Keywords expects better second half as video game sector picks up

Video game developer Keywords Studios said it expects a better performance in the second half of the year, as organic growth for the first half after came in lower than expected amid “mixed markets”.

In its half year results to 30 June 2024, Keywords posted revenue of $440m (£334m), up seven per cent year on year, following recent acquisitions. Organically, however, revenue fell two per cent.

Adjusted operating profit dropped to $57m (£43m), down from $64m (£49m) in the first half of 2023, which the company said was due to the “moderation of growth, and the timing of the realisation of savings from cost programmes underway.”

Net debt notched up to $102m (£77.5m) from $75m (£57m) the year before, mainly because of deferred consideration payments.

But Keywords, which recently accepted a take-private bid, said it expects its performance to improve in the second half as the sluggish pace of content creation that is currently dampening industry spend starts to accelerate. 

Chief executive of Keywords Studios, Bertrand Bodson, said: “Keywords delivered solid growth in the first half despite the current mixed market backdrop. This has resulted in lower activity levels across the industry, as clients recalibrated their operations and game portfolios, and meant that our organic growth was lower than originally anticipated, as flagged in July.

“We continued to make good progress against our strategy, enhancing our leading position in the market whilst expanding the use of technology within our business and on behalf of clients. We have begun to see the results of actions we have taken on costs and expect to see a pick-up in activity levels as we move into 2025.”

In July, the Dublin-based firm accepted an offer of more than £2bn for its takeover by private equity firm EQT, which had previously made four unsolicited proposals for Keywords. Shareholders accepted the offer last month and regulators have given their approval.

Bodson added: “The Transaction represents an exciting new chapter for the business as we continue our journey.”

Keywords has grown from having  €16m (£13.5m) upon IPO to become one of the biggest companies on London’s junior AIM market by providing services to some of the world’s biggest video games, including Assassin’s Creed and Fortnite.