Keywords Studios confident of delivering ‘good’ revenue growth in 2024

Keywords Studios said on Friday that it remains confident in delivering "good" overall revenue growth in 2024, with the performance expected to be weighted to the second half.

The provider of technology-enabled solutions to the video games and entertainment industries said in an update that the sector was starting to emerge from the slower content creation trends that are currently dampening industry spend and therefore Keywords’ growth.

It said it has had a small number of larger game development projects deferred or cancelled in the first half, creating capacity gaps in Create which were unable to be filled at short notice.

"This, together with ongoing softer demand in Globalize and the relatively slow ramp-up in content production in Hollywood, has meant that reported revenue is expected to grow by around 7% in the first half, with organic growth over the period expected to be around minus 2%.

"The group has seen spend from larger clients continue to grow strongly during the first half, and anticipates a stronger recovery from the US strikes in H2, reinforcing our confidence in an improved second half performance, although further delays and project scope reductions are now expected to temper H2 organic growth from previous expectations.

"The board continues to be confident in the group's ability to outperform the market and deliver on its medium-term guidance beyond 2024."

Keywords said it was continuing to closely manage costs, taking a broad range of cost actions, including the restructuring of the go-to-market approach in Globalize set out at the full-year results.

Due to the timing of the cost saving programmes and the reduction of volumes, first-half adjusted operating margins are expected to be around 13%, it said, with H2 margins improving as the impact of the cost savings programmes and pick-up in volumes flow through.

Keywords highlighted a continued strong pipeline of active M&A opportunities.

"The group has signed a number of letters of intent with high-quality businesses, and recently completed the acquisition of a small game development studio in Australia, and a small creative design studio in the UK, as it continues to build out its offering," it said.

The company expects to commit around €100m on value accretive M&A this year, in line with its medium-term guidance.