Keywords sees profit rise but coronavirus causes disruption

Revenue and profit rose at video games company Keywords Studios, capping off a year of strong growth, but the company stopped short of issuing any forecasts for the 2020 in light of the coronavirus pandemic.

Chief executive Andrew Day and chief financial officer Jon Hauck said they would take a 20 per cent pay cut as a result of the disruption, while other executives and non-executive directors had also volunteered to reduce their pay.

Although Keywords, which is headquartered in Dublin, said it would be “inappropriate” to recommend a final dividend, it was confident it would emerge from the Covid-19 crisis in a position to deal with pent-up demand in the games industry.

Light year

The company had delayed publication of its 2019 results in line with guidance from the UK's Financial Conduct Authority.

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Despite being a relatively light year for video game releases, revenue rose 30.2 per cent to €326.5 million, in line with what the company said last month it had expected to report for the year ended December 31st, 2019. Pretax profit was €40.9 million, almost 8 per cent higher year on year. Adjusted earnings before interest, depreciation and amortisation were €49.5 million.

The company had €82 million of funds available at the end of the year from cash balances and undrawn committed facilities.

Keywords made a number of investments in its platform throughout 2019, and strengthened its game development, marketing and audio services. Eight acquisitions included three in December for €11.2 million which saw the company buy machine translation technology company Kantan, marketing services company Ichi and audio recording studio Syllabes.

It also significantly expanded its facilities in Montreal, Katowice, Manila, Brighton, Mexico City, Tokyo, Sao Paulo and New Delhi, and established a new presence in Leamington Spa.

The company said trading began 2020 in line with expectations for the full year, with limited impact from Covid-19 in the first two months at Keywords’ five China-based studios.

There was increased demand for many of its services, Keywords said, with clients reappraising their production arrangements,

Like many companies of late, Keywords has moved towards a remote workforce, with some 5,500 people working from home. The company said it was in talks with clients to move more of its staff to these arrangements, which would cut the number of people in furlough, particularly among those involved in testing.

“Whilst we are seeing some operational disruption to the provision of our services due to the Covid-19 pandemic, with some of our service lines and locations affected more than others, the underlying drivers of growth across the video games market remain intact,” chief executive Andrew Day said.

“There will be some further challenges ahead, but we are well financed, with a global footprint, a unique position in a resilient market and a strong team to manage the business through these unprecedented times. We are, therefore, confident that the group is well placed to emerge in a robust position in order to deliver on the pent-up demand across its client base when the operating environment normalises.”