ZOO Digital Group plc, the provider of cloud-based media production services and software to global creative organisations, today announces its financial results for the year ended 31 March 2014.
* Adjusted EBITDA and operating loss are stated before share based payments of $0.03m (2013: $0.1m).
Stuart Green, CEO of ZOO Digital, commented, “At the time of our interim results I stated that we had succeeded in creating a more flexible and focused business but that the Board’s primary aim was to build sustainable growth in revenues. I am glad to report that I believe ZOO is well on this path. Billings in the second half were an improvement on the first half, a trend which I am pleased to confirm has continued into the new financial year.
“The Company has succeeded in diversifying both its client base and revenue mix as well as reducing its exposure to the production of physical media. With the ability to deliver across all formats of digital content and increasing customer diversification, the Board believes that we have the right platform for sustainable growth and, as we look forward, are cautiously optimistic about our prospects.”
The year under review has been a transitional one for the Group and I am pleased to report that it has ended with ZOO having a more focused set of differentiated products and services, increased sales and marketing resources, and a greatly diversified customer base. We have made the difficult transition from traditional software licensing and a heavy dependence on one major customer to a business model where a range of different customers use our software and services, and we are pleased at the momentum now building in these continuing revenue streams.
The main focus of the year has been on the development and deployment of ZOOsubs, the Group’s subtitling and captioning services delivered using our proprietary cloud-based production and management systems. ZOOsubs was developed in response to feedback from customers who wished to create and manage localisation services through our technology. Our offering now includes subtitling, captioning and dubbing services – all huge markets which can be efficiently addressed by our technology platforms. It has been particularly pleasing to see the early enthusiasm for these differentiated services translate into live deployments serving five of the six major Hollywood film studios, as well as several tier-two studios and other corporations.
One of the real strengths of ZOOsubs is that it delivers localisation services across all of the formats of digital content delivery, not just in our traditional area of filmed entertainment. These include physical media, broadcast, streaming and download. The Board believes that this will position the Group well for sustainable growth and shelter us from the decline in the production of physical media for filmed entertainment.
Revenues in the second half of the year were stronger than in the first half with a total for the year of $9.6m, which reflects the fact that monthly billings increased through the second half. I am pleased to report that this trend has continued into the new financial year as our ZOOsubs and ZOOcore systems achieve deeper and wider deployments in a number of different markets around the world.
Roger D Jeynes
At the time of the interim results I stated that we had succeeded in creating a more flexible and focused business but that the Board’s primary aim was to build sustainable growth in revenues. I am glad to report that I believe ZOO is well on this path. Revenues for the year were $9.6m, with the second half of the year showing an improvement on the first half, whilst the adjusted EBITDA* loss of $0.4m follows a period of significant investment in our new subtitling and dubbing propositions, particularly ZOOsubs, the Group’s innovative service delivered through our proprietary cloud-based subtitle production and management system.
The Company also concluded the extension of its convertible loan notes of £1.77m by four years to 31 October 2017, with all the other terms of the notes remaining unchanged. This support from our loan note holders enables us to build on the current momentum within the business unhindered, and on behalf of the Board, I would like to thank the loan note holders for their continued support.
This momentum has been created by the Board’s focus on its key strategic goals, including further development and deployment of ZOOsubs and ZOOcore.
Progress with ZOOsubs has continued in line with the Board’s expectations. At the half year stage, three of the six major Hollywood studios were utilising ZOO’s subtitling production and management system and I am pleased to report that this had increased to five, either directly or indirectly, as well as a growing number of second tier film and television makers shortly following the end of the financial year. As well as these new client additions, ZOOsubs has also continued to see increased volumes of throughput from existing clients.
Use of ZOOsubs by our clients is biased more towards recurring outsourced delivery of services which use our software, rather than per-user software licensing. Although this results in lower initial payments from clients, it provides much greater visibility and sustainability of the Company’s revenues. The Board is pleased to report that the revenue run rate from ZOOsubs services clients continues to develop, providing a strong trajectory of future growth and driving further diversification in client mix, a trend which the Board expects to continue in the new financial year.
As well as an essential component of ZOO’s subtitling and captioning services and a defining feature of other production services we provide, ZOOcore, the cloud-based workflow and collaboration system continues to be deployed as a stand-alone project management solution. This technology platform enables customers to track creative processes and projects from start to finish. In the case of our subtitling services, each client is provided with a customised ZOOcore system through which to submit localisation work orders and track them through all stages until completion on a 24/7 basis. Prospects for all parts of this business remain strong and continue to contribute to ZOO’s recurring revenues.
