KWS is consolidating outsourced service providers at a rapid pace. Its scale advantage and high barriers to entry provides it with an incredible moat resulting in a >1500% return over a decade.
Hi, terrific job you did with all your thesis. I've just discovered you (I started learning about investing short ago). Thanks for sharing your deep research for free.
You might want to analyze RWS Holdings. Similar business (translation, linguistic services), based in UK, also an acquirer, but more diversified areas (outside gaming), cheaper valuation (IMHO, but I am not still good at that).
I am a freelance translator and I've worked for both of them. I know the business from inside and neural machine translation is gonna be a game-changer (lower rates for us freelancers, probably higher profits for these agencies).
Great article, insightful! On the TAM would be great to know the breakdown by contient? SEA and LATAM sems to be the fastest growing regions (given the number of app downloads and active user etc) whereas KS focus is on Europe and US. Is this a future headwind for KS?
KWS had studios all over the world, including LatAm and SEA. In a sense, it does not really matter where the game is played/sold. The gaming companies outsource work to KWS, so there is no as much of a direct connection between the location of the players and whether KWS gets contracted. But to answer your question directly, the breakdown can be found on page 105 of the Annual Report (comments don't allow screenshots):
Thanks for taking time out to reply. I appreciate it.
I asked just to see if there was a link given the recent regulatory ban in China on the gaming market. And one of first growing game in SEA and LATAM is freefire owned by SEA limited, not sure if they even outsource, but just curious if they did they would tend to use a local supplier. A cultural thing with most companies in SEA I’ve found. PS I’m a fan of KS just trying to find reasons not to invest!
Hi, terrific job you did with all your thesis. I've just discovered you (I started learning about investing short ago). Thanks for sharing your deep research for free.
You might want to analyze RWS Holdings. Similar business (translation, linguistic services), based in UK, also an acquirer, but more diversified areas (outside gaming), cheaper valuation (IMHO, but I am not still good at that).
I am a freelance translator and I've worked for both of them. I know the business from inside and neural machine translation is gonna be a game-changer (lower rates for us freelancers, probably higher profits for these agencies).
Kind Regards,
Great article, insightful! On the TAM would be great to know the breakdown by contient? SEA and LATAM sems to be the fastest growing regions (given the number of app downloads and active user etc) whereas KS focus is on Europe and US. Is this a future headwind for KS?
KWS had studios all over the world, including LatAm and SEA. In a sense, it does not really matter where the game is played/sold. The gaming companies outsource work to KWS, so there is no as much of a direct connection between the location of the players and whether KWS gets contracted. But to answer your question directly, the breakdown can be found on page 105 of the Annual Report (comments don't allow screenshots):
https://www.keywordsstudios.com/content/uploads/2022/04/38183-KW-AR21-WEB.pdf
Thanks for taking time out to reply. I appreciate it.
I asked just to see if there was a link given the recent regulatory ban in China on the gaming market. And one of first growing game in SEA and LATAM is freefire owned by SEA limited, not sure if they even outsource, but just curious if they did they would tend to use a local supplier. A cultural thing with most companies in SEA I’ve found. PS I’m a fan of KS just trying to find reasons not to invest!
The management transition + valuation are my reasons not to. Subject to change as they prove themselves and price changes.