TIDMKWS
RNS Number : 7403U
Keywords Studios PLC
03 August 2022
3 August 2022
Keywords Studios plc ("Keywords Studios", "Keywords", the
"Group")
Half year trading update and notice of results
Strong organic revenue growth of 22%
Keywords Studios, the international technical and creative
services provider to the global video games industry, today
provides a trading update for the six months ended 30 June 2022,
ahead of half year results which will be announced on 21 September
2022.
Trading update
The Group has performed strongly during the first half, with the
Board expecting to report revenues of approximately EUR320m
representing a c.34% increase on the comparative period (H1 2021:
EUR238.7m). On an organic(1) basis, Group revenues are expected to
increase by approximately 22% (H1 2021: 22.9%) with robust demand
for all of the Group's services.
Adjusted profit before tax(2) is expected to be approximately
EUR54m, representing an increase of over 35% from EUR39.7m in the
comparative period in the prior year. This reflects a strong margin
of c.17% (H1 2021: 16.6%) which includes a 1% point benefit from
foreign exchange, particularly the strong US dollar during the
period as we invoice a proportion of our sales in US dollars.
We announced, at our Capital Markets Day in June, a more
simplified structure to support collaboration across the business,
meaning that for the half year ended 30 June 2022 onwards we will
report divisional results in three segments; Create (combining the
former Art Services and Game Development service lines); Globalize
(the former Audio Services, Localization and Functional and
Localization Testing service lines); and Engage (the former Player
Support and Marketing service lines).
The newly formed Create and Globalize services lines had very
strong performances, as the momentum from the renewed industry
focus on developing new content to keep gamers engaged in 2021
continued into 2022, and started to benefit our post production
services (Globalize) to a greater extent. Engage saw more modest
growth, with good growth from Player Support partially offset by
Marketing, due to the exceptionally strong performance in the first
half of last year (H1 2021 organic growth for Marketing of 50.6%),
and some delays in work with certain projects moving into H2 and
early next year.
As previously outlined, we are actively relocating some of our
people and existing work from our only business operating in
Russia, Sperasoft, to locations including Poland, Serbia, Armenia
and Malta. This has had a more limited impact on H1 performance
with the second half of the current financial year being the key
transition phase for this process. We are focussed on making this
as smooth a transition as possible for both our people and
international clients, with the benefit of our global footprint and
infrastructure.
Keywords Studios continues to deliver on its acquisition
strategy with the acquisition of the Game Development studio,
Forgotten Empires, having completed and the acquisition of Mighty
Games, as announced separately today. The Forgotten Empires
acquisition has extended the reach and scale of the Group's Create
service line. The acquisition of Mighty Games brings an innovative
and proprietary AI-based Testing technology platform, which will
allow us to do more for our clients and remain at the forefront of
our industry, in line with our strategy to develop more
technology-enabled solutions. We continue to actively review a
healthy pipeline of acquisition opportunities.
As at 30 June 2022, the Group had net cash of EUR121m (31
December 2021: EUR105.6m) after cash spend on prior year
acquisitions in the first half of the year amounting to EUR13.6m.
The Group's cash balance, strong cash generation and the EUR150m
available under its undrawn committed revolving credit facility,
leave the Group well placed to pursue it organic and acquisition
growth strategy.
Notification of Half Year Results
The Group expects to announce its half year results for the six
months ended 30 June 2022 on 21 September 2022. To register your
interest, please use the following link:
https://www.keywordsstudios.com/H1-2022-results/ , or contact
Keywords@mhpc.com .
Bertrand Bodson, CEO of Keywords Studios commented:
"Keywords has started the year very strongly, building on the
momentum achieved in 2021 as we continue to benefit from a renewed
focus on content creation post pandemic and the structural trends
towards outsourcing. We would like to thank all Keywordians for
their incredible dedication to serving our clients with passion and
commitment.
" Whilst we are mindful of a more uncertain macro-economic
environment and some volatility in the scheduling of certain
projects we continue to see strong demand for our services. Given
this and the Group's strong performance in H1, we are confident of
delivering a performance comfortably ahead of current market
expectations for the full year, albeit with organic growth rates
moderating and margins moving to historic levels of 15% as we
invest in the business, transition our people and work from Russia,
and as more costs return with the easing of COVID restrictions.
"We set out, in our Capital Markets Day in June, how we intend
to build on the Group's strong platform by developing strategic
customer partnerships, introducing new technologies, galvanising
the Group's culture of entrepreneurialism and collaboration,
establishing Keywords as the destination for talent and leveraging
the Group's capabilities into adjacent markets, all complemented by
our M&A strategy. Whilst it is early days, we are making good
progress with each of these areas of focus.
" We were pleased to have completed the acquisitions of
Forbidden Empires and Mighty Games and we continue to review a
healthy pipeline of acquisitions that extend the services Keywords
is able to offer its global video games clients, particularly as we
build our Create and Engage service lines.
"Our unrivalled, scale, reach and breadth of services position
Keywords well to continue to increase our share of our large
addressable market and our strong financial position will enable
further selective acquisitions as we cement our position as the 'go
to' services platform for the global video games industry and
beyond."
(1) Organic Revenue at constant exchange rates is calculated by
adjusting the prior year revenues, adding pre-acquisition revenues
for the corresponding period of ownership, and applying the prior
year foreign exchange rates to both years, when translating studio
results into the euro reporting currency.
(2) Adjusted profit before tax comprises Profit before taxation
as reported in the Consolidated statement of comprehensive income,
adjusted for share based payment expense, costs of acquisition and
integration, amortisation and impairment of intangible assets,
non-controlling interest, foreign exchange gains and losses, and
unwinding of discounted liabilities. In order to present the
measure consistently year-on-year, the impact of investment income
is also excluded.
For further information, please contact:
Keywords Studios ( www.keywordsstudios.com
)
B ertrand Bodson, Chief Executive Officer +353 190 22
Jon Hauck, Chief Financial Officer 730
Numis Securities
Stuart Skinner/Kevin Cruickshank/Will +44 20 7260
Baunton 1000
MHP Communications (Financial PR) +44 20 3128
Katie Hunt/Eleni Menikou/Charles Hirst 8193
keywords@mhpc.com
About Keywords Studios ( www.keywordsstudios.com )
Keywords Studios is an international technical services provider
to the global video games industry. Established in 1998, and now
with over 70 facilities in 24 countries strategically located in
Asia, Australia, the Americas and Europe, it provides integrated
art creation, marketing services, game development, testing,
localization, audio and player support services across more than 50
languages and 16 games platforms to a blue-chip client base of over
950 clients across the globe.
Keywords Studios has a strong market position, providing
services to 23 of the top 25 most prominent games companies. Across
the games and entertainment industry, clients include Activision
Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games,
Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell,
TakeTwo, Tencent and Ubisoft. Recent titles worked on include
Anthem, Star Wars Jedi: Fallen Order, Valorant, League of Legends,
Fortnite, Clash Royale and Doom Eternal. Keywords Studios is listed
on AIM, the London Stock Exchange regulated market (KWS.L).
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