Executive Summary: The Elephant in the Room

Bearish.

Big Cheese Studio’s Q3 2025 results reveal a company kept afloat not by game sales, but by accounting mechanisms and related-party transactions. Revenue is down by nearly half year-over-year, while production-in-progress assets increased to a record high, now representing over 70% of the balance sheet. Operating cash flow is sharply negative despite positive net profit, underscoring the disconnect between reported earnings and economic reality.

A critical technical point: the company’s profitability is being inflated not by low amortization, but by capitalizing development costs into inventory through the “Change in products” line. Without this mechanism, the company would report a sizable operating loss.

The studio is approaching a structural breaking point unless it delivers a significant commercial hit in the next 12 months.

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Key Financial Metrics

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Portfolio & Sales Performance

1. Core Franchise Decay

The Cooking Simulator ecosystem continues to contract on all fronts:

• Cooking Simulator (PC): 1,875k PLN (vs. 4,219k)
• Cooking Simulator VR: 1,673k PLN (vs. 3,144k)
• All DLCs combined: 888k PLN (vs. 1,210k)
• Cooking Simulator Sushi: 167k PLN (vs. 361k)

Each component of the franchise is in decline. The once-reliable DLC engine has weakened, and the legacy VR version is deteriorating alongside the base game.

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Recoupment & Cost Recognition (Critical Forensic Section)

1. The Accounting Mechanism Driving “Paper Profit”

A central correction:
The article must not interpret the 281k PLN of “Amortization” as game write-offs.
Big Cheese Studio classifies games as Inventory, not Intangible Assets. Therefore:

• “Amortization” captures only fixed assets (IT equipment, office leases).
• Game development costs flow through “Change in products”.

In 9M 2025, this line shows a +4,675k PLN increase, meaning:

• Approximately 4.7M PLN of costs were capitalized instead of being expensed.
• Without this capitalization, operating profit (1.2M) would swing to a large operating loss (~ -3.5M).
• This aligns precisely with the negative operating cash flow (-3.6M).

Thus, the company is profitable due to capitalization, not sales.

2. Inventories as a Red Flag

Production-in-progress rose to 18.5M PLN—a 48% YoY increase.
Inventories now make up 70.6% of total assets, an extreme concentration for a single-franchise studio.

This represents:

• Massive unrecouped development costs.
• Long-term amortization risk (slow-moving titles).
• High probability of future write-downs.

The surge in production-in-progress is more likely tied to:

• The delayed new VR version of Cooking Simulator.
• New unannounced projects.
• Potentially prolonged development cycles.

The underlying dynamic remains: costs are increasing while revenues collapse, worsening recoupment pressure.

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Future Outlook & Pipeline

The company notes:

• Delay of the new Cooking Simulator VR release.
• Launch of a new DLC (Cooking Simulator BBQ).
• The new VR version will not include revenue sharing with a licensor, improving margin if it sells.
• A more meaningful upcoming project is Cooking Simulator 2: Better Together, which already has a publicly visible Steam presence and is positioned as the “next evolution” of the franchise. Early public performance data (wishlists, followers, and visibility metrics) indicate that the title has the potential to become the studio’s next flagship release, but this is not guaranteed.

But this optimism rests on weak foundations:

• The entire Cooking Simulator ecosystem is declining.
• DLC contribution is shrinking.
• The existing player base is not growing.
• Development timelines are slipping.

Relying on remakes and DLC for an aging brand is a high-risk strategy with diminishing returns.

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Risk Assessment

Revenue Quality Risk
A meaningful share of revenue comes from related entities, masking underlying market demand.

Inventory & Impairment Risk
With production-in-progress dominating the balance sheet and sales falling, future impairments are increasingly likely.

Cash Flow Risk
Cash burn is incompatible with the reported profit — a sustainability issue.

Franchise Dependency
The company remains excessively reliant on Cooking Simulator, which is steadily losing commercial traction.

Deferred Tax Asset Volatility
Deferred tax assets are supported by projected future profitability; sustained losses could force a write-down.

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Management Commentary

Management offers minimal qualitative explanation regarding the revenue decline, inventory surge, or related-party dependence.

The absence of:

• amortization disclosures per project,
• recoupment plans for capitalized costs,
• sales performance commentary by title,

signals a lack of transparency at a time when the company faces significant operational and financial headwinds.

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Final Verdict

Big Cheese Studio reports a net profit on paper, but the underlying fundamentals paint a far more concerning picture:

• Revenues are collapsing.
• Large portions of revenue are related-party, not market-driven.
• Development costs are ballooning.
• Cash flow is negative and deteriorating.
• The franchise base is weak and aging.

Without a major commercial success in 2026, the company is heading toward serious impairment risk, reduced liquidity, and a structurally weaker competitive position.