Keywords Studios tipped to make less acquisitions

Dublin-based video game content provider Keywords Studios is expected to make fewer acquisitions this year but could well spend more on the purchases it does make.

Keywords Studios tipped to make less acquisitions

Dublin-based video game content provider Keywords Studios is expected to make fewer acquisitions this year but could well spend more on the purchases it does make.

The company - which provides design, sound and cultural localisation services for many of the world's top console game manufacturers including Capcom, Sony and Bethesda - is set to publish its 2018 annual results early next week.

Analysts are expecting a second acquisition announcement of the year to coincide with the figures.

Keywords made nine acquisitions last year for a combined €60m or so.

The company has guided for a €100m increase in annual revenues for 2018, to €250m and a 64% rise in pre-tax profit to just under €38m.

Market expectations are for 10% organic revenue growth, in line with broader industry growth.

"Keywords Studios acquired nine companies in 2018, for a combined net outlay of around €60m, in line with our forecasts, giving it a circa 5% share of the outsourced services market," said Goodbody analyst Patrick O'Donnell.

"With net debt of just €400,000 and in excess of €100m firepower, via a revolving credit facility, we expect management to address the acquisition landscape. We continue to model €60m of annual acquisitions into our valuation, given a fragmented market for outsourcers," said Mr O'Donnell.

Analysts expect Keywords to look for acquisitions in the software engineering and art areas, which could see fewer opportunities but at higher valuations.

The company's share price was up by over 8%.

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