LONDON (ShareCast) - (Sharecast News) - Video game technical and creative service provider Keywords Studios reported a strong performance in its final results on Wednesday, reflecting healthy underlying demand.
The AIM-traded company said group revenue increased 34.8% in the year ended 31 December, to €690.7m.

It said the growth was driven by sustained demand for high-quality content and a continuing trend towards external service provision.

Organic revenue growth was also strong, increasing by 21.8%, with good contributions across all service lines.

Adjusted profit before tax rose 30.2% to €112.0m, with an adjusted profit before tax margin of 16.2%, in line with guidance.

However, foreign exchange benefits were offset by the cost of the transition out of Russia and post-Covid-19 costs.

The adjusted cash conversion rate was 100.1%, lower than 2021's figure of 107.3%, but still ahead of guidance.

Adjusted free cash flow totalled €112.1m, resulting in net cash of €81.8m, despite €116.4m net cash being spend on acquisitions.

Keywords Studios announced a final dividend of 1.6p per share, an increase of 10% compared to the 2021 final distribution of 1.45p.

That took the total dividend for 2022 to 2.37p, which was also an increase of 10% over 2021.

Looking ahead, Keywords said it expected robust demand for content generation, with a diversified client base, geographical reach, and skew towards high-quality games positioning them well to navigate volatility in the scheduling of certain projects.

Keywords Studios said it was also well-placed to expand its market share, with the potential for the current industry backdrop to accelerate the trend to external service provision.

The company said it was well-funded to continue delivering on its value-accretive acquisition strategy, with a healthy number of merger and acquisition opportunities in the pipeline.

Trading in the current year had started well, in line with the company's outlook for the year.

"We delivered an excellent performance in 2022, demonstrating the strength of our platform and the dedication and hard work of the 12,000 people within Keywords," said chief executive officer Bertrand Bodson.

"Whilst mindful of the increasing uncertainty within the broader industry and potential for foreign exchange movements, we are excited about the opportunity ahead with our business model, highly diversified client base, adoption of technology and geographic reach.

"We are increasingly well positioned to support our clients in generating engaging content for their leading franchises and trading has started well, in line with our expectations for the year."

Bodson said the firm expected to continue to see robust demand for content generation as clients looked to "capture the imagination" of the world's three billion gamers.

"We continue to have a healthy pipeline of acquisition opportunities to broaden our capabilities, geographic footprint and service offerings.

"This, together with our organic growth, will enable us to continue to grow market share, and build upon our position as the partner of choice for the global video games industry, and beyond."

At 1225 GMT, shares in Keywords Studios were down 8.61% at 2,652p.

Reporting by Josh White for Sharecast.com.

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