Zoo Digital (ZOO) AI Stock Analysis

• Market Cap: £12.04M
• Dividend Yield: N/A
• Average Volume (3M): 406.02K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.72
• Revenue Growth: -25.63%
• EPS Growth: -202.60%
• Country: UK
• Employees: 515
• Sector: Technology
• Sector Strength: 68
• Industry: Software - Application
• EPS (TTM): -0.12
• Shares Outstanding: 98,318,230
• 10 Day Avg. Volume: 381,999
• 30 Day Avg. Volume: 406,021
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.01
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 6.63
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £73.00
• Price Target Upside: 495.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

Zoo Digital's overall stock score reflects significant financial challenges, including declining revenue and profitability, which are major concerns. Technical analysis suggests some potential for short-term gains, though longer-term resistance remains. The company's valuation is hampered by its negative P/E ratio. However, corporate confidence, as indicated by insider buying, provides a positive note. Addressing financial instability will be crucial for future performance.

Positive Factors

Financial Performance

ZOO Digital's results show a recovery in the entertainment industry resulting in 29% revenue growth and $1.6m in EBITDA profitability.

Strategic Positioning

ZOO is well-positioned for industry changes with a secure platform, benefiting from the industry's shift to a streaming model and licensing.

Technological Innovation

ZOO Digital is well positioned to be an adopter of technological advances rather than be disintermediated by them, given its unique software-led approach to end-to-end service delivery.

Negative Factors

AI Limitations

AI falls short outside a small subclass of content, as translation needs to have an understanding of culture and language to avoid unwanted effects.

Complex Content Challenges

For complex content, AI still appears to have a long way to go, requiring a more holistic approach that includes cultural, social, and regulatory aspects.

Zoo Digital Business Overview & Revenue Model

Company Description

ZOO Digital is a leading provider of cloud-based localization and digital distribution services to the media and entertainment industry. The company specializes in delivering subtitling, dubbing, and media services to major film studios, streaming platforms, and television broadcasters. Leveraging cutting-edge technology and a global network of talent, ZOO Digital ensures high-quality and efficient content adaptation for international audiences.

How the Company Makes Money

ZOO Digital primarily makes money through its comprehensive suite of localization services, which include subtitling, dubbing, and media processing. These services are offered to major entertainment companies, including film studios and streaming services, who require their content to be adapted for different languages and regions. Revenue is generated through service contracts and partnerships with these companies, where ZOO Digital charges fees based on the scope and scale of the localization projects. The company's cloud-based platform and proprietary tools also contribute to cost efficiency and scalability, making its services attractive to a global client base. Strategic partnerships with major content producers and distributors further bolster ZOO Digital's revenue streams by ensuring a steady flow of projects.

Zoo Digital Financial Statement Overview

Summary

Zoo Digital is experiencing substantial financial challenges, with a significant drop in revenue and profitability. The balance sheet shows manageable leverage but declining equity, highlighting financial strain. Cash flow issues are pronounced, with negative operating and free cash flows. While there are some strengths, such as a moderate debt level, the company must address its declining revenue and profitability to improve financial stability.

Income Statement

Zoo Digital's revenue has shown significant volatility. The company experienced a sharp decline in revenue from $90.26M in 2023 to $40.63M in 2024, a decrease of approximately 55%. Gross profit margin decreased significantly from 37.6% in 2023 to 13.4% in 2024. The company also reported a net loss in 2024, indicating profitability challenges. Overall, while the company had growth in prior years, current performance reflects instability and declining profitability.

Balance Sheet

Zoo Digital's balance sheet shows a moderate debt-to-equity ratio of 0.21 in 2024, indicating manageable leverage. Stockholders' equity has decreased from $35.13M in 2023 to $27.65M in 2024, reflecting financial strain. The equity ratio is 56.3%, suggesting a somewhat stable capital structure. However, declining equity and increased liabilities pose risks to long-term financial health.

