Keywords Studios hikes forecasts amid solid second half

Video games technical and creative services provider Keywords Studios updated the market on its trading on Monday, upgrading its expectations for the year amid a solid second-half, following a “strong performance” in the first.

The AIM-traded firm said demand for its services was being driven by a “buoyant” video games market, and the industry's focus on new content creation.

It had continued to benefit from a reduction in certain costs due to Covid-19, primarily relating to remote working, property costs, travel and business development.

As a result, Keywords said it now expected that full-year revenue for the year ending 31 December would be at least €505m, making for 35% year-on-year growth, with adjusted profit before tax of more than €85m, for year-on-year growth of 55% - both ahead of current consensus forecasts.

Keywords said it expected the trading momentum to continue into 2022, giving the board “confidence” in delivering 2022 revenue at the upper end of the current consensus forecasts among analysts.

At the same time, it continued to expect adjusted profit before tax margins to moderate towards its historic levels of around 15%, as certain costs returned with the easing of restrictions and as it continued to invest in the platform and people.

“Keywords continues to perform strongly, driven by high levels of demand for our services, as we grow our capabilities, reach and scale,” said chief executive officer Bertrand Bodson.

“Having started to meet with many of our people, studios and customers, I am excited about the opportunity to capitalise on the group's unique full service platform to deliver an ever more compelling proposition for the buoyant video games market, and adjacent content industries.

“I have been impressed by the ambitious team at Keywords, which is highly driven to continue to build on the group's successful organic and acquisitive growth track record.”

Keywords said it would provide a further update with its scheduled trading update at the end of January.

At 0943 GMT, shares in Keywords Studios were up 4.7% at 2,628p.