Keywords Studios PLC (AIM:KWS, OTC:KYYWF) balanced a cash-intensive M&A strategy with a notable increase in top-line revenues in the first half of 2023.
Group revenues increased 19.4% year on year to €383.5 million (£329.3 million), with revenues growing 10.4% on an organic basis when excluding new acquisitions.
Underlying earnings grew 10.3% to €77.3 million on a slightly reduced margin of 20.1%.
Adjusted earnings per share stayed relatively flat at 55.6p, but a ramp-up in sales and administration expenses caused a near 50% dip in profit after tax, bringing basic EPS down from 36.8p in the first half of 2022 to 18.48p in this interim period.
Capital expenditure increases were attributed to the group’s Russia exit, purchases of new software licences, leases, and research and development-related expenses.
Keywords’ M&A strategy, in which the group dedicated €91.9 million to new acquisitions, saw the company flip from a net cash position at the end of 2022 to a net debt position of €11.4 million as of June 30.
However, Keywords retains a €340 million undrawn credit facility to support ongoing operations.
In terms of outlook, Keywords expects full-year underlying organic growth to be similar to the first half, weighted to the fourth quarter of 2023.
Due to its exposure to the US entertainment industry, the group remains mindful of the impact of Hollywood strikes, which have begun to affect post-period performance.
Chief executive Bertrand Bodson commented: "Keywords delivered good first-half growth despite the current industry backdrop, benefitting from our focus on strategic partnerships and our unique provision of solutions across the full game development cycle.
“We have continued to broaden our offering through high-quality targeted acquisitions and are excited about the pipeline ahead. We are on track to deliver underlying organic growth (excluding the unfortunate impact of the US entertainment strikes) and operating margins in line with our guidance for the year.”