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Keywords Studios reports strong revenue growth as developers knuckle-down after COVID-19 disruptions

"The group has delivered another strong performance and we are seeing ongoing high levels of demand for our services,” said Jon Hauck

Keywords Studios PLC - Keywords Studios reports strong revenue growth as developers knuckle-down after COVID disruptions

Keywords Studios PLC (AIM:KWS, FRA:KS3, OTC:KYYWF) reported strong revenue growth for the first half of 2021, up 22.9% organically, despite its operations still being encumbered by Coronavirus (COVID-19) constraints – providing sufficient confidence for management to lift the interim dividend 20%.

The outsourcing contractor to the video games industry said growth has been driven by robust demand, supported by a buoyant video games market.

Games studios are focused on the return to the development of new content after production delays and disruption in 2020 production delays and disruption experienced in 2020, Keywords said.

Earnings (adjusted EBITDA) was up 64.6% in the first half to €50.7mln, and the company highlighted strong cash conversion, with €37.7mln of adjusted free cash flow representing a 94.9% cash conversion rate. Keywords ended the six month period with €84.1mln of net cash, after spending €44.7mln of cash on acquisitions.

The interim dividend increased 20% from last year to 0.7p per share.

"The group has delivered another strong performance and we are seeing ongoing high levels of demand for our services,” said Jon Hauck, chief financial officer and interim chief executive.

"We have continued our acquisition strategy which is building the group into the 'go to' service provider globally.”

"Looking forward, we expect the strong demand to continue, giving us confidence in delivering a full year performance in line with recently increased market expectations, and our financial strength leaves us well placed to continue to complement organic growth with value-accretive acquisitions."

Sonia Sedler, chief operating officer and also joint interim chief executive, added: "We are proud of the group's strong organic growth performance in the first half, as our global sales and local teams continue to build upon our deep, long-standing relationships with our broad client base.

“As the structural trend in the industry towards outsourcing continues, our integrated services are addressing our clients' needs more effectively than ever.”

Keywords completed four acquisitions during the first half, for a total consideration of up to €105mln. It added the Heavy Iron Studios, Tantalus, Climax Studios, and AMC businesses.

In its outlook statement, the company said it had started the second half well with strong demand seen for most services.

The company is expecting to benefit from what it describes as a well-balanced range of services across the game development lifecycle.

A strong pipeline of acquisition opportunities continue to be reviewed, and, the company said it is focussing on adding specific expertise and talent particularly as it seeks to build game development and marketing service lines.

It highlighted that it is confident in delivering recently increased market expectations for the full year.

Quick facts: Keywords Studios PLC


Price: 3000 GBX

Market Cap: £2.27 billion

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