On behalf of the Board I would like to thank all of our staff for their continued contribution and hard work over the past year and also the growing community of language specialists who work closely with us.
The Board’s focus on ZOOsubs and ZOOcore has already succeeded in diversifying the Company’s client base and revenue mix and has placed the Group in a strong position to provide increasing volumes of localisation services across all delivery platforms.
As well as showing increased revenues in the second half of the year over the first half, the Board is pleased to announce that the trend of increasing monthly billings has continued into the new financial year.
Stuart A Green
Friday, August 29, 2014
ZOO Digital Group plc, the provider of cloud-based media production software and services, today announces an update on trading for the financial year ended 31 March 2014.
The Company is pleased to report that results for the year are expected to be slightly ahead of those previously indicated in the trading update on 12 February. The Group expects to report revenue for the year of $9.7 million and a loss at the EBITDA* level of $0.3 million. This follows a period of significant investment in ZOOsubs, the Group’s proprietary cloud-based subtitle production and management system, to ensure the Group remains well positioned to capitalise on this market opportunity and demand.
ZOOsubs continues to gain momentum through new client additions as well as increased volumes from existing clients. Use of ZOOsubs by our clients is biased more towards recurring outsourced delivery of services which use our software, rather than per-user software licensing. Although this results in lower initial payments from clients, it provides much greater visibility and sustainability of the Company’s revenues. The Board is pleased to report that the revenue run rate from ZOOsubs clients continues to develop, providing a strong trajectory of future growth and driving further diversification in client mix, a trend which the Board expects to continue in the new financial year.
Separately, the prospects for the Company’s ZOOcore business remain strong, particularly in regards to cross-selling into ZOOsubs clients, and ZOOcore continues to contribute to ZOO’s recurring revenues.
Stuart Green, Chief Executive Officer of the Company, commented: “We remain very confident in the value proposition and prospects for our ZOOsubs offering and are pleased with the momentum achieved in the early phase of the rollout. We are encouraged by the current ramp up of revenues that provide better visibility and further diversification of the mix for future periods. We expect this trend to continue into the new financial year and view the future with cautious optimism.”
* Adjusted for exchange differences and share based payments
Tuesday, April 29, 2014
ZOO Digital Group plc, the new generation provider of services that works with leading content owners and creative organizations to enable the delivery of media content globally, faster, and for less investment, today provides an update on trading ahead of its financial year end of 31 March 2014.
The major focus of this financial year has been on the development of ZOOsubs, the Group’s proprietary Cloud-based subtitle production and management system and associated services. The Company is pleased that the progress reported in the Company’s interim results has continued into the second half, and in addition to the three major studios reported at the interim stage, ZOOsubs has now been adopted by several Tier-2 studios and large corporations and there is a strong pipeline of future prospects.
ZOO is currently processing significant volumes of ZOOsubs work, demonstrated by the number of client projects in progress at any one time having tripled over the last two months, and expects the volume of work undertaken to grow further during the remainder of this financial year and throughout next year. Revenue from the ZOOsubs proposition is repeating in nature, which provides the Company with greater visibility over future revenue and resource requirements.
Whilst the Company is pleased with this momentum building in ZOOsubs, its revenue profile tends towards delivery of ZOOsubs as an ongoing service rather than as licence sales, and accordingly revenue for the year to 31 March 2014 is now expected to be below the Company’s expectations and in the region of $9.5 million. In acknowledgement of customer enthusiasm and requirements, the Company has also significantly increased its investment into ZOOsubs in order to meet the market opportunity and demand, including the development of a subtitling team with significant expertise in the sector. As a consequence of the above, the Company now expects to report a loss at the EBITDA* level of no more than $0.4 million, and a loss* before tax significantly greater than the previous year.
Separately, the prospects for the Company’s ZOOcore business remain strong and continue to contribute to ZOO’s recurring revenues.
The Group has during the second half of the financial year announced an extension in the term of its convertible loan notes to 31 October 2017 and the renewed ongoing support for its working capital requirements provided by its standby loan facility. In addition, the Company now has a committed invoice financing facility of up to $1 million to support the working capital requirements of the Company.
Stuart Green, chief executive officer of the Company, commented that: “Whilst it is disappointing that ZOOsubs volumes initially took longer than expected to build, we are pleased that this side of our business is now gaining momentum. We have focused our efforts, and our at times constrained resources, on developing specifically this proposition, which provides significant visibility of future revenues and has already diversified our customer base.”
