Keywords Studios, the Ireland-based, London-listed technical services provider to the video games industry (including game localization), on December 17, 2019, announced the acquisition of fellow Dublin-headquartered machine translation company KantanMT, which trades under the name Xcelerator Machine Translations Ltd.
Keywords is paying a total consideration of up to EUR 7m (USD 7.8m), including a substantial earn-out component. Initially, Keywords will pay EUR 3.5m in cash to Kantan Founder Tony O’Dowd as well as Kantan’s backers, including Delta Partners and Enterprise Ireland.
Another portion will be paid to O’Dowd in newly issued shares. As for the earn-out component, Keywords said, “The remaining EUR 2.9m consideration will become payable to Tony O’Dowd, in a mix of cash and shares, based upon performance targets for Kantan for the three years post completion.”
Keywords said Kantan generated annual revenues of EUR 0.8m in its most recent financial year ended March 31, 2019 and achieved an adjusted EBITDA margin of 22%. If the full consideration were to be paid, it would translate into a purchase price of 8.75x revenues and 39x adjusted EBITDA. This sets an interesting data point for the dozen or so pure-play machine translation players that operate a B2B managed service model; as opposed to, for example, DeepL’s model, which is geared more toward B2C.
KantanMT was founded in 2011, at a time when statistical machine translation was still the standard, and transitioned to neural machine translation models after 2016. The company’s client portfolio includes eBay, VistaPrint, the European Commission, and language service providers, according to the announcement. The company currently employs nine people and is based at Dublin City University’s ADAPT Centre in Ireland.
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The same announcement said Keywords had used Kantan as a vendor before. The acquisition is interesting; gaming is a notoriously difficult space for machine translation given the content’s highly creative nature and fan vigilance over how games are localized.
According to Keywords CEO Andrew Day, “Video games are highly context specific, often being set in fantasy worlds, are highly immersive, and therefore require both high quality and highly adapted localisation, are multi branching and use real time, AI generated content.”
Keywords has been highly acquisitive since its 2013 IPO, and the Kantan acquisition is in line with its strategy of bolting on niche capabilities and technologies. Alongside the Kantan deal, Keywords also announced the acquisition of London-based Ichi, a creative and marketing services firm, for GBP 3.2m (USD 4.22m), and Canadian audio recording and casting services company Syllabes for CAD 0.475m (USD 0.36m).
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