25 January
2024
Keywords Studios plc
("Keywords Studios", "Keywords", the "Group")
Full Year
2023 Trading Update
Delivering resilient growth and strong performance in the
current market backdrop
Keywords Studios, the international
provider of creative and technology-enabled solutions to the global
video games and entertainment industries, provides the following
unaudited trading update covering the expected results for the year
ended 31 December 2023.
Highlights
· Full year revenue of c.€780m, growth of 13% and 17% on a
constant currency basis
· Organic revenue growth1, excluding FX and US strikes,
of c.9% (c.6% on a reported basis)
· Adjusted operating profit2 of c.€122m, representing
margins of 15.6%
· Adjusted cash conversion above 80%, with strong H2
cashflows
· Completed five high-quality acquisitions for maximum
consideration of €225m
Trading update
The Group has delivered resilient
growth in the second half of 2023, through a mixed industry
back-drop and the US entertainment strikes, and expects full-year
revenues to be approximately €780m, representing year-on-year
growth of 13%, and 17% on a constant currency basis. As a result of
the current market conditions, full year organic revenue growth,
excluding the impact of foreign exchange and the US strikes, is
expected to be approximately 9%. The overall impact of the US
strikes on organic revenue growth was 2.6% (€20m), with foreign
exchange also a small headwind, leading to reported organic revenue
growth of approximately 6% for the year.
On a divisional level, Create's
performance remained strong, with growth normalising, as expected,
from the high levels in H1. The impact of the US strikes and lower
client activity, especially in its Localization businesses, led to
subdued performance in Globalize. Engage saw a small improvement in
growth in H2, even with a number of marketing projects slipping out
of Q4 and the impact of the US strikes.
The Group expects to report strong
adjusted operating profit performance of approximately €122m, with
adjusted operating profit margins of approximately 15.6%, supported
by cost-saving measures and efficiencies across the Group. Cash
generation remained healthy, with full year adjusted cash
conversion expected to be above 80%, ahead of guidance, as we
continued to see an H2 weighting to cash flow.
The Group completed five
acquisitions in 2023, for a total maximum consideration of €225m.
This included the exciting acquisition of The Multiplayer Group on
18 December 2023 for £76.5m (link),
which significantly scales our Create division, and further
increases our exposure to high-end creative services. We ended the
year with a net debt position of approximately €68m. Our healthy
balance sheet and strong cash generation continues to provide us
with significant flexibility to invest in growing our platform, and
we have a strong pipeline of opportunities as we move into
2024.
Outlook
We expect to deliver strong revenue
and profit growth in 2024, driven by improving organic growth,
recent M&A, and the maintenance of adjusted operating profit
margins above 15% as we continue to manage our cost base and drive
efficiencies across the Group. Organic growth is expected to
improve from current levels as we move through the year, as the
industry's appetite for new content returns and allowing time for
the output from Hollywood to increase post the 2023
strikes.
Bertrand Bodson, CEO of Keywords
Studios, commented:
"In what was a difficult year for
the industry, we delivered resilient performance in 2023 and we
continued to grow our market share and industry leadership
position. We made considerable progress against our strategic
objectives and scaled our platform through the acquisition of five
studios, broadening our high-quality offering for clients. We will
continue to successfully navigate the market conditions in 2024 and
are excited by the opportunity ahead to build the leading
technology-enabled platform, solving complexity for clients across
the content creation process in the largest entertainment
industries in the world."
1 Organic revenue at constant
exchange rates is calculated by adjusting the prior year revenues,
adding pre-acquisition revenues for the corresponding period of
ownership, and applying the 2022 foreign exchange rates to both
years, when translating studio results into the euro reporting
currency.
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2 Adjusted operating profit
consists of the Operating profit as reported in the Consolidated
statement of comprehensive income, adjusted for share-based
payments expense, costs of acquisition and integration, and
amortisation of intangible assets. In order to present the measure
consistently year-on-year, the impact of other income is also
excluded.
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Notification of Full Year
Results
The Group expects to report full
year results for the year ended 31 December 2023, on
13th March 2023. To register your interest please
contact: keywords@mhpgroup.com
For
further information, please contact:
Keywords Studios
Giles Blackham
Director of Investor
Relations
+44 7714 134 681
gblackham@keywordsstudios.com
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Deutsche Numis
Nomad & Joint Corporate
Broker
Stuart Skinner / Will
Baunton
+44 20 7260 1000
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MHP
Group
Financial Communications
Katie Hunt / Eleni Menikou / Charles
Hirst
+44 7884 494 112 / +44 20 3128
8100
keywords@mhpgroup.com
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Barclays
Joint Corporate Broker
Tom Macdonald / Stuart
Jempson
+44 20 7029 8000
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About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is an international provider of creative and technology-enabled
solutions to the global video games and entertainment
industries. Established in 1998, and now with over 70
facilities in 26 countries strategically located in Asia,
Australia, the Americas, and Europe, it provides services across
the entire content development life cycle through its Create,
Globalize and Engage service lines to a large blue-chip client base
across the globe.
Keywords Studios has a strong market
position, providing services to 24 of the top 25 most prominent
games companies and contributing to over 70% of the
2023 Game Awards winners. Across the games
and entertainment industry, clients include Activision Blizzard,
Bandai Namco, Bethesda, Electronic Arts, Epic Games, Konami,
Microsoft, Netflix, Riot Games, Square Enix, Supercell, TakeTwo,
Tencent and Ubisoft. Recent titles worked on include Starfield,
Baldur's Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring, Fortnite,
Valorant, League of Legends and Clash Royale. Keywords Studios is
listed on AIM, the London Stock Exchange regulated market
(KWS.L).