Keywords Studios — Conference Presentation (November 2020)
30 slides from Keywords Studios's conference presentation, November 2020
Slide 1: Andrew Day, CEO and Jon Hauck, CFO – November 2020
Andrew Day, CEO Jon Hauck, CFO November 2020
Slide 2: Disclaimer
DISCLAIMER: This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this presentation. Due to inherent uncertainties, including both economic and business risk
Slide 3: To become the go-to provider for technical and creative services to games
To become the ‘go to’ provider for technical and creative services to the video games industry • a unique end-to-end global services platform in a highly fragmented market • relationships with the top games companies who are increasingly outsourcing; in a more structured way • unrivalled scale and f
Slide 4: Game development cycle
Art Services Game Development Game development services including full game development, co- The creation of video game graphical art, including development, porting of games from one platform to another concept art, 2D and 3D art asset production & including remastering, tool development and consul
Slide 5: Fast growing games industry – c. 9% CAGR
• Fast growing games industry – c. 9% CAGR $217.9bn +9.4% CAGR • Content demand remains strong: Upcoming new console launches, streaming platform $174.9bn developments and increased game play $146.2bn $138.8bn • Trend towards outsourcing as the industry deals with an increasingly complex environment
Slide 6: Increasingly integrated with game development pipelines
• Increasingly integrated with game development pipelines • Increasing numbers of client specific, dedicated operations • Highly attached to game titles & client service infrastructures • Moving beyond game production budgets to marketing spend Art & Marketing Services Game Development Audio Service
Slide 7: 8,002 people in over 50 languages, 60 studios, 21 countries
Art & Marketing Services Game Development Audio Services Functional Testing Localization Localization Testing Player Support An average of 8,002 people in H1 2020, working in over 50 languages, more than 60 studios, in 21 countries, on 4 continents 7
Slide 8: We work with 23 of the top 25 games companies
* Newzoo, Top 25 Games Companies by Revenue, Q4 2019 and Sensor Tower, Top Apps Games publishers, Q2 2019 We work with 23 of the top 25 games companies by revenue and 10 of the top 10 mobile games publishers by revenue.* 8
Slide 9: Value creating acquisitions since IPO
€116m €347m Art & Marketing Services 11 €350m Average organic Game Development growth +15% Audio Services €300m 9 9 Functional Testing €250m €215m Localization 7 Localization Testing €200m Player Support Number of acquisitions €150m 4 4 3 €100m €50m €16m - 2013 revenue Acquired revenue Organic reven
Slide 10: Building our platform
Building our platform Organic growth Focused M&A • Continue to expand our end-to-end global services • Particular focus on Marketing Services and Game platform Development to establish them as go to providers • Enhancing our service lines through further investment in • More selective acquisitions t
Slide 11: H1 2020 highlights
H1 2020 highlights iP Keywords MM stubios Support | Deliver | Evolve
Slide 12: Resilient business model despite COVID-19 constraints
H1 impact: • January and February was in line with expectations resilient business model • Demand for most of our services has remained strong throughout the operational disruption despite • From May the vast majority of our business has been operated in a work from home model constraints under COVI
Slide 13: H1 2020 revenue and Adjusted EBITDA growth
+ 13.3% + 19.3% Reported growth in H1 2020 Increase in H1 Adjusted EBITDA to €173.5m (H1 2019: €153.2m) to €30.8m (H1 2019: €25.8m) 17.8% + 8.0% Adjusted EBITDA margin Organic Revenue growth (H1 2019: 17.3%) increased by 0.9% pts (H1 2019: 16.9%) Definitions of the performance measures are provided
Slide 14: €110m raised in May placing; acquisitions since placing
€110m raised in May placing 3 Acquisitions since placing • Marketing services: Maverick - consideration of up to £3.6m • Game development: Coconut Lizard – consideration of up to £2m Heavy Iron – consideration of up to US$13.3m 14
Slide 15: Resilient business model and robust balance sheet
Resilient business model Robust balance sheet • Cash generative business with an adjusted free • Recent placing provided net proceeds of ~€110m to cash flow conversion of 50% in H1 (H1 2019: 30%) deploy on M&A programme • Continued strong demand for the Group’s services • Revolving Credit Facility (
