Keywords – Labour Shortages Hold Back Growth

Keywords – Labour Shortages Hold Back Growth
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Keywords Studios PLC (LON:KWS)’s underlying revenue rose 22.9% to €238.7m, with all segments posting double digit growth thanks to the impact of the pandemic on last year’s figures.

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Q2 2021 hedge fund letters, conferences and more

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Underlying cash profits rose 64.6% to €50.7m, reflecting 1 3.4 percentage point improvement in cash profit margins to 21.2. In addition to better revenue generation, cost savings from remote working and lower spend on travel, business development and marketing fed into this improvement.

Strong demand has continued into the second half of the year, but growth is expected to moderate as the group laps last year’s strong performance.

After pausing dividend payments in 2020, Keywords will pay an interim dividend of 0.7p per share, a 20.7% increase from 2019.

The shares were broadly unchanged following the announcement.

Keywords' Q2 Earnings

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“Keywords posted a strong performance for the first half as all of the group’s segments post double-digit revenue growth. This was unsurprising, considering the buoyant gaming market and the fact that growth in the same period last year was held back considerably due to Covid-related headwinds.

But labour shortages in Game Development, the group’s largest segment, were a red flag. We’ve seen this story play out across a wide range of industries, Keywords is just the latest to report issues attracting talent. In order to capitalise on ballooning demand for new games, the group needs to expand its network of highly-skilled workers. This has proven to be a challenge as it’s drawing from a limited pool and Covid has made the onboarding process more difficult. The result will be wage inflation and ultimately increased costs for Keywords. Whether or not those can be passed on to customers remains a question.

This isn’t make-or-break for Keywords, but it could hold back growth in the six months to come. Zooming out further, it adds to growing concern that inflationary pressures are continuing to pile on.”

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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