Keywords Studios


£989.4m market cap

1545p last close

Keywords Studios is now the largest and most diverse supplier of outsourced services to the games industry. Through regular acquisitions, the company is building its scale, geographic footprint and delivery capability.

Investment summary

Keywords Studios looks structurally well placed to continue performing well in an industry where change and innovation are the norm. Looking ahead, we see sustained growth from the launch of streaming services by industry majors and the continued shift towards outsourcing. Keywords showed the resilience of its model in FY18, delivering 10.1% l-f-l revenue growth and 53% adjusted EPS growth as well as a five-year EPS CAGR of 53%. As such, we believe that the shares remain set for continued appreciation.

Y/E Dec
Revenue (€m)
PBT (€m)
EPS (c)
P/E (x)
P/CF (x)
2017A 151.4 26.6 23.1 30.0 59.9 49.3
2018A 250.8 44.2 37.9 45.8 39.2 30.0
2019E 298.9 51.3 44.1 54.3 33.1 34.7
2020E 334.7 57.3 49.4 60.9 29.5 32.3
Last updated on 25/04/2019
Industry outlook

Despite a period of weakness in the games industry in H218, including the sell-off in the shares of a number of market-leading companies, we believe that the dynamics of the industry remain attractive and that recent downgrades/share price weakness have been a reflection of expectations getting ahead of themselves. The sustained trend towards outsourcing should support a low mid-teens growth rate for service providers, supported by M&A in what remains a fragmented industry.

Last updated on 25/04/2019
Share price graph
Balance sheet
Forecast net debt (€m) 5.6
Forecast gearing ratio (%) 2
Price performance
Actual 44.7 30.3 (8.4)
Relative* 39.2 19.9 (8.7)
52-week high/low 2065.0p/900.0p
*% relative to local index
Key management
Ross Graham Chairman
Andrew Day CEO
David Broderick FD

Content on Keywords Studios