Zoo Digital set to beat forecasts

Z'‹oo'‹ Digital, which provides subtitles for Hollywood film studios,'‹'‹ '‹reported further growth over the past six months and said full year earnings should be ahead of market expectations.

Stuart Green, chief executive of Zoo Digital

The Sheffield-based group said its subtitling and dubbing​ services traded strongly and​ are expected to ​make up 70​ per cent​ of overall revenue​, up from 52 per cent last year.

In an update on current trading for the year ending March 31, 2018, Zoo said revenue is expected to be at least £20m, up from £12m the previous year.

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Adjusted earnings are expected to beat market expectations and should hit at least £1.7m, up from £1.3m the previous year.

Zoo has invested in its new dubbing service, which is delivered through its proprietary cloud-based production platform, and the board said it is greatly encouraged by the response to this from both existing and new clients.

​Stuart Green, chief executive of Zoo, said: “We are delighted with the progress of our dubbing service and the positive response we have received from clients.

"Whilst this proposition is still in the investment phase, we have made significant strides in advancing and validating our proprietary technology, establishing our internal team, and building our network of freelance talent across multiple languages and countries.

"This will provide us with a platform for strong growth, therefore we expect to be operationally geared to achieve enhanced profitability in future periods.” ​

Analyst ​Harold Evans​ at FinnCap said: "Momentum has continued in the second half, such that the company now expects 2018 sales and EBITDA of at least $28.0m and $2.3m, implying impressive year on year growth of 70 per cent and 31 per cent respectively.

"In view of this update, we upgrade our 2018 forecasts, but make no change to 2019 estimates. Having said this, given our forecasts now imply just 14 per cent sales growth in 2019, we believe there is a strong likelihood of future upgrades. Zoo remains one to watch."

​Zoo’s planned technology developments include the application of machine learning to streamline the dubbing process for TV and film entertainment content, for which the company has recently been awarded an R&D grant from Innovate UK, the Government-funded agency.

This funding will support collaboration with a speech and hearing research group at the University of Sheffield and is expected to improve the quality and speed of production for lip-sync dubbing projects.

The group has recently begun a new phase of its affiliate partner programme in order to establish services in the United Arab Emirates, enabling the company to extend its reach in key countries in the Middle East.

To support global digital distribution platform providers in their acquisition of regional content in the territory, Zoo’s partnerships will include services for the intake of media. This is in addition to providing access to linguists and voice actors to expand the subtitling and dubbing services. ​

The ​c​ompany currently has a gross cash position of ​£1.6m​, up from £500,000 last September.