ZOO Digital Group plc has swung from an operating profit of $8.1 million in 2023 to losses of $19.1m in 2024.
The Sheffield-headquartered firm, which featured on our MediaTech 50 innovation ranking earlier this year, blamed a hiatus in new productions across the film and television industry as its revenue dropped by 55% to $40.6m (FY23: $90.3m) in the 12 months to 31st March 2024.
The slowdown was a result of Hollywood writers’ and actors’ strikes, resolved in September and November 2023 respectively.
ZOO provides cloud software for subtitling, dubbing and media localisation. It has additional bases in Los Angeles, London and Dubai.
Net cash at year-end was $5.3m (FY23: $11.8m), significantly higher than previous market expectations. It added that, together with the company’s debt facilities, this would provide sufficient working capital for FY25.
It said it expected growth to return in FY25, with sales up 35% in FY25 Q1, compared with the prior quarter. Cost reductions implemented in FY24 led to an EBITDA profit for the quarter, it added.
It also pointed to strategic growth investments in India – it has opened a new facility in Chennai – Turkey and South Korea, in addition to launches in Spain and Italy.
“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,” said Stuart Green, CEO of ZOO.
“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.”