Keywords Studios


£879.1m market cap

1350p last close

Keywords Studios is the leading 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 games industry.

Investment summary

At the capital markets day (CMD) on 14 November, management offered a comprehensive review of Keywords’ business and its drivers. This was the first event with Jon Hauck formally in place as CFO, who brings useful experience from his background at Rentokil Initial. Keywords appears to be well positioned to continue to perform robustly in FY20 despite the Q420 console transition (which may even be a net benefit to the group), balancing strong growth with a margin recovery back to more normalised levels (c 15%) with M&A, particularly in game development and marketing, very much front of mind. Keywords remains the only public games service provider at a global scale. We have updated our forecasts, but these are largely unchanged as the year end approaches.

Y/E Dec
Revenue (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2017A 151.4 26.6 23.1 30.0 52.4 43.1
2018A 250.8 44.2 37.9 40.1 39.2 26.3
2019E 319.7 48.8 40.2 45.0 34.9 21.1
2020E 354.9 60.3 51.9 64.1 24.5 17.0
Industry outlook

Keywords Studios operates in the global games sector, an industry where change and innovation are the norm. We believe that the dynamics of the industry remain attractive. Looking ahead, we see sustained industry growth (c 9% to 2022) driven by ongoing digital transition and strategic investment in the sector (streaming, eSports), as well as a continuing shift towards outsourcing for large projects.

Last updated on 06/12/2019
Share price graph
Balance sheet
Forecast net debt (€m) 4
Forecast gearing ratio (%) 2
Price performance
Actual 12.7 (7.5) 25.0
Relative* 13.9 (8.1) 14.2
52-week high/low 1838.0p/900.0p
*% relative to local index
Key management
Ross Graham Chairman
Andrew Day CEO
David Broderick FD
Joe Quinn Investor relations

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