£1887.9m market cap
2538p 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 to become the ‘go to’ supplier across the industry.
Investment summary
Buoyed by exceptional demand for games during lockdown and boosted by the start of the console transition, the global games industry showed year-on-year growth of 20% in FY20 (Newzoo). Benefiting from increased industry development spending and the growth in new releases, Keywords delivered underlying organic revenue growth of 12%, with FY20 revenues rising 14% y-o-y. Assuming no worsening impact from COVID-19, FY21 looks set to be a more settled year. With publishers launching increasing numbers of new titles to address a growing next-gen console base in FY21–23, demand for Keywords’ services should continue to build in the short to medium term. The outlook for Keywords appears positive and, with net cash of c €100m (plus €100m of undrawn facilities), Keywords remains well placed to participate in earnings-enhancing M&A.
Y/E Dec |
Revenue (€m) |
EBITDA (€m) |
PBT (€m) |
EPS (fd) (c) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2018A | 250.8 | 43.7 | 37.9 | 43.7 | 66.3 | 54.8 |
| 2019A | 326.5 | 57.6 | 40.9 | 47.2 | 61.4 | 40.9 |
| 2020E | 373.0 | 72.9 | 55.0 | 62.0 | 46.7 | 29.7 |
| 2021E | 464.5 | 89.7 | 67.8 | 72.1 | 40.2 | 26.8 |
Industry outlook
Keywords Studios operates in the global games sector, a net beneficiary from COVID-19-related lockdowns (Newzoo: 20% y-o-y growth in FY20). 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 as the industry returns to trend growth (Newzoo: 10.5% CAGR 2019–23e).
Last updated on 03/03/2021
Sector |
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Share price graph
Balance sheet |
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| Forecast net cash (€m) | 92.5 |
| Forecast gearing ratio (%) | N/A |
Price performance
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12m |
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Key management |
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|---|---|
| Ross Graham | Chairman |
| Andrew Day | CEO |
| Jon Hauck | CFO |
| Joe Quinn | Investor relations |
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