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Welcome to the Big Picture

 

Our quarterly investor newsletter featuring the latest news from ZOO and updates from across the global entertainment industry.

 

Click below to watch a summary of our recent interim results

Video Update

Interim Results FY24:

 

ZOO well positioned following short-term industry hiatus; orders returning from H2 FY24 onwards

In November, we released interim results for the six months ended 30 September 2023 (H1 FY24).


The period was impacted by industry-wide disruption from Hollywood actors’ and writers’ strikes as well as strategic reviews by customers. This caused a temporary reduction in sales of $21.4m (H1 FY23: $51.4m) and resulted in a LBITDA of $7.1 million (H1 FY23: EBITDA of $7.3 million).

 

Operationally, ZOO maintained our leading standard of customer satisfaction with retained sales of 99.5% and post period, we were named APAC Netflix Preferred Fulfilment Partner of the year.


With the strikes now resolved, we have commenced the second half with a stronger order book from major customers and expect to deliver progressively improved performance in each of Q3 and Q4 with significant increase in sales in FY25. 

 

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."

 

Interim results for the six months ended 30 September 2023

Interim results presentation recording / slides

 

 

Analyst Note

Analyst Note: Progressive Equity Research

H1 24 – positive news, short and long term

 

quote-marks-2

We welcome the news earlier this month that the US actors’ strike has ended. This suggests that revenues could return to historical levels in the relatively near term, and that ZOO was correct to maintain capacity and capability to deliver during the recent hiatus. Subdued workflows have led to a significant EBITDA loss in H1 on revenue of $21m; but given the sequential month-on-month improvement expected, we maintain revenue and EBITDA estimates for FY24E. In addition, we view recent customer wins for ZOOstudio as a major endorsement, with significant revenue potential as orders ramp up.


Read the full research note, including an in-depth focus
on the opportunity for Artificial Intelligence (AI) in ZOO’s business and marketplace. 


Progressive Equity research

 

 

Hollywood

INDUSTRY NEWS

Hollywood strikes come to an end

 

The first simultaneous strike of US writers and actors in more than 60 years brought film and TV productions to a halt for six months. The temporary disruption has had a significant impact across the sector and, subsequently, ZOO’s pipeline of work. 

 

The writers’ strike reach agreement on pay, employment terms and AI 

 

The leadership of the Writers' Guild of America, which represents 11,500 screenwriters, voted on 27 September 2023 to end its strike following resolution of the labour dispute, thereby paving the way for resumption of preparation of new scripts.


The agreement promises increased compensation for the writers and adds new minimum staffing requirements for TV writers’ rooms based on their episode count. The deal also bars the use of AI for writing or rewriting literary material and forbids studios from enforcing writers to use it.

 

Hollywood actors reach terms to end the longest strike in its union’s history

 
This was followed on 9 November 2023 when the leadership of the Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA) agreed contract terms for the next three-year period for its 160,000 members. 


The deal, valued at more than $1 billion, includes increases in minimum salaries and a new bonus paid by streaming services. The deal also provides protections against unauthorised use of AI-generated images, preventing actors being replaced by “digital doubles”.


ZOO positioned to take market share as industry recovers 

 

As projects are now resuming, ZOO is well positioned to benefit from the evolving market and changing customer requirements. The industry has been widely impacted and several major buyers have elected to contract their vendor pools, thereby requiring fewer studio personnel to manage these relationships.

 

As large buyers choose to concentrate work on a smaller number of vendors, there is a growing preference for those that are able to provide an end-to-end (E2E) service, namely, to offer all necessary media services together with subtitling and dubbing across all required languages. ZOO is one of few providers with this capability and scale.

 

 

 

 

ZOO in the news

 

Sharecast: 
Zoo Digital confident after strike-affected weak first half

 

Insider Media: 
Zoo Digital targets recovery as Hollywood strikes hit interim results

 

Slator: 
ZOO Digital’s Half-Year Results Reveal the Damage Done by Hollywood Strikes

 

StreetInsider
Stifel upgrades ZOO Digital Group PLC (ZOO:LN) to Buy 

 

Yorkshire Post:
Sheffield-based ZOO Digital Group announces expansion of its operations in

India

 

MultiLingual:
ZOO Digital Expands Operations in India With New Chennai Facility

 

The Business Desk 
Entertainment industry tech group beefs up key part of its overseas operation 

 

Alliance News: 
Zoo Digital CEO buys shares after profit warning

Industry news

The SAG-AFTRA strike in Hollywood, explained 

 

Actors ratify strike-ending contract

 

Disney+ Reins In 7 Million Subscribers Amid Better Earnings 

 

Paramount stock rises after strong earnings report

 

Warner Bros. Discovery Posts $111M Streaming Profit 

 

Peacock Hits 30M Subscribers 

 

The Return Of Licensing 

 

Disney to buy remaining 33% stake in streaming service Hulu

 

 

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ZOO Digital Group plc, 2201 Park Place, Suite 100, El Segundo, California 90245, United States

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