Keywords Expects Strong First-Half Growth as CEO Search Continues

Keywords Studio Expects Strong First-Half Growth

On August 4, 2021, video game services provider Keywords Studios released a half-year trading update and notice of results for the six months ended June 30, 2021 (H1 FY21).

The Ireland-headquartered and UK-listed company said it expects to generate revenues of around EUR 238m (USD 282m) for H1 2021, an increase of ca. 37% compared to the same period the previous year. Excluding acquisitions and the impact of currency movements, Keywords expects organic growth in the region of 23%.

The video games specialist operates seven business lines of which three involve localization-related activities: Localization, Localization Testing, and Audio Services. Collectively, these three divisions contributed around USD 137m (or about 30%) to top-line revenues of ca. USD 442m for the full year 2020 (SlatorPro).

According to the trading update, “all service lines performed well during the period,” despite the fact that “certain parts of the business continue to experience some Covid-19 related operational constraints.”

Keywords said growth was supported by robust demand for their services, continuing the strong momentum from the second half of 2020. Moreover, game producers are doubling down on bringing out new game content thanks to pandemic-linked “increases in both numbers of gamers and gameplay.”

Keywords also expects adjusted profit before tax of around EUR 40m (USD 48m), a significant increase — more than 80% — from the previous year, and said its strong underlying margin was boosted by factors including operational leverage, good cost control, and lower costs associated with travel, remote working, business development, and marketing during the pandemic.

The company also provided an update on first-half acquisitions: game development providers Tantalus and Climax Studios. Keywords said both are performing as expected and that it continues to review a healthy pipeline of opportunities.

Keywords is typically highly acquisitive. Its current M&A strategy is focused outside the core of localization — most recently on marketing and game development.

With Keywords’ former CEO Andrew Day having announced his retirement in mid-June 2021, the company also provided an update on the search for Day’s replacement in the August 4 trading update. Keywords said a “full search process” is underway, adding that “a number of high calibre candidates have been identified.”

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While the new CEO is yet to be announced, joint interim CEOs Jon Hauck and Sonia Sedler remain in place. Meanwhile, longtime Keywords exec Jaime Gine announced his departure from his role as Chief Customer Officer and Board Member on LinkedIn. On August 2, 2021, Gine revealed plans to join game development agency, Amber, as CEO from September.

Renewed Focus on Content Creation

In the same trading update, joint interim CEO Hauck highlighted the ongoing trend toward outsourcing and a “renewed focus on content creation” on the part of Keywords’ customers in the context of a buoyant video games market — key factors behind the demand for Keywords’ services.

“We expect strong demand to continue across most service lines underpinning our confidence of delivering a performance that is at least in line with market expectations for the year, albeit with growth rates and margins expected to moderate against stronger H2 2020 comparatives, and as some costs return with the easing of restrictions,” Hauck said.

On the day of the trading update, shares in Keywords Studios were down around 5% from market open. Shares have climbed nearly 90% since the start of 2020 and are hovering around the same level as they were at the start of 2021. Keywords’ market capitalization stood at ca. USD 2.93bn at the time of writing.

Keywords will announce half-year results on September 15, 2021.

Use Slator’s Real-Time Charts of Listed LSPs to track Keywords’ share price and performance in real time, exclusively available to SlatorPro subscribers.