Keywords Studios

LN: KWS

£980.4m market cap

1448p 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 industry.

Investment summary

Keywords Studios (KWS) is the largest supplier of outsourced services to the games industry. At its capital markets day in November, Keywords introduced its new CFO, Jon Hauck, who brings useful experience from Rentokil Initial. Keywords looks well set for strong growth in FY20 despite the Q420 console transition (which may even be a net benefit to the company), with a recovery of margins back to more normalised levels (c 15%) by end FY20. M&A, particularly in development and marketing, is very much front of mind. KWS remains the only games service provider at global scale.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2017A 151.4 26.6 23.1 30.0 59.0 48.6
2018A 250.8 44.2 37.9 40.1 44.1 29.6
2019E 319.7 48.8 40.2 45.0 39.3 24.2
2020E 360.2 61.0 52.5 64.8 27.3 18.7
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 23/01/2020
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (€m) 10.2
Forecast gearing ratio (%) 4
Price performance
%
1m
3m
12m
Actual 3.0 30.8 21.1
Relative* 2.5 22.8 9.8
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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