ZOO Digital Group plc (LON: ZOO), a world-leading provider of cloud-based localisation and digital media services to the global entertainment industry, today announces its unaudited financial results for the six months ended 30 September 2023 (“H1 FY24”).

Summary

Key Financials

• Revenues decreased by 58% to $21.4 million (H1 FY23: $51.4 million) primarily as a result of the Hollywood writers’ and actors’ strikes
• Gross profit decreased by 87% to $2.1 million (H1 FY23: $16.5 million)
• Adjusted LBITDA* of $7.1 million (H1 FY23: EBITDA of $7.3 million)
• Operating loss of $10.9 million (H1 FY23: $3.8 million operating profit)
• Completed in April 2023 an equity fundraise of £12.5 million ($15.5 million) for the proposed acquisition of a trusted partner in Japan
• Cash balance of $16.8 million at period end (H1 FY23: $10.8 million)

Operational Highlights

• Localisation revenues fell by 58%
• Media services revenue fell by 61%
• Freelancer network declined slightly to 11,745 (H1 FY23: 12,343)
• Strategic international investments in Korea and Turkey, and launch of Chennai facility post period, as ZOO continues to align with major customers’ growth plans
• Continuing development and integration of ZOOstudio with customer operations
• Leading standard of customer satisfaction maintained – retained sales KPI was 99.5%
• Post period, named APAC Netflix Preferred Fulfilment Partner of the year for outstanding results in this programme including an on-time delivery rate of 99.5%

Outlook and Post Period Events

• Resolution of writers’ and actors’ strikes in September and November respectively
• Following a subdued first half, commenced second half with a stronger order book from major customers
• Expect to deliver progressively stronger sequential performance in each of Q3 and Q4, with significant increase in sales in FY25
• Expect to achieve at least break-even at EBITDA level in Q4 and return to profitability in FY25 in line with current market expectations
• In regular dialogue with the vendor of the proposed target in Japan

*adjusted for share-based payments.

Stuart Green, CEO of ZOO Digital, commented:

“The year to date has been overshadowed by the first joint strike of Hollywood actors and writers in more than 60 years. This temporary disruption has had a significant impact across our sector and the wider media and entertainment industry, resulting in artificially low production volumes in the short-term. While this has had a significant impact on our financial performance, we have taken targeted measures to conserve cash while positioning the business to recover rapidly once orders return to more usual levels.

“As the streaming industry focuses increasingly on profitability, we are already seeing evidence that major buyers are relying on fewer vendors and prioritising those with end-to-end capacity and scale. This puts ZOO in a strong position to process higher volumes of work from customers over time, particularly as we make strategic investments in customers’ high-priority growth regions.

“With the resolution of the strikes, we look to the future with optimism and anticipate a phased return of orders in the second half, accelerating into FY25. We remain confident in the industry’s long-term structural growth drivers and our role as a trusted partner to many of the world’s largest entertainment companies.”

In the TV interview below CEO Stuart Green provides an overview of the 6 months to 30 September 2022 and an outlook for the group

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