13th Mar 2024 10:29
(Alliance News) - Keywords Studios PLC on Wednesday reported a revenue hike for 2023, despite the video games industry's growing convergence with the media and entertainment sector exposing it to Hollywood strikes.
Keywords shares jumped 14% to 1,558.00 pence each in London on Wednesday morning.
The provider of technical and creative services for video game production said revenue last year rose 13% to EUR780.4 million from EUR690.7 million. The firm's customers include Electronics Arts Inc, Microsoft Corp and France-based Ubisoft Entertainment SA.
However, pretax profit declined 49% to EUR35.0 million from EUR68.0 million. Administrative expenses were 28% higher at EUR252.3 million. Adjusted pretax profit, which strips out exceptional costs, was 2.4% higher at EUR114.7 million.
Revenue rose 17% at constant currency. Organic growth at constant currency, excluding the hit from entertainment worker strikes in the US and foreign exchange, was 9%.
Keywords said: "Whilst Keywords' primary market is video gaming, it has an increasing exposure to the broader media and entertainment industry, with the crossover between the two industries growing. Both our Globalize and Engage Divisions generate revenues from the media and entertainment industry, with a large proportion of this in post-production audio services and marketing in the US. In May, the Writers Guild of America union commenced strike action following the failure of union negotiations around working conditions, residuals and AI usage."
Keywords noted the Screen Actors Guild-American Federation of Television & Radio Artists union then began striking in mid-July, "which meant a near complete stoppage of content generation in Hollywood".
The company said this led to around EUR20 million worth of lost revenue in the second half of its financial year.
Chief Executive Officer Bertrand Bodson said: "In what was a difficult year for the industry, we delivered resilient performance in 2023 and continued to extend our market leadership position, reflecting our role as a diversified enabler of the industry.
"We made considerable progress against our strategic objectives and delivered a record year of M&A, bringing greater exposure to higher growth and margin Create services, and have an extensive pipeline of acquisitions in 2024. We will continue to successfully navigate the current market conditions and are excited by the opportunities that lie ahead as we deliver against our plans and become a +EUR1 billion revenue business in the coming years."
Keywords lifted its final dividend by 10% to 1.76 pence per share from 1.60p. Its total dividend was also 10% higher at 2.61p from 2.37p.
Looking ahead it added: "We expect to deliver strong revenue and profit growth and further extend our market leadership position in 2024."
Keywords said it has an "extensive" M&A pipeline of opportunities in 2024. Last year was already a "record year for M&A", which saw it fork out a maximum of EUR225 million on "five high-quality acquisitions".
Shore Capital Markets said the company's revenue growth was even more admirable given its exposure to Hollywood strikes.
Shore analyst Katie Cousins said: "The current share price is not reflective of the high-quality characteristic reflecting Keywords, in our view. We believe concerns around industry layoffs and rapidly developing AI continue to offset the upside, although in our view both these issues are potential net benefits for the group."
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Keywords Studios Plc