Service provider to the video gaming industry Keywords Studios (KWS:AIM) said it expected to deliver first half revenue growth of 37% to €238 million and adjusted pre-tax profit up 80% to approximately €40 million.

The strong half was driven by robust demand for the group’s technical services amid a buoyant video games market which was focused on delivering new content for the increased number of gamers and gameplay during the pandemic.

Excluding acquisitions, the company delivered organic growth of 23% compared with the first half of 2020.

Despite delivering strong first half growth the shares fell 3.75% to £28.20 on disappointment that management only guided for full year profits to be ‘at least’ in line with market expectations.


A combination of good general cost control, positive operational leverage and short- term benefits from lower travel and marketing expenses as well as a higher proportion of remote working boosted pre-tax margins to 16.8%, well above the company’s long-term guidance of 15%.

Management indicated margins are expected to moderate as some costs return to the business in the second half.

Acquisitions form a key part of the growth strategy and the company said it continued to actively review a ‘healthy pipeline’ of opportunities.

The acquisitions of Tantalus and Climax Studios made earlier in the year were said to be performing in line with expectations and bring extended scale and reach to the company’s game development capabilities.

After spending €45 million on acquisitions the company ended the half with cash of €84 million compared with €102.9 million at 31 December.

Keywords also has €100 million of undrawn revolving credit facilities leaving it well positioned to pursue its growth strategy and return to a progressive dividend policy.

The firm said it had identified several ‘high calibre’ candidates to replace outgoing chief executive Andrew Day.

Numis has upgraded its full year revenue estimate by 3% to €495.8 million and pre-tax profit by 6% to €79.7 million which is around 4% higher than consensus.

The brokerage has left its 2022 estimates unchanged to reflect ‘our expectation that margins will track back towards longer-term guidance’.

The group expects to announce interim results on 15 September 2021.


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Issue Date: 04 Aug 2021