Cash Flow

Zoo Digital's cash flow situation is concerning, with a negative operating cash flow of -$11.94M and a negative free cash flow of -$16.86M in 2024. The free cash flow growth rate is negative, reflecting deteriorating cash management. The operating cash flow to net income ratio is negative, further indicating cash flow challenges. Overall, the company faces significant cash flow constraints.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
40.63M	90.26M	70.40M	39.52M	29.79M
	Gross Profit
5.46M	33.93M	22.11M	13.64M	10.09M
	EBIT
-19.12M	8.08M	3.15M	603.00K	-359.00K
	EBITDA
-12.61M	14.22M	7.82M	3.54M	1.24M
	Net Income Common Stockholders
-21.93M	8.23M	2.63M	-3.16M	316.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.32M	11.84M	5.96M	2.95M	1.22M
	Total Assets
49.11M	64.25M	64.43M	24.85M	21.35M
	Total Debt
5.75M	8.38M	9.14M	6.79M	7.03M
	Net Debt
433.00K	-3.46M	3.18M	3.84M	5.81M
	Total Liabilities
21.45M	29.11M	38.17M	22.01M	16.05M
	Stockholders Equity
27.65M	35.13M	26.26M	2.84M	5.30M
Cash Flow		Free Cash Flow
-16.86M	8.77M	-628.00K	3.13M	-308.00K
	Operating Cash Flow
-11.94M	15.70M	5.48M	6.76M	1.34M
	Investing Cash Flow
-7.14M	-8.23M	-10.06M	-3.63M	-1.65M
	Financing Cash Flow
12.64M	-1.60M	7.59M	-1.39M	-302.00K

Zoo Digital Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 12.25
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:ZOO, the sentiment is Neutral. The current price of 12.25 is above the 20-day moving average (MA) of 10.62, above the 50-day MA of 11.37, and below the 200-day MA of 32.36, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 56.45 is Neutral, neither overbought nor oversold. The STOCH value of 70.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:ZOO.

Zoo Digital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REL	78 Outperform	$75.82B	39.76	56.34%	1.36%	2.98%	10.10%
PTEC	76 Outperform	£2.41B	24.98	6.42%	―	3.75%	―
WPP	73 Outperform	£6.36B	11.72	15.82%	6.68%	-0.70%	388.07%
ITV	67 Neutral	£2.99B	7.71	22.70%	6.25%	-3.75%	98.08%
Sector *	60 Neutral	$10.94B	10.58	-7.08%	2.98%	7.52%	-12.04%
ZOO	50 Neutral	£12.04M	―	-43.12%	―	-25.63%	-202.60%
SFOR	48 Neutral	£164.95M	99.88	-42.53%	―	-16.14%	-5856.63%

Zoo Digital Corporate Events

Zoo Digital CFO Increases Shareholding, Signaling Confidence

Zoo Digital Group PLC announced that its Chief Financial Officer, Phillip Blundell, has acquired 20,000 ordinary shares at a price of 12.15 pence per share. This transaction increases Blundell’s total holding to 100,000 shares, representing 0.01% of the company’s issued share capital. The acquisition is seen as a positive signal of confidence in the company’s future prospects and may influence stakeholder perceptions regarding the company’s market position.

ZOO Digital Projects Revenue Growth Despite Falling Short of Market Expectations

ZOO Digital Group PLC has announced a trading update for the financial year ending March 31, 2025. Despite an expected revenue increase of 24% to at least $50.5 million and a return to EBITDA profit of at least $1.0 million, these figures fall short of market expectations. The company has implemented cost-saving measures, reducing fixed costs by 20% while improving gross margins. ZOO Digital has secured new customer engagements, including being named a Preferred Fulfillment Vendor for Amazon Prime Video, which is expected to contribute to revenues in FY26. The company’s order book has improved, though revenue recognition for some projects remains uncertain. The company is experiencing increased client interest in licensing rather than original programming, with overall profitability expected to improve due to a lower cost base.