Keywords Studios (KWS) Trading Update summary

Trading performance and outlook

• Revenue growth for 2024 is expected to be positive, with performance weighted towards the second half as industry content creation trends recover.

• H1 saw deferrals and cancellations of large projects, leading to capacity gaps and a reported revenue growth of around 7%, with organic growth at approximately -2%.

• Stronger client spend and recovery from US strikes are anticipated in H2, but further delays and project scope reductions are expected to temper organic growth.

• Adjusted operating margins in H1 are expected to be around 13%, with improvement in H2 as cost-saving measures and increased volumes take effect.

• The board remains confident in outperforming the market and delivering on medium-term guidance beyond 2024.

Cost management and operational actions

• A broad range of cost actions have been implemented, including restructuring the Globalize division's go-to-market approach.

• Timing of cost-saving programs and reduced volumes impacted H1 margins, but H2 margins are expected to improve.

M&A activity and strategic initiatives

• A strong pipeline of M&A opportunities exists, with several letters of intent signed with high-quality businesses.

• Recent acquisitions include a small game development studio in Australia and a creative design studio in the UK.

• Around €100 million is expected to be committed to value-accretive M&A in 2024, in line with medium-term guidance.