27 January 2022

Keywords Studios plc ("Keywords Studios", "the Group")

Full year trading update

19% Organic revenue growth and strong full year margin performance

Keywords Studios, the international technical and creative services provider to the global video games industry, today provides the following unaudited trading update for the year ended 31 December 2021 ahead of full year results which will be issued on 30 March 2022.

Trading Update

The Group announced a trading update on 20 December 2021, in which it stated that its performance for the year would be ahead of market expectations, with revenue expected to be at least €505m (2020: €373.5m) and adjusted profit before tax¹ in excess of €85m (2020: €55.0). The Board now expects revenue and adjusted profit before tax¹ to be marginally ahead of that guidance at c.€512m and c.€86m, respectively. This performance includes an expected Organic Revenue growth² rate for the full year of approximately 19% (H1 2021: 22.9%, 2020: 11.7%), partly benefiting from the COVID-19 constraints that we experienced in first half of 2020.

The Group's strong performance during the year reflected high levels of demand for our services, driven by the buoyant video games market, the industry's focus on new content creation, and the continued trend in the industry towards external service provision. The business also benefitted from reduced costs due to COVID-19, primarily relating to remote working and reduced property, travel and business development costs, which we expect to return with the anticipated easing of restrictions in 2022 alongside further investment in our platform and people. 

In 2021, Keywords completed six high quality acquisitions in Australia, UK, Romania, and the US, further extending our geographical reach and strengthening the breadth and depth of the value-added services we offer to our global client base. Four of these were in Game Development (Climax, Heavy Iron, Tantalus, Wicked Witch), one in Marketing Services (Waste Creative) and one in Art (AMC). Total consideration for these six acquisitions, which includes performance related contingent deferred consideration elements, is up to a maximum of c.€126m.

As at 31 December 2021, the Group had net cash of approximately €103m (€84.1m at 30 June 2021, 31 December 2020: €102.9m) after cash spend on acquisitions during the year which amounted to €73m, including €14m of deferred consideration in respect of prior year acquisitions. The Group's cash balance, strong cash generation and the €150m available under its new undrawn committed revolving credit facility, leave the Group well placed to pursue both its organic and acquisition growth strategies.

Bertrand Bodson, Chief Executive Officer of Keywords Studios, commented:

"I am delighted to be joining Keywords at a time when the business is performing so well. The Group has delivered strong organic growth, driven by high levels of demand for our services, and further extended our capabilities, reach and scale through selective acquisitions.

"We are well placed to continue to capitalise on the Group's unique full service platform powered by our incredibly talented team of over 10,000 Keywordians, including over 1,500 game developers. We continue to deliver an ever more compelling proposition globally for our partners in the buoyant video games market, and adjacent content industries. We expect the Group's trading momentum to continue in 2022, as we invest in the platform and our people to build further on the Group's successful organic and acquisitive growth track record." 

¹ Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive income, adjusted for share option expense, costs of acquisition and integration, amortisation and impairment of intangible assets, non-controlling interest, foreign exchange gains and losses, and unwinding of discounted liabilities. In order to present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed in the prior year and investment income are also excluded.

² 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 prior year foreign exchange rates to both years. 

Notification of Full Year Results

The Group expects to announce its full year results for the year ended 31 December 2021 on 30 March 2022. To register your interest, please use the following link: https://www.keywordsstudios.com/FY21-results/, or contact Keywords@mhpc.com.

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About Keywords Studios (www.keywordsstudios.com)

Keywords Studios is an international technical services provider to the global video games industry. Established in 1998, and now with over 70 facilities in 23 countries strategically located in Asia, Australia, the Americas and Europe, it provides integrated art creation, marketing services, game development, testing, localization, audio and player support services across more than 50 languages and 16 games platforms to a blue-chip client base of over 950 clients across the globe.

Keywords Studios has a strong market position, providing services to 23 of the top 25 most prominent games companies. 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 Anthem, Star Wars Jedi: Fallen Order, Valorant, League of Legends, Fortnite, Clash Royale and Doom Eternal. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).