Keywords Studios


£906.6m market cap

1389p 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

Prior to the onset of COVID-19, Keywords looked well set for strong growth in FY20, with management expecting a recovery of margins back to more normalised levels (c 15%) by end FY20. However, as set out in the RNS on 25 March 2020, with large teams and studios around the world, Keywords distributed delivery model will be tested over coming months eg greater levels of home-working. Although the impact is hard to quantify, we would expect a slowdown in project delivery and new game launches, from which Keywords potentially gains. Keywords is liquid and well-capitalised (net debt/Adj EBITDA of 0.4x) with undrawn debt facilities of €122m. We will review our estimates with the FY19 results.

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 43.2
2018A 250.8 44.2 37.9 40.1 39.2 26.3
2019E 326.0 49.5 41.0 46.0 34.2 24.9
2020E 374.9 61.2 52.4 64.8 24.3 17.7
Industry outlook

Overall, with its digital model, we would expect the games industry to benefit from the impact of COVID-19, with self-isolation policies around the world likely to drive demand for all forms of home entertainment.

Last updated on 06/04/2020
Share price graph
Balance sheet
Forecast net debt (€m) 18
Forecast gearing ratio (%) 8
Price performance
Actual (7.4) (8.4) 5.2
Relative* 9.0 25.9 39.9
52-week high/low 1838.0p/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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