viewKeywords Studios PLC

Keywords Studios on course for ‘supercharged years’ as new consoles launch


  • Supplies range of technical services to computer games developers and publisher
  • Clients include Sega, Nintendo, Google, Microsoft and Warner Bros
  • Employs buy-and-build strategy and has been expanding rapidly
Keywords Studio

Quick facts: Keywords Studios PLC

Price: 2538 GBX

Market: AIM
Market Cap: £1.89 billion

What Keywords Studios does

Keywords Studios PLC (LON:KWS) supplies a range of technical services to computer games developers and publishers.

Some of the services it provides include art direction, 3D animation, software engineering, audio services, functionality quality assurance (QA), localisation (enabling games to be published in several languages) and player support.

Game development is its largest addressable market — estimated to be valued at well in excess of US$3bn but with just a fifth of services across the industry currently outsourced, though Keywords clients include Sega, Nintendo, Electronic Arts, Microsoft, Google, Warner Bros and Tencent Games.

Established in 1998 it now has studios in more than 42 locations in 20 countries across four continents.

Keywords employs a buy-and-build strategy and has been expanding rapidly since its first acquisition in 2014.

How it's doing

Keywords upgraded its full-year profits again in January saying they would be “marginally ahead” of guidance after a strong finish to 2020.

In a trading update for the year to December 31, 2020, the AIM-listed group forecast revenues and adjusted pre-tax profit of €373mln and €55mln respectively, compared to guidance of €367mln and €52mln issued on November 24.

What the boss says: Andrew Day, chief executive

"The group has delivered another robust performance, delivering good organic growth despite the obvious challenges of COVID-19 across our global operations.

"This is testament to the dedication of our talented Keywordians, who have continued to provide our clients with the excellent service they have come to expect, despite these challenging circumstances”, 

What the brokers say

Keywords offers exposure to a growing sector without the hit risk that comes with most video games groups, according to Barclays, which has just started coverage.  

As the industry matures, outsourcing will be a more central component of every project - and ancillary services provider Keywords has advantages over peers in scale, technology and reputation, said the bank.

Liberum (target price 3,250p) added:  “Looking ahead, the impact of Covid leaves the business in an even better position; new consoles and streaming will create additional work for the next two years, their clients are cash-rich, and there are more gamers than ever all craving their next helping of new content.

“Add in a pipeline of M&A, and the KWS equity story has a lot further to run.”

Inflexion points

  • Continues with acquisitions plan
  • Videogame industry booming during the pandemic
  • Busy years ahead with new console cycle

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