Keywords Studios Share Discussion Threads

[rivaldo] 22/9/2015 13:49

Good interview with the CEO:

Http ://www.proactiveinvestors.co.uk/companies/news/111020/keywords-studios-eyes-all-year-round-business-111020.html

"Keywords Studios eyes all-year-round business
13:01 22 Sep 2015

Typically, the summer months have been the peak period for the industry, as developers push for key release dates ahead of Christmas.

Keywords Studios (LON:KWS), which today revealed results in line with expectations, is working to become a less seasonally dependant business.

Typically, the summer months have been the peak period for the industry, as developers push for key release dates ahead of Christmas.

Huge peaks and troughs, however, are something Andrew Day, chief executive of Keywords Studios, said he is trying to avoid.

August and September have traditionally been the busiest months for video game service provider, with less work in the after-Christmas period.

“We’re seeing a slight flattening out of the peak so it’s less sharp but runs for more months,” Day said.

“We won’t see the big downturn around November and December because there won’t be a big peak in September.

“If the business continues to show this trading it’s much better than having peaks and troughs,” he added.

The reason for this levelling out, is the work on less seasonal sectors, including mobile games, Day said.

While blockbuster games such as Fable and Tomb Raider can take up to two months to translate and another three to test, mobile games are produced much quicker and updated with further content once released.

Looking ahead, Day is confident for the full-year, after reporting a strong first half to the year.

“Daily and weekly production on mobile games and then a raft of triple A games which are already in hand or coming into us shortly mean the pipeline is very strong,” he told Proactive.

Today, Keywords reported revenue in the first six months of 2015 rose 23% year-on-year on a pro forma basis, which strips out the contribution of companies acquired in the last 12 months.

Group revenue, including contributions from acquisitions, shot up 74% to €23.9mln from €13.7mln in the same period of 2014.

Its two most recent acquisitions, Kite and Liquid Development, have already begun to make an impact, Day said.

"The acquisition of Liquid Development in August this year has both provided additional in-house capacity and has also brought much greater flexibility in resourcing which will allow us to flex up and down with the demands of individual projects in much the same way that we do in our other service lines,” he added.

Meanwhile, Mexico City-based audio recording and localisation group Kite Team, another acquisition made this year, was bought to allow the company to take on work that it had been outsourcing to other providers.

Broker Numis Securities said: “We believe that acquisitions have been a significant source of value creation for the group.”

Adjusted profit before tax for the period- climbed 65% to €2.2mln from €1.3mln, while statutory profit before tax soared to €1.6mln from €0.04mln.

Numis added that the strong profit improvement was “somewhat ahead of our expectations,” but has kept its pre-tax profit forecast of around €7.6ln unchanged.

The interim dividend has been hiked to 0.40p from 0.36p.

“We believe it’s right to pay a dividend because it’s a good discipline, and while the business is growing as it is, we would like to think we can continue this progressive dividend policy and raise the payout year on year,” Day said."

[mg1982] 22/9/2015 11:09

The interesting thing is that if Numis is already increasing their target to 230p - up 15% from their previous 200p target, they must be feeling confident that the company will go on to beat expectations as the second half is usually stronger.

Any pullback will result in top ups - im sure not just from me!

[rivaldo] 22/9/2015 10:53

Cheers for the info MG82 - here's a link to Numis' 230p target:

[soupdragon55] 22/9/2015 10:18

Watching in the background, pleased with the results. Appears to be tightly held as it's always difficult to buy in any volume. Looks good for H2 over the coming months.

[saucepan] 22/9/2015 10:10

The share price is gaining some traction now; perhaps the Numis recommendation?

Another thing perhaps worth pointing out - only four of us have commented on today's results. That suggests to me KWS is still largely off the private investor radar.

[the stigologist] 22/9/2015 10:09

Just a warning for anybody who gets taken in by rivaldo's style of subtle ramping/deramping/talking his own book. I have just exposed him for being either wilfully stupid or an outright liar on the VENN thread.

[mg1982] 22/9/2015 10:05

Numis say to buy and have a 230p target

[saucepan] 22/9/2015 09:50

Thanks, MG1982.

[mg1982] 22/9/2015 09:39

Presentation is now available:

hxxp://brrmedia.co.uk/event/140318?popup=true

listening to it now

[mg1982] 22/9/2015 09:03

NORTHLAND CAPITAL PARTNERS VIEW: Keywords’ buy and build strategy means that financial statements can be a little opaque but the momentum in the business remains strong. The acquisitions have increased the breadth and depth of Keywords’ offering and enables it to provide publishers with a comprehensive offering. This represents a clear competitive advantage in a highly fragmented market. The different dynamics of the different service offerings also helps to smooth some lumpiness. That said, the business remains H2 weighted but we are through the peak summer trading months. Shares are trading on 19.2x FY15 and 14.9x FY16.

[mg1982] 22/9/2015 08:33

OK we are ready to lift off - 2 x 50k buys gone through.

I was particularly impressed with the pro-forma revenue increase of 23%

I think there is clear scope to beat expectations as their 2nd half is usually stronger.

LT hold for me now

GLA

[rivaldo] 22/9/2015 07:49

Indeed, very confident stuff. It seems the industry and the company are now in a definite upcycle.

H2 results will be even better too given the seasonality.

Happy to stay with KWS as a long-term outperformer for some time to come methinks.

[saucepan] 22/9/2015 07:40

Delighted with the results - and what a breath of fresh air they are in their writing style and clarity: which I think speaks volumes for the Company. No spin, everything just stated as it is.

Yes, I noted that little nugget about Keywords being involved in cutting edge virtual reality gaming developments.

It also sounds as if Keywords is planning further exciting acquisitions which will strengthen its market position and broaden its services even more. Plenty of news to look forward to, therefore, which will surely drive the share price, too!

We are continuing to review a number of interesting acquisition opportunities that could further extend our service offering and operating territories.

[lanzarote666] 22/9/2015 07:32

Results out. Another strong performance.

Sales up 23%, PBT up 65%, EPS up 63%, Dividend up 11%.

Art Services working to capacity even after taking on 100 new staff.

I particularly like this paragraph in the outlook statement;

'The continued proliferation of content in the video games market in terms of the growth in size of individual games; the increase in the richness of the content (graphic and audio quality); and quantity of games, particularly in the mobile games arena; and the move to games as a service with its inherent, perpetual content additions will continue to drive growth opportunities for our business. This will be supplemented by continued innovations in games platforms and peripherals. Virtual reality in particular is starting to create work for us and we have been at the leading edge of this innovation in our Art services businesses as well as our testing operations.'

[saucepan] 21/9/2015 12:39

Worth taking note of the longer term chart: first blue sky today since IPO. No overhead resistance now.

[wilmslowwhite] 21/9/2015 12:28

About time this one picked up a bit of momentum.

There has been too many times when I have almost lost patience but it now looks like that will be rewarded.

[lanzarote666] 21/9/2015 08:26

...ahead of half year announcement tomorrow, 22 September.

[rivaldo] 21/9/2015 08:20

Nice start to the week....

[walter walcarpets] 20/9/2015 16:28

just to add, tipped by Anna Croze in Moneyweek, a well known and talented stockpicker.

[lanzarote666] 19/9/2015 08:06

From what I remember reading

- global games market bigger than film industry
- important to outsource to capture wider market
- fragmented USD600m market. KWS only have 5%
- motivated workforce, but flexible as most are freelance
- acquisition strategy going well
- Microsoft had 14 localisation services, now only 2. KWS is one of them retained.
- Attractively valued given forecast growth

[rivaldo] 19/9/2015 00:05

I'd be grateful for a copy too cfro!

[cfro] 18/9/2015 18:26

I'll send the article through to you tomorrow Saucy.

[saucepan] 18/9/2015 18:16

Thanks for that info, cfro. It probably explains today's buying, and perhaps it will follow through to Monday, with weekend readership.

Does anyone have the gist of the tip?

[cfro] 18/9/2015 18:12

Tipped today in Moneyweek.

[saucepan] 18/9/2015 15:57

The chart is now looking beautifully set for breakout - from a substantial consolidation pattern that has 'cup and handle' characteristics (period May 2014 to the present).

Roll on Tuesday!!