TIDMKWS
RNS Number : 7502N
Keywords Studios PLC
25 January 2023
25 January 2023
Keywords Studios plc ("Keywords Studios", "Keywords", the
"Group")
Full year trading update
Strong full year performance and confident in 2023 outlook
Keywords Studios, the international technical and creative
services provider to the global video games industry and beyond,
today provides the following unaudited trading update for the year
ended 31 December 2022 ahead of full year results which will be
issued on 15 March 2023.
Trading Update
The Group announced a trading update on 21 November 2022, in
which we stated that our performance for the year would be ahead of
market expectations, with revenue expected to be at least EUR675m
(2021: EUR512m) and adjusted profit before tax (1) in excess of
EUR110m (2021: EUR86m). The Board now expects revenue and adjusted
profit before tax (1) to be marginally ahead of that guidance at
c.EUR690m and c.EUR112m, respectively. This performance includes an
expected Organic Revenue growth (2) rate for the second half of the
year of approximately 22% (H1 2022: 21.7%, 2021: 19.0%), as the
momentum experienced in H1 continued into the second half.
The Group's strong performance during the year reflected high
levels of demand for our services, particularly in our Create and
Globalise service lines. In Create, we continued to benefit from
the industry's focus on new content creation and the increasing
complexity of games, leading to strong demand for our services. In
Globalise, our increased scale and footprint meant we were well
positioned to capitalise on the industry's healthy demand for
post-production services despite it being a slower period for new
launches. The Engage service line also delivered solid growth
across the period. During the year we benefited from the strength
of the US dollar, which positively impacted both revenue and gross
margin, partially offset by the predominantly second half weighted
return of travel and administrative expenses.
In 2022, Keywords completed five high quality acquisitions in
the US, Australia, Canada and Italy, delivering against our
strategy of extending our capabilities and geographical reach in
our Create and Engage service lines, as well as scaling our
technology offering. Three acquisitions were game development
studios (Forgotten Empires, Smoking Gun and Mighty Games), with
Mighty Games also bringing an automated testing technology
solution, and one in marketing (Labcom). In December, we announced
the acquisition of Helpshift, which has developed a market leading
software-as-a-service customer support automation tool to resolve
customer issues in real-time within its clients' mobile apps, for
up to $75 million. Total consideration for these five acquisitions,
which includes performance related contingent deferred
consideration elements, is up to a maximum of c.EUR140m.
As at 31 December 2022, the Group had net cash of approximately
EUR80m (EUR121.3m at 30 June 2022, 31 December 2021: EUR105.6m)
after cash spend on acquisitions during the year which amounted to
EUR118m, including EUR26m of deferred consideration in respect of
prior year acquisitions. 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
both its organic and acquisition growth strategies. The focus for
accretive M&A remains on expanding our game development and
marketing offerings, our technology capabilities and exploring
opportunities to enter adjacent markets, such as media and
entertainment.
Outlook for 2023
Despite the evolving market backdrop, across both the global
economy and within the video gaming sector, our expectations for
2023 remain consistent with the guidance given on 21 November 2022,
and we are confident in delivering a performance towards the upper
end of the recently raised analysts' consensus range(3) . We
continue to expect organic growth to moderate, but remain above the
medium-term guidance of 10%+, with adjusted profit before tax
margins expected to move to historical levels of c.15%, as
previously guided.
Bertrand Bodson, Chief Executive Officer of Keywords Studios,
commented:
"We delivered an excellent performance in 2022, demonstrating
the strength of the platform we have and the dedication and hard
work of the 12,000 people within Keywords. Whilst we are mindful of
some headwinds currently facing the industry, our business model,
highly diversified client base and geographical reach means that we
are less exposed to the "hit or miss" risk from individual games
and more insulated from changes to the development cycle of new
releases. We are increasingly well positioned to support our
clients in generating engaging content for their leading franchises
and believe that we will see robust demand for content generation
as our clients seek to capture the imagination of the 3 billion
gamers globally. This backdrop, together with our continued
delivery against our strategy, means we are well placed for 2023
and will continue to build upon our position as the partner of
choice for the global video games industry, and beyon d."
(1) 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, other income is excluded
(2) 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
(3) As at 20 January 2023, company compiled analysts' forecasts
gave a consensus for FY 2023 of EUR800m of revenue (range:
EUR785-816m) and EUR120m of adjusted profit before tax (range:
EUR117-123m).
Notification of Full Year Results
The Group expects to announce its full year results for the year
ended 31 December 2022 on 15 March 2023. To register your interest,
please contact Keywords@mhpc.com .
For further information, please contact:
Keywords Studios +353 190 22 730
Bertrand Bodson, Chief Executive investors@keywordsstudios.com
Officer
Jon Hauck, Chief Financial Officer
Giles Blackham, Investor Relations
Numis Securities (Nominated Adviser
& Broker)
Stuart Skinner/Will Baunton +44 20 7260 1000
MHP (Financial PR) +44 20 3128 8794
Katie Hunt/Eleni Menikou/Charles keywords@mhpgroup.com
Hirst
About Keywords Studios ( www.keywordsstudios.com )
Keywords Studios is an international technical and creative
services provider to the global video games industry and beyond.
Established in 1998, and now with over 70 facilities in 26
countries strategically located in Asia, Australia, the Americas,
and Europe, it provides services across the entire content
development life cycle through its Create, Globalise and Engage
service lines 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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