Video games services provider Keywords Studios PLC (LON:KWS) saw its shares jump today after it said it expects its 2017 revenues and profits to be “comfortably ahead” of market expectations.
The AIM-quoted firm – which, among other things, tests video games for bugs and translates them into different languages – said it had enjoyed a year of strong organic growth which had been complemented by a “number of significant and successful acquisitions”.
As a result, Keywords expects revenues to be at least €150mln (FY16: €96.6m) for the 12 months ended December 31 and adjusted profit to be not less than €22.5mln (FY16: €14.9m).
11 acquisitions in 2017
The Irish company snapped up eleven businesses last year, including two of its biggest deals to date: the €53.3mln (US$66mln) takeover of VMC Consulting and the €21.8mln (US$27mln) acquisition of California-based Sperasoft.
All of the new additions have strengthened Keywords’ service offerings as well as its geographic reach and access to talent.
READ: Keywords Studios makes second biggest acquisition with $27mln Sperasoft purchase
In total, the group invested net cash of €89.1mln into those acquisitions, funded by its own strong cash generation, available debt facilities and a successful €85.5mln (£75mln) fundraise back in October.
At the end of 2017, Keywords had €30.5mln in cash as well as €16.7mln left on its rolling credit facility which the firm said left it “well-placed to compete further selective acquisitions” this year.
Much has been made of President Trump’s sweeping new tax reforms over in the US with companies rushing to figure out what the changes mean to them.
Keywords said on Thursday it was still working out the exact implications but doesn’t expect the reforms to have a material impact on its effective tax rate going forward.
Looking to further consolidate fragmented market
“We are delighted with the group's performance as we grew revenues and profits strongly again this year,” said chief executive Andrew Day.
“Our ever-increasing geographic footprint and broader range of services have combined to grow market share, introduce additional services to established clients and win new clients.
“The eleven acquisitions in 2017 demonstrate strong progress in our strategy to selectively consolidate the fragmented video games market and generate synergies through scale, and our entry into Engineering and particularly Co-Development, enhances our positioning as a strategic partner to game developers and publishers, whilst continuing to ensure we are not directly exposed to the commercial performance of individual titles.
“As games are becoming bigger and are higher definition, game developers are increasingly relying upon co-development arrangements with companies like Keywords to provide them with broader capability to develop both initial games and ongoing content and features post-launch.”
In afternoon trading, Keyword Shares were 7% higher at 1,592p.
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