Robust demand drives revenue, profit at Keywords Studios

Hunt still on for new chief executive, but games group identifies several candidates

New acquisition Climax Studios has worked with a number of major games publishers on titles such as Silent Hill: Shattered Memories, Crackdown 3 and Returnal PS5.

New acquisition Climax Studios has worked with a number of major games publishers on titles such as Silent Hill: Shattered Memories, Crackdown 3 and Returnal PS5.

 

Video games services provider Keywords Studios said robust demand fuelled a strong first-half performance, with revenues rising by 37 per cent.

The company,which provides technical and creative services to the global video games industry, said momentum seen in the second half of 2020 continued throughout the first half of 2021 as the market focused on developing new content to capitalise on the boost in players during the pandemic.

In a trading update, Keywords said adjusted profit before tax is expected to be approximately €40 million, an 80 per cent rise from the same period in 2020, when Covid-19 caused some disruption to the business.

“While certain parts of the business continue to experience some Covid-19 related operational constraints, Keywords has delivered a strong underlying margin, driven by operational leverage and good cost control, in addition to the continued short term benefit of a reduction in certain costs due to Covid-19, primarily resulting from a higher proportion of remote working and lower costs relating to travel, business development and marketing,” said Keywords.

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At June 30th, the group had net cash of €84 million, having spent €45 million in cash on acquisitions, including €5 million of deferred consideration from the prior year’s purchases.

“Keywords has made a strong start to the year, continuing the momentum seen in the second half of 2020, with demand for our services being driven by a buoyant video games market, structural trends towards outsourcing, and a renewed focus on content creation,” said joint interim chief executive John Hauck.

“Looking forward, we expect strong demand to continue across most service lines underpinning our confidence of delivering a performance that is at least in line with market expectations for the year, albeit with growth rates and margins expected to moderate against stronger H2 2020 comparatives, and as some costs return with the easing of restrictions.”

Acquisitive Keywords snapped up Tantalus and Climax Studios in the first half of the year, extending the reach and scale of the group’s game development service line.

The company is still on the hunt for a new chief executive following the retirement of Andrew Day, with several candidates identified. Mr Day stepped down earlier than planned following a health scare that meant Mr Hauck and Sonia Sedler took over as joint chief executives.

“Our unrivalled breadth of services and sought after 9,000 people-strong specialised resource base positions Keywords well to increase our share of our buoyant market, whilst our financial strength supports further acquisitions to enhance the scale and reach of our services as we cement our position as the ‘go to’ services platform for the global video games industry,” said Mr Hauck.

Keywords will announce its half-year results on September 15th.

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