Keywords Studios – Full Year Guidance Raised Again

Keywords Studios worst performing mega-cap stocks in Dec 2022 best performing mega-cap stocks in Dec 2022

Keywords Studios PLC (LON:KWS) has upgraded its full-year revenue guidance from €675m to €690m. Underlying profit before tax guidance has also been upgraded slightly from €110m to €112m.

Both upgrades reflect high levels of demand for the group’s services, as well as strong organic revenue growth of roughly 22% in the second half of 2022. Keywords highlighted it’s benefitting from the gaming industry’s “focus on new content creation and the increasing complexity of games”.

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In December, the group announced the acquisition of Helpshift for up to $75m. This brings Keyword’s total consideration for its five acquisitions last year up to around €140m.

At the end of the 2022, after taking into account deferred acquisition spending, the group had net cash of around €80m.

Looking forward, organic growth is expected to moderate in 2023 but still remain above medium-term guidance of above 10%. Underlying profit before tax margins are also expected to move to historical levels of around 15%.

The shares rose 3.4% following the announcement.

Keywords Studios’ Earnings

Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown:

“Despite being a slower period for new game launches across the industry, Keywords Studios leaned on its strong market position to continue delivering a strong performance. The group provides services to most of the prominent videogame companies like Activision Blizzard, Microsoft and TakeTwo.


The group’s growing from two angles. Its impressive rates of organic revenue growth coupled with strong margins are providing the funds for acquisitions. These acquisitions, in-turn, allow Keywords to quickly extend its capabilities and geographical reach.

That said, some of the wind is expected to come out Keywords’ sails next year. It benefitted from the strength of the US dollar in 2022, which gave a boost to both revenue and gross margin. Looking forward, profit margins are expected to return to historical levels in 2023.

While there are also global headwinds to navigate such as inflation and a cost-of-living crisis, we think Keywords sit in a relatively sheltered part of the game-making chain. Its highly diversified client base and geographical reach means it’s less exposed to the hit or miss risk from individual games, and to some degree insulated from changes to development cycles of new releases.