LONDON (ShareCast) - (Sharecast News) - Keywords Studios posted a jump in full-year revenue but a decline in profit on Thursday as it announced the suspension of its final dividend due to the coronavirus pandemic.
In the year to the end of December 2019, group revenue rose 30.2% to €326.5m, driven by organic revenue growth of 15.5%, with particularly good performances in Game Development and Functional Testing, which delivered organic growth of 36.4% and 37.0% respectively.

Keywords said increased game playing due to Covid-19 isolation measures was driving continued demand for game development services. Trading in 2020 started in line with market expectations for the full year, it said, with only "limited impact" from the outbreak seen in the first two months at its five China-based studios.

Nevertheless, given the circumstances, the company said it would be "inappropriate" to recommend a final dividend. The group also said it would not be prudent to provide guidance on the potential outcome for FY20.

Chief executive Andrew Day said: "2019 was a year of strong growth as we continued to build our platform to become the 'go to' service provider to the video games industry which, in turn, enabled us to take advantage of the accelerating trend towards external development in the industry.

"Some of our service lines felt the effects in 2019 of a light games release schedule at the tail end of the existing console cycle. 2020 is expected to see stronger demand from a fuller release schedule as a result of the launch of a new generation of games consoles, in addition to the further development of new streaming platforms, content demands for virtual and augmented reality, and the underlying drivers of growth across the video games market."

Day said that while there has been some operational disruption to the provision of its services due to the pandemic, the underlying drivers of growth across the video games market remain intact.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Gaming is a rare ray of light in the current stock market gloom - spending looks set to spike as the world is increasingly confined to the sofa. As the leading provider of outsourced gaming services, contributing to the development of hundreds of games every year, Keywords should see a slice of the action.

"A decentralised model, with dozens of studios scattered around the globe, is naturally resilient to the current disruption. Teams are used to working with each other remotely and the company has quickly moved 75% of the workforce to work from home. The transition in some of the more commercially sensitive units is less straight forward though, and with demand for many services increasing already, the biggest question in the near term is whether Keywords will be able to service the extra business that's coming its way."

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