Keywords Studios (KWS) H1 2024 earnings summary

Executive summary

• Revenue grew 6.6% year-over-year to $440.4m, driven by acquisitions, while organic revenue declined 1.9% due to project cancellations and delays in Create and lower activity in Globalize.

• Adjusted EBITDA fell 6.6% to $77.8m, with margin down to 17.7% from 20.2% as cost savings from restructuring are expected to be realized in H2.

• Operating loss of $18.7m (vs. $31.7m profit in H1 2023) was impacted by $47m in one-off costs related to the EQT acquisition and Globalize restructuring.

• Shareholders approved a £2.1bn cash acquisition by EQT at £24.50/share, with delisting expected in October 2024.

Financial highlights

• Group revenue: $440.4m (H1 2023: $413.3m), up 6.6%.

• Adjusted operating profit: $57.4m (H1 2023: $63.5m), margin 13.0% (H1 2023: 15.4%).

• EBITDA: $15.4m (H1 2023: $65.3m), impacted by $47m in exceptional items.

• Adjusted earnings per share: 49.77c (H1 2023: 59.92c); basic loss per share: (38.82)c (H1 2023: 19.93c).

• Net debt: $102.4m (Dec 2023: $75m), with undrawn facilities of $268m.

Outlook and guidance

• Confident in delivering overall revenue growth in 2024, with H2 expected to be stronger as industry content creation recovers.

• Margins expected to improve in H2 as cost savings and higher volumes materialize.

• Active M&A pipeline and continued focus on cost management.