Keywords Studios


£1209m market cap

1841p last close

Keywords Studios is the largest and most diverse supplier of outsourced services to the games industry. Through regular acquisitions, it is building its scale, geographic footprint and delivery capability. Its ambition is to become the ‘go to’ supplier across the industry.

Investment summary

Keywords completed a £100m equity placing in May 2020 to support its buy-and-build M&A strategy and reinforce its financial position. Reassured by the trading update, we raised our growth forecast for FY20 revenue to 8% y-o-y (€352.9m), with a consequential impact on FY21e (€405.8m, 15% growth). We maintain our view that Keywords is well placed as the only games service provider on a global scale. The P/E rating reflects the company’s leading market position, track record and potential, but should fall further as Keywords executes its buy-and-build strategy with a c €220m warchest.

Y/E Dec
Revenue (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2018A 250.8 43.7 37.9 43.7 47.7 39.5
2019A 326.5 57.6 40.9 47.2 44.2 29.5
2020E 352.9 55.0 37.3 41.9 49.8 27.1
2021E 405.8 70.5 51.6 55.1 37.9 25.4
Industry outlook

Keywords Studios operates in the global games sector, a net beneficiary from the COVID-19 lockdown. Although Keywords has experienced some short-term business disruption (particularly Audio and QA), as lockdowns ease, it will quickly be business as usual, with potential catch-up from pent-up demand. Thereafter, we expect the industry to return to its long-term growth trends (Newzoo: 8.4% CAGR 2019–22e).

Last updated on 04/06/2020
Share price graph
Balance sheet
Forecast net cash (€m) 106.8
Forecast gearing ratio (%) N/A
Price performance
Actual 14.9 19.5 15.6
Relative* 4.0 29.2 30.1
52-week high/low 1841.0p/1073.0p
*% relative to local index
Key management
Ross Graham Chairman
Andrew Day CEO
David Broderick FD
Joe Quinn Investor relations

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