Keywords Studios PLC (LON:KWS) has once again hailed the performance of its recent acquisition after telling investors that it expects its full-year results to beat management and market expectations.
The video games services provider said a stronger-than-expected second half from Synthesis – which it bought back in April – was the main reason that revenues and adjusted profit before tax will be “significantly ahead” of current forecasts.
Keywords now expects profit before tax to not be less than €14mln for the 12 months to 31 December.
“We are starting to see signs of consolidation of the supplier base at a number of our clients which is something we welcome,” said chief executive Andrew Day.
“We believe we are uniquely well positioned to benefit from this consolidation and… we expect to be a net beneficiary of this process.”
The business has also benefitted from strong like-for-like performance, Keywords added, while its other new businesses – such as Ankama and MindWalk – are integrating well and performing in line with expectations.
This is isn’t the first time the Dublin-based firm has praised recent acquisitions. Earlier this year it said that they were responsible for the outperformance in the first half of 2016.
finnCap analyst Harold Evans upped his profit before tax forecast for the company to €14.2mln from €13.1mln.
The City broker also expects the growing importance of augmented and virtual reality to help drive growth at Keywords, although the rewards may not be reaped for a little while yet.
“While longer term this should be positive, in the shorter term, support companies may experience some contraction of workflow, as publishers explore this new medium of gaming, instead of releasing the same volume of games that would otherwise be the case,” said Evans.
As a result, the broker added he is “cautiously optimistic” for 2017 although he wouldn’t be upgrading its forecasts for next year just yet.
Shares were up more than 8% to 460p.
--Updates for broker comment and share price--