* Adjusted for exchange differences and share based payments
Wednesday, February 12, 2014
All other terms of the Loan Notes remain unchanged, being principally that the Loan Notes accrue interest at 7.5 per cent. per annum (payable half-yearly) and that the conversion price of the Loan Notes remains 48 pence per ordinary share of 15p each in the Company (“Ordinary Shares”) converted.
Stuart Green and Roger Jeynes, chief executive officer and chairman of the Company respectively, have agreed to purchase Loan Notes with a face value of £466,500 from other Loan Note holders (the “Purchase”). It is expected that these purchases will complete on 1 November 2013.
Dr Green and his wife, Mrs Sara Green, have purchased Loan Notes with a face value of £443,500 for a total consideration of £332,625 and consequently, together with their combined previous holding of Loan Notes with a face value of £171,000, have an interest in £614,000 of Loan Notes. Mr Jeynes has purchased £23,000 of Loan Notes at face value, having previously had no interest in Loan Notes.
The participation in the Extension of Dr Green, as a director of the Company, and of Herald Investment Trust and Foresight Group, as substantial shareholders of the Company, and the entering into the Purchase by Dr Green and Mr Jeynes, comprise related party transactions under the AIM Rules for Companies.
The Company’s independent directors (being Helen Gilder and Gordon Doran), having consulted with the Company’s nominated adviser, finnCap Limited, consider that the terms of the Extension and Purchase are fair and reasonable insofar as the Company’s shareholders are concerned.
Thursday, October 31, 2013
* Adjusted EBITDA is stated before exchange differences and share based payments
Stuart Green, CEO of ZOO Digital, commented, “The Board is pleased that the Company has returned to an adjusted EBITDA* profitability after a difficult second half of last year. We are already starting to see the benefits of the management actions taken last year and are pleased to be able to report some real momentum in the business, particularly with regards to ZOOsubs.
“The Board expects the second half to show further improvement on the first half of the year, particularly in light of the interest received for ZOOsubs, and we would hope to see continuing growth in revenues in the next financial year and beyond.”
A presentation is available on the Company’s website.
Turnover for the first half to 30 September 2013 has decreased to $4.7m (H1 2012: $6.2 million) but shows an improvement compared with the second half of 2012 ( H2 2012: $4.2 million). Our adjusted EBITDA* in the period to 30 September 2013 decreased to $290k (H1 2012: $930k) but this also shows a marked improvement compared with last year’s second half (H2 2102: loss of $297k).
In January 2013 ZOO announced a contraction in the pipeline of production services work as a major client deferred certain orders which significantly impacted our results for the full financial year to March 2013. Steps were taken to restructure the Group’s cost base, reducing operating expenses by over $1 million since the first half of last year, and match it with the revenue pipeline. Progress was also made in diversifying ZOO’s revenue streams in workflow management and productivity software.
The Board is encouraged therefore by the improvement in performance between the second half of 2012 and the first half of 2013, reflecting the strong sense of momentum within the ZOO business resulting from the growth of our subtitling and other software-based services to new clients.
The major focus of the period under review has been ZOOsubs, the Group’s proprietary Cloud-based subtitle production and management system and associated services.
ZOOsubs manages the entire process for the creation of subtitles, including translation services, their use in a variety of geographies and across numerous delivery platforms. Through the use of automation and workflow management delivered by the Company’s ZOOcore platform, ZOOsubs is a much more cost efficient process than traditional methods and provides greater flexibility and control for clients. Importantly, freelance translators are engaged on a project basis, providing the Company with production scalability without requiring any significant increase in its fixed cost base.
ZOOsubs has been deployed at three of the six major global studios. Within one of these we have already seen a significant increase in the volume of work and expect this to improve even further, whilst we also anticipate increased volumes at the other two studios in the next calendar year. Equally encouraging is the level of interest in ZOOsubs amongst the large second tier of film and TV studios, which the Company has been targeting in the last few months. A number of these studios have trialled the services on a project basis and the feedback has been particularly positive.
The Company has continued to see adoption of ZOOcore, its Cloud-based workflow and collaboration platform, with increasing workflow and user numbers coming from both existing and new customers.
The cost restructuring that was implemented earlier this year has created a more focused and flexible business, but the Board’s primary aim is to build sustainable growth in revenues, continuing the progress made in the first half of 2013 compared with the second half of 2012. Adoption of ZOOsubs by the world’s leading studios, the large untapped opportunity for ZOOsubs in the wider market, and the relevance of ZOOcore to improving the workflows of leading content owners and creative organisations should support this goal.
Excluding our convertible loan note, the Group has a relatively small amount of debt. We expect to provide an update in respect of an extension in the term of our convertible loan note shortly.
Thursday, October 31, 2013