Keywords Studios – 2022 Results Meet Upgraded Targets

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Keywords Studios PLC (LON:KWS) saw full year revenue grow by 34.8% to €690.7m, in line with recently raised guidance. This reflected strong organic growth, positive changes in exchange rates, and contributions from acquisitions. Keywords also said it’s benefitting from a continued trend towards outsourcing.

Underlying operating profit came in at €114.6m, an increase of 29.6%, slightly ahead of management’s expectations. Profits rose at a slower rate than revenue because of the exit from the Russian market and costs associated with a return to normal work patterns after lockdowns.

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The outlook for 2023 remains unchanged with organic growth expected to moderate but remain above medium-term guidance of over 10%.

Underlying free cash flow was up from €92.3m to €112.1m, but net cash fell £21.8m reflecting the continued spend on acquisitions. A final dividend of 1.60p was recommended.

The shares were up down 6.5% in early trading.

Keywords Studios' Earnings

Derren Nathan, Head of Equity Research at Hargreaves Lansdown

“There were no surprises from Keywords today as it continues its long track record of double-digit sales and profit growth. It’s a leader in its space, offering video game developers a full suite of technical and creative services which it’s developed organically and through an aggressive programme of acquisitions.


Whilst no specifics were mentioned today, Keywords has its eye on a healthy number of M&A opportunities in the pipeline. A strong balance sheet, and indeed a strong share price, leaves it well placed to make further selective bolt-ons without shareholders needing to be overly worried about dilution.

Keywords has held on to its high twenties earnings multiple and deservedly so. Its execution has been impressive and there’s still a lot to go for in this fragmented market. We think it’s better placed to ride out a recession than games publishers, but it’s not immune. It’s set the bar lower for 2023 but needs to ensure continued delivery if it wants to retain its premium rating.”