GCIZOO Digital navigates industry challenges in 1H24, anticipates strong recovery in FY25
() , a provider of cloud-based localisation and media services, announced unaudited interim results for the 6 months to September 30 2023 (1H24).
ZOO recorded a 58% drop in revenues and 87% drop in gross profit from 1H23 primarily as a result of the Hollywood writers' and actors' strikes. Adjusted EBITDA stayed largely flat at US$7.1m, and the group recorded an operating loss of US$10.9m, down from a US$3.8m profit in 1H23.
Cash balance at period end was US$16.8m, from US$10.8m in 1H23. ZOO completed an equity fundraise of £12.5m in April 2023 for the proposed acquisition of a Japanese partner.
Operationally, localisation revenues fell by 58%, media services revenues fell by 61% and ZOO's freelancer network declined slightly to 11,745 from 12,343 last year. The media company completed international investments in Korea and Turkey, and launched a facility in Chennai, India post-period, as it continued to align with major customer's growth plans.
Work is continuing to integrate ZOOstudio with customer operations. Retained sales KPI remained at 99.5%.
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ZOO's financial performance in 1H24 was significantly impacted by the Hollywood writers' and actors' strikes, which ended in September and November respectively. Following resolution of the joint strike, momentum is building into H2 with a strong order book reported from major customers. During the subdued first half, ZOO took measures to conserve cash, resulting in a much improved cash position of US$16.8m from last year's US$10.8m. This has positioned the business for a rapid turnaround in 2H24 and FY25.
ZOO expects progressively stronger sequential performance in Q3 and Q4, to be followed by a "significant increase" in sales in FY25. By Q4 the media company expects to achieve at least break-even at EBITDA level and return to profitability in FY25, in line with current market expectations. shares rose 6.25% on the expected recovery.
The streaming industry's increased focus on profitability has meant major buyers have reduced their number of media vendors while prioritising those with end-to-end capacity and scale. This has positioned ZOO well to process higher volumes from customers over time, particularly as it continues to expand in high-growth regions.
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