Keywords shrugs off Covid-19 impact, sticks to full-year forecast

Keywords Studios, the Irish-headquartered but London-listed video gaming company, has said the Covid-19 crisis has had a minimal impact on its financial performance and that it expects to benefit from "pent up demand" from consumers once things return to normal.

The company, which has delayed publication of its 2019 results in line with guidance from the UK's Financial Conduct Authority, said it expects to report full-year revenues of €326 million, up 30 per cent on the prior year. It also forecasts an 8 per cent jump in pretax profits to €41 million and a 13 per cent rise in earnings before interest, taxes, depreciation and amortisation to €49.5 million.

Keywords said trading in 2020 started in line with market expectations for the full year, with only minimal impact from Covid-19 in the first two months, due principally to the short-term disruption in China that affected its five studios there. These operations have now returned to near full production.

The company says 4,500 of its workforce is now working remotely and that it is seeing demand outstrip its ability to fulfil it given capacity constraints.

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"Whilst we do expect disruption to the provision of our services due to the Covid-19 pandemic, we anticipate the underlying drivers of growth across the video games market to remain intact, whilst games companies also look to enhance their resilience across their production arrangements," said chief executive Andrew Day.

“The situation is changing rapidly. And it is difficult to foresee the impact on our clients and the further threats and opportunities that may await us. As such, the board does not believe it is prudent to provide guidance on the potential full-year outcome for full-year 2020 at this time,” he added.

Established in 1998, and now with 59 facilities in 21 countries, Keywords provides integrated art creation, marketing services, software engineering, testing, localisation, audio and customer care services across more than 50 languages and 16 games platforms.

Games companies

Keywords sells to 23 of the top 25 most prominent games companies, including Activision Blizzard, Electronic Arts, Microsoft and Ubisoft.

In an analyst note, Patrick O'Donnell of Goodbody said Keywords has the balance sheet and network to consolidate further.

“ Our view is it will strengthen its focus on the game’s development space as it expands its footprint,”he said.

Given the scale of its services by geography and service line, it is well positioned to serve that growing market demand for its services as this global lockdown eases and early indications are positive for its Chinese studios which are now back near to full production, added Mr O’Donnell.