Zoo Digital Group (ZOO ), a provider of cloud-based localisation and media services to the global entertainment industry, has revealed significant growth across the board in its FY22 final results for the year ended 31 March 2022.
The company reported strong revenue growth of 78% to US$70.4m, while operating profit more than tripled to US$3.1m (FY21: US$1m), and pretax profit grew to US$1.1m from a US$3.6m loss the previous year. Adjusted EBIDTA grew to US$8.3m (FY21: US$4.5m) and its EBITDA margin increased to 11.8%.
The company ended the year with net cash of US$6.0m compared to US$2.9 in FY21, and aditionally completed a US$10.1m placing in April 2021 to aid in its global expansion efforts, particularly in South Korea, Turkey, and India.
The company converted its 7.5% of unsecured convertible loan stock into 5,273,959 new shares, removing the majority of borrowings and associated interest payments from its balance sheet.
Operational Highlights
Zoo Digital furthered deployment of its ZOOStudio smart platform, including expanded adoption by an existing major media client and the signing of a new major multinational client. ZOO also introduced a new mastering services division where it initiated a significant engagement with a leading media customer.
ZOO's media services revenues grew 51%, driven by regional launches of streaming platforms and catalogue content work. Related to this, media localisation grew 108% as demand for new production work rebounded in H2, and dubbing revenue increased 170% HoH. ZOO's network of freelancers also grew 20% to 11,208.
Customer satisfaction remained high with a retained sales key performance indicator of 97.6%.
Stuart Green, CEO, summarised the results: "These results reflect an outstanding year of operational delivery and growth across the whole business. ZOO is taking market share in a growing market, benefitting from our cloud-based platforms, extensive freelancer network and embedded client relationships. With our global scale and end-to-end offering, we are one of the few vendors capable of meeting the requirements of major media companies to take their content to international audiences."
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The streaming market continues to grow with no apparent end in sight, with cord cutting on the rise as well. Global spending on streaming services is forecast to reach $200 billion by 2025 according to Morgan Stanley. ZOO has done an excellent job capitalising on growth in the segment, with its ZOOStudio, mastering, dubbing, and localisation services signing up major customers, and expanding offerings.
The company is also expanding geographically in the developing world where streaming is still in its initial boom phase. Three direct-to-consumer (DTC) streaming platforms from major US companies have recently begun their international rollouts, and ZOO expects its investments in multilingual dubbing capability and capacity to result in strong growth in FY23. ZOOStudio has also been a success, and the company is currently in negotiations with multiple major streaming operators.
ZOO is also investing in innovation, with ZOO Digital Labs headcount increasing 33% during the fiscal year, accelerating product development. This, together with a 20% increase in independent freelancers, provides the company with flexibility and capacity to scale quickly.
CEO Stuart Green expects H1 sales to exceed the H2 of the prior year, which was in turn 60% ahead of the first half of 2022. He expanded: "The record levels of investment across the entertainment industry in new original content is creating unprecedented demand for localisation and media services. For some services and languages, this is already exposing shortages in capacity that are prompting buyers to place orders with extended notice periods. We expect that this will result in improving visibility of revenues during FY23."
Based on the results shown today, it is highly likely this prediction will materialise. Investors welcomed today's results with the shares up 7.58% so far today. The stock has been mostly flat in the last 12 months and YTD, but has risen more than 7-fold over the last 5 years.
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