Keywords Studios hikes guidance further amid 'buoyant' market

Keywords Studios increased its guidance for full-year trading on Thursday, amid high levels of demand in a strong video games market.

The AIM-traded provider of technical and creative services to the gaming industry had already hiked its expectations in December, when it pencilled in revenue of at least €505m and adjusted profit before tax in excess of €85m.

On Thursday, it said it now expected revenue and adjusted profit before tax to be marginally ahead of that guidance, at €512m and €86m, respectively.

The board said that included expected organic revenue growth of 19%, partly benefiting from the Covid-19 constraints that it experienced in the first half of the 2020 financial year.

Keywords said its strong performance in the 12 months ended 31 December reflected high levels of demand for its services, driven by a “buoyant” video games market, the industry's focus on new content creation, and the continued sector trend towards external service provision.

The business also benefited from reduced costs due to Covid-19, primarily relating to remote working and reduced property, travel and business development costs, which it expected to return with the anticipated easing of restrictions in 2022 alongside further investment in its platform and people.

In 2021, Keywords completed six acquisitions in Australia, the UK, Romania, and the United States, further extending its geographical reach and strengthening the range of value-added services it could offer to clients.

Four of those were in game development, being Climax, Heavy Iron, Tantalus and Wicked Witch, with one acquisition in marketing services in Waste Creative, and one in art, being AMC.

Total consideration for the six acquisitions, including performance-related contingent deferred consideration elements, was up to €126m.

At year-end on 31 December, the group had net cash of about €103m, up from €84.1m on 30 June, after cash spend on acquisitions totalling €73m, including €14m of deferred consideration for prior year acquisitions.

The group's cash balance, strong cash generation and the €150m available under its new undrawn committed revolving credit facility left it “well-placed” to pursue both its organic and acquisition growth strategies, the board said.

“I am delighted to be joining Keywords at a time when the business is performing so well,” said new chief executive officer Bertrand Bodson.

“The group has delivered strong organic growth, driven by high levels of demand for our services, and further extended our capabilities, reach and scale through selective acquisitions.

“We are well placed to continue to capitalise on the group's unique full service platform powered by our incredibly talented team of over 10,000 ‘Keywordians’, including over 1,500 game developers.”

Bodson said the company was delivering an “ever more compelling proposition” for its partners in a “buoyant” video games market, and adjacent content industries.

“We expect the group's trading momentum to continue in 2022, as we invest in the platform and our people to build further on the group's successful organic and acquisitive growth track record.”

At 1222 GMT, shares in Keywords Studios were up 0.57% at 2,480p.