Keywords Studios sees revenue jump following strategic acquisitions

Irish video game service provider Keywords Studios (LSE: KWS) has cited robust organic growth and multiple acquisitions for a 13% jump in 2023 full-year revenue to approximately £666 million, from £590 million in the previous year.

The company’s adjusted operating profit rose 6% to £104 million with a 15.6% margin, which was ahead of its 2022 guidance of 16.6% and “a reflection of good cost control”.

Adjusted free cash flow of £80 million was driven by solid cash generation in the second half of the year, with adjusted cash conversion of 82% being in line with guidance.

Net debt of £58 million primarily reflected a year of acquisition activity, with five high-quality buy-outs for a maximum consideration of £192 million adding £77 million in pro forma revenues.

Strategic execution

Keywords chief executive officer Bertrand Bodson said the company had continued to outperform the market due to a diversified global platform and “strong strategic execution”.

“In what was a difficult year for the industry, we delivered resilient performance and continued to extend our market leadership position, reflecting our role as a diversified enabler of the industry,” he said.

“While the industry backdrop remains tough in the near-term, our technology-enabled offerings will see us well-positioned to continue growing our market share as we support our clients in the creation of more exciting and immersive experiences.”

The company’s strategic partnerships have begun bearing fruit, with revenues from Top 25 clients increasing comfortably ahead of the group.

Mergers and acquisitions

It was also a record year for mergers and acquisitions, with five buy-outs adding to Keywords’ bottom line.

“We made considerable progress against our strategic objectives to deliver a record year of mergers and acquisitions and we have an extensive pipeline of acquisitions planned for the coming year,” Mr Bodson said.

“We will continue to navigate current market conditions and are excited by the opportunities that lie ahead as we deliver against our plans to become a £1 billion-plus revenue business in the coming years.”

Global provider

Keywords Studios is a global provider of creative and technology-enabled solutions to the video games and entertainment industries.

Established in 1998, the company has over 70 facilities in 26 countries and provides services across the entire content development life cycle to a large blue-chip client base through its Create, Globalise and Engage business units.

Across the games and entertainment industry, clients include Electronic Arts, Epic Games, Microsoft, Netflix and Ubisoft.

Recent titles worked on include Starfield, Baldur’s Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring and Fortnite.