Slide 16: H2 2020 outlook
H2 2020 outlook iP Keywords MM stubios Support | Deliver | Evolve
Slide 17: Outlook by service line
% of Total Organic revenue growth growth Outlook 15% Demand for all our services in this area has been building and we expect to maintain 18.5% 7.9% good levels of activity through to the end of the year complemented by acquisitions 22% COVID-19 is resulting in some delays in getting new projects st
Slide 18: Positive start to H2
Trading in the second half has been good with continued growth across all service lines, despite Positive start to H2 ongoing headwinds from the disruption caused by COVID-19, trading against stronger comparators and possibility of continued USD weakness Maintain remote working model in Maintain eff
Slide 19: Q&A
Q&A % n Hauck Andrew Day Jo =P Keywords WB studios
Slide 20: Appendices
Appendices iP Keywords MM stubios Support | Deliver | Evolve
Slide 21: H1 2020 progress by service line
% of Total Organic H1 2020 progress revenue growth growth 15% • Good revenue performance despite some COVID-19 disruption 18.5% 7.9% • Early stages of the COVID-19 affected our five studios in China and some earlier stage Marketing services held back as marketing plans were reassessed • Our largest
Slide 22: H1 2020 progress by service line (continued)
% of Total Organic H1 2020 progress revenue growth growth • Robust performance given the operational constraints created by the COVID-19 21% lockdown measures 12.6% 10.7% • While constrained at the beginning of the lockdown, in consultation with our clients, transitioned quickly to move the majority
Slide 23: H1 2020 income statement summary
Definitions of the performance measures are provided in the Alternative performance measures chart in the Appendix H1 2020 H1 2019 % change €m €m Revenue 173.5 153.2 13.3% • Reported revenue up 13.3%, Organic revenue up 8.0% Organic revenue growth 8.0% 17.3% • Adjusted EBITDA up 19.3% with margin im
Slide 24: Free cash flow
Definitions of the performance measures are provided in the Alternative performance measures chart in the Appendix H1 2020 H1 2019 Change • €11.7m increase in free cash flow year on year driven by: €m €m €m Adjusted EBITDA 30.8 25.8 5.0 • Increase in Adjusted EBITDA of €5.0m MMTC and VGTR (4.3) (7.0
Slide 25: Net cash movement and acquisition spend
Definitions of the performance measures are provided in the Alternative performance measures chart in the Appendix • Acquisition spend of €2.5m: H1 2020 H1 2019 Change • €1.3m on acquisitions in the first half following the resumption €m €m €m of M&A programme in May - further cash spend of c. €6m i
Slide 26: Revenue, Adjusted EBITDA and Adjusted PBT growth 2016-2019
Definitions of the performance measures are provided in the Alternative performance measures chart in the Appendix * Adjusted EBITDA Pre-IFRS 16 Organic Revenue growth 2016 - H1 2020 Revenue – 50% CAGR 2016-2019 25 350 300 20 % €m 250 15 200 10 150 100 5 50 0 0 2016 2017 2018 2019 H1 20 2016 2017 20
Slide 27: Revenue by service line and customer concentration
Definitions of the performance measures are provided in the Alternative performance measures chart in the Appendix No of clients using 3 or more Limited customer concentration 150 40% 2 services 124 99 108 30% 100 93 64 20% 1 50 10% 0 0% 0 2016 2017 2018 2019 H1 20 2016 2017 2018 2019 H1 20 % Revenu
Slide 28: Scale, global presence, knowledge and financial strength
Scale - Large clients need large suppliers Global presence – proximity to talent and clients, multiple time zones Knowledge and expertise – Breadth and depth of capability Technology - Regular investment, security Scalable model – flexibility to meet clients needs Acquisition track recor
Slide 29: Acquisitions by year and service line
* Includes all cash, deferred and equity portions of consideration ** 48% subsidiary interest Year Art Services Game Audio Functional Localization Localization Player Support Total Cost* Development Testing Testing 2014 Lakshya Digital Liquid Violet Babel Media Babel Media Babel Media €19.0m Binari
Slide 30: Alternative performance measures
The Group reports a number of alternative performance measures (APMs) to present the financial performance of the business which are not GAAP measures as defined by International Financial Reporting Standards (IFRS). The Directors believe these measures provide valuable additional information for th
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