Keywords Studios


£1632.5m market cap

2226p 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

After its opportunistic £100m equity placing in May (to support M&A and reinforce its balance sheet), Keywords has been operationally focused. 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 as Keywords executes its buy-and-build strategy with a c €220m war chest.

Y/E Dec
Revenue (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2018A 250.8 43.7 37.9 43.7 56.3 46.6
2019A 326.5 57.6 40.9 47.2 52.1 34.8
2020E 352.9 55.0 37.3 41.9 58.7 32.0
2021E 405.8 70.5 51.6 55.1 44.6 29.9
Industry outlook

Keywords Studios operates in the global games sector, a net beneficiary from COVID-19-related lockdowns. 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 13/08/2020
Share price graph
Balance sheet
Forecast net cash (€m) 106.8
Forecast gearing ratio (%) N/A
Price performance
Actual 22.9 39.8 44.4
Relative* 22.1 31.6 65.9
52-week high/low 2226.0p/1073.0p
*% relative to local index
Key management
Ross Graham Chairman
Andrew Day CEO
David Broderick FD
Joe Quinn Investor relations

Content on Keywords Studios