ZOO Digital Group plc (AIM: ZOO), the leading provider of end-to-end (“E2E”) cloud-based localization and media services to the global entertainment industry, today announces its audited financial results for the year ended 31 March 2024.
SUMMARY
FY24 was an extremely challenging year for the film and television entertainment industry and all those businesses that operate in this wider ecosystem. ZOO was on a strong growth trajectory before the industry disruption, reaching over $90 million in sales in FY23. The significant decline in revenues and profits reported for FY24 is a direct result of the industry-wide hiatus in new productions.
Recent market research* and insights provided by ZOO’s customers are consistent and point to a gradual and extended period of recovery through to late 2025, at which point a return to former levels of industry output is expected. The structural dynamics continue to move in ZOO’s favour such that the Company remains well positioned for recovery, able to respond quickly to increased customer demand, leading to long-term growth.
HIGHLIGHTS
Key Financials
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Revenue decreased by 55% to $40.6 million (FY23: $90.3 million) due to the industry-wide disruption of 2023 and the hiatus in media production and orders that followed.
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Operating loss of $19.1 million (FY23: profit of $8.1 million).
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Reported loss before tax of $20.5 million (FY23: profit of $7.9 million).
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Net cash at year-end of $5.3 million (FY23: $11.8 million), being significantly higher than previous market expectations and which, together with the Company’s debt facilities, providing sufficient working capital for FY25.
Operational Highlights
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ZOO selected by major film and TV distributor as a primary vendor for dubbing and subtitling in FY24; orders now being received, and meaningful contribution expected from FY25.
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Media localisation revenues decreased by 52% in the year to $27.2 million (FY23: $56.6 million), as a direct result of the industry strikes.
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Media services revenues decreased by 63% to $11.9 million (FY23: $32.1 million), also because of the industry strikes and the associated lack of new content releases.
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Worldwide freelancer network grew by 4% to 11,952 (FY23: 11,467).
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Strategic progress in global growth initiative with further investments in India, Turkey and South Korea, in addition to launches in Spain and Italy.
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Opened new facility in Chennai providing a platform to expand capacity in India in support of the Company’s ‘follow-the-sun’ strategy.
Market Highlights
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Hollywood writers’ and actors’ strikes resolved in September and November 2023 respectively with gradual subsequent resumption in new productions.
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Total Hollywood content cash spend declined by 8% in 2023 due to the strikes, forecast to recover by 2025 to levels of the full year pre-strike period of 2022*.
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Media companies continue to increase focus on episodic programming, international content, and multiple monetisation models.
Current Trading and Outlook
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Improved trading in FY25Q1 with sales up 35% over the prior quarter.
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Cost reductions implemented in FY24 led to an EBITDA profit for FY25Q1.
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Major customers have not yet provided full order schedules for Q3; however, expect further revenue growth and an EBITDA profit in H1.
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On track to meet market expectations for the full year.
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Well positioned in new market environment to deliver long-term growth.
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A further update will be provided at the AGM on 26 September 2024.
* Research by market commentator MoffetNathanson
Stuart Green, CEO of ZOO, commented:
“It has been a year of unprecedented challenges for the entire film and television entertainment industry as the Hollywood writers and actors strikes brought new productions to a standstill. This has required difficult decisions to conserve cash while positioning the business for the market recovery that is in progress. Customer demand has improved recently as delayed 2023 productions have completed, with ZOO’s technology platforms, global reach and trusted reputation positioning us well as the recovery continues.
“We view the market disruption as a symptom of a sector undergoing structural change away from linear and towards streaming on demand. With this comes a preference for vendors that can deliver multi-platform, multilingual content across international markets. As one of the few end-to-end vendors with the scale and skillset required by major media companies, we believe that ZOO’s model is strategically aligned with the future direction of film and TV streaming. These structural dynamics of the industry continue to move in ZOO’s favour such that the Board remains optimistic for the long-term prosperity of the Group.”
For further enquiries please contact:
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ZOO Digital Group plc
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+44 114 241 3700
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Stuart Green – Chief Executive Officer
Phillip Blundell – Chief Finance Officer |
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Stifel (Nominated Adviser and Joint Broker)
Fred Walsh / Erik Anderson/ Ben Good
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+44 20 7710 7600
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Singer Capital Markets (Joint Broker)
Shaun Dobson / Asha Chotai
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+44 20 7496 3000
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Instinctif Partners
Matthew Smallwood / Joe Quinlan
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+44 20 7457 2020
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