Revenue at Keywords Studios rises strongly as company invests in growth

Dublin-headquartered gaming company Keywords Studios said it expected revenues to rise in 2019, with acquisitions providing a boost to growth.

In a trading update, the company predicted total revenue growth of 30 per cent for the year to €326 million, with organic revenue growth of 15 per cent.

The latter was driven by strong organic growth in its functional testing and game development units.

“Some of our service lines felt the effects of the slowing development cycle of the current generation of games consoles with others already starting to benefit from the new development cycle associated with the upcoming releases of the new Xbox and PlayStation later in 2020,” the company said in a statement.

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Adjusted profit before tax is expected to be 8 per cent higher at around €41 million. Adjusted earnings before interest, tax, depreciation and amortisation looks set to rise 13 per cent to €49.5 million for the year.

The strong growth in revenue was partially offset by ongoing investment, the impact of incorporating some of Keywords’ acquisitions in 2018 and an under-performing, fixed price contract in one of its acquisitions.

The company bought a total of eight businesses in the 12 month period, adding to its services, and spending €13 million in net cash. Net debt at the end of last year is expected to be approximately €18 million.

Keywords has has also invested in its own facilities and employees, expanded its facilities in Montreal, Katowice, Manila, Brighton, Mexico City, Tokyo, Sao Paolo and New Delhi, and opened a new game development studio in Leamington Spa, near Birmingham, which contributed to costs.

"In what was a relatively light year for the video games industry against a backdrop of the tail end of the current generation of video games consoles from Microsoft and Sony, the group has delivered strong growth, particularly from our two largest divisions, functional testing and game development services," said Andrew Day, chief executive.

“Looking forward, we expect the launch of a new generation of games consoles and the further development of new streaming platforms, in addition to the structural drivers of growth across the video games market as a whole and the ongoing trend towards external development, to drive continued strong demand for our services through 2020 and beyond. The full benefit of this new generation of consoles is expected to increase over the medium term.”