REG - Keywords Studios PLC - Full Year Trading Update

Keywords StudiosAnnouncement

25/01/2024 07:00

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RNS Number : 8192A  Keywords Studios PLC  25 January 2024

25 January 2024

 

Keywords Studios plc ("Keywords Studios", "Keywords", the "Group")

Full Year 2023 Trading Update

Delivering resilient growth and strong performance in the current market
backdrop

Keywords Studios, the international provider of creative and
technology-enabled solutions to the global video games and entertainment
industries, provides the following unaudited trading update covering the
expected results for the year ended 31 December 2023.

Highlights

·   Full year revenue of c.€780m, growth of 13% and 17% on a constant
currency basis

·   Organic revenue growth(1), excluding FX and US strikes, of c.9% (c.6%
on a reported basis)

·   Adjusted operating profit(2) of c.€122m, representing margins of
15.6%

·   Adjusted cash conversion above 80%, with strong H2 cashflows

·   Completed five high-quality acquisitions for maximum consideration of
€225m

Trading update

The Group has delivered resilient growth in the second half of 2023, through a
mixed industry back-drop and the US entertainment strikes, and expects
full-year revenues to be approximately €780m, representing year-on-year
growth of 13%, and 17% on a constant currency basis. As a result of the
current market conditions, full year organic revenue growth, excluding the
impact of foreign exchange and the US strikes, is expected to be approximately
9%. The overall impact of the US strikes on organic revenue growth was 2.6%
(€20m), with foreign exchange also a small headwind, leading to reported
organic revenue growth of approximately 6% for the year.

On a divisional level, Create's performance remained strong, with growth
normalising, as expected, from the high levels in H1. The impact of the US
strikes and lower client activity, especially in its Localization businesses,
led to subdued performance in Globalize. Engage saw a small improvement in
growth in H2, even with a number of marketing projects slipping out of Q4 and
the impact of the US strikes.

The Group expects to report strong adjusted operating profit performance of
approximately €122m, with adjusted operating profit margins of approximately
15.6%, supported by cost-saving measures and efficiencies across the Group.
Cash generation remained healthy, with full year adjusted cash conversion
expected to be above 80%, ahead of guidance, as we continued to see an H2
weighting to cash flow.

The Group completed five acquisitions in 2023, for a total maximum
consideration of €225m. This included the exciting acquisition of The
Multiplayer Group on 18 December 2023 for £76.5m (link
(https://www.keywordsstudios.com/download/file/SmRFYW5mUm5BaG5sVWRKNERXYXQvZz09/Acquisition-of-Multiplayer-Group/)
), which significantly scales our Create division, and further increases our
exposure to high-end creative services. We ended the year with a net debt
position of approximately €68m. Our healthy balance sheet and strong cash
generation continues to provide us with significant flexibility to invest in
growing our platform, and we have a strong pipeline of opportunities as we
move into 2024.

Outlook

We expect to deliver strong revenue and profit growth in 2024, driven by
improving organic growth, recent M&A, and the maintenance of adjusted
operating profit margins above 15% as we continue to manage our cost base and
drive efficiencies across the Group. Organic growth is expected to improve
from current levels as we move through the year, as the industry's appetite
for new content returns and allowing time for the output from Hollywood to
increase post the 2023 strikes.

Bertrand Bodson, CEO of Keywords Studios, commented:

"In what was a difficult year for the industry, we delivered resilient
performance in 2023 and we continued to grow our market share and industry
leadership position. We made considerable progress against our strategic
objectives and scaled our platform through the acquisition of five studios,
broadening our high-quality offering for clients. We will continue to
successfully navigate the market conditions in 2024 and are excited by the
opportunity ahead to build the leading technology-enabled platform, solving
complexity for clients across the content creation process in the largest
entertainment industries in the world."

 (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 2022 foreign exchange rates to both
 years, when translating studio results into the euro reporting currency.

 (2) Adjusted operating profit consists of the Operating profit as reported in
 the Consolidated statement of comprehensive income, adjusted for share-based
 payments expense, costs of acquisition and integration, and amortisation of
 intangible assets. In order to present the measure consistently year-on-year,
 the impact of other income is also excluded.

 

Notification of Full Year Results

The Group expects to report full year results for the year ended 31 December
2023, on 13(th) March 2023. To register your interest please contact:
keywords@mhpgroup.com (mailto:keywords@mhpgroup.com)

 

For further information, please contact:

 Keywords Studios                                                       Deutsche Numis

 Giles Blackham                                                         Nomad & Joint Corporate Broker

 Director of Investor Relations                                         Stuart Skinner / Will Baunton

 +44 7714 134 681                                                       +44 20 7260 1000

 gblackham@keywordsstudios.com (mailto:gblackham@keywordsstudios.com)

 MHP Group                                                              Barclays

 Financial Communications                                               Joint Corporate Broker

 Katie Hunt / Eleni Menikou / Charles Hirst                             Tom Macdonald / Stuart Jempson

 +44 7884 494 112 / +44 20 3128 8100                                    +44 20 7029 8000

 keywords@mhpgroup.com (mailto:keywords@mhpgroup.com)

 

 

 

 

About Keywords Studios (www.keywordsstudios.com
(http://www.keywordsstudios.com/) )

Keywords Studios is an international provider of creative and
technology-enabled solutions to the global video games and entertainment
industries. 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, Globalize and Engage service lines to a large blue-chip client
base across the globe.

Keywords Studios has a strong market position, providing services to 24 of the
top 25 most prominent games companies and contributing to over 70% of the 2023
Game Awards winners. 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 Starfield,
Baldur's Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring, Fortnite, Valorant,
League of Legends and Clash Royale. Keywords Studios is listed on AIM, the
London Stock Exchange regulated market (KWS.L).

 

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