Zoo Digital (ZOO) AI Stock Analysis

• Market Cap: £11.55M
• Dividend Yield: N/A
• Average Volume (3M): 136.94K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.20
• Revenue Growth: 20.12%
• EPS Growth: 64.40%
• Country: UK
• Employees: 515
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -0.04
• Shares Outstanding: 98,318,230
• 10 Day Avg. Volume: 154,854
• 30 Day Avg. Volume: 136,936
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £17.25
• Price Target Upside: 43.75% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 45 Neutral
• Price Target: 12.50p ▲(4.17% Upside)

Zoo Digital's overall stock score is driven by significant financial performance challenges, including negative profitability and cash flow issues. Technical analysis indicates bearish momentum, and valuation metrics highlight concerns about unprofitability. The absence of earnings call insights and corporate events means these factors do not influence the score.

Positive Factors

Revenue Growth

The company's revenue growth indicates a strong demand for its services, suggesting effective market penetration and potential for future expansion.

Partnerships

Strategic partnerships enhance Zoo Digital's market position, providing a competitive edge and stable revenue streams from established industry players.

Technology Investment