FY17 was a transformative year for Keywords Studios Plc (LON:KWS) with revenues growing by 57% and EPS by 52%. Like-for-like revenue growth accelerated to 15.1% (we estimate 18% stripping out recent acquisitions) highlighting the company’s strengthened position in the supply chain. With an expanded debt facility, we believe the company potentially has the acquisition firepower to more than double its EPS run rate exiting FY18, and see no obvious reason why the cycle should not repeat in FY19. The shares price in further strong progress, but nothing is new there, and sustained execution should continue to drive strong returns.
15.1% like-for-like growth, 52% growth in EPS
FY17 was a transformative year for Keywords with revenues growing by 57% to €151.4m (Edison €150.5m). Like-for-like (l-f-l) growth of 15.1% highlights the strength of the company’s proposition, within a games industry that was estimated by Newzoo to have grown by 10.7% over the same period. Stripping out recent acquisitions, we believe that l-f-l growth was closer to 18%. Adjusted PBT grew by 53% to €23.0m (Edison €22.5m) and adjusted EPS nearly kept up, growing by 53% to 29.9c (Edison 29c), highlighting the company’s ability to make accretive acquisitions. Year-end net cash of €11.1m and a new €75m facility (with the potential to extend to €105m) give the company plenty of firepower to continue with its acquisition strategy.
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