, any differences due to exchange rate movements have been accounted for in the final income line.

Other Income

The other income line represents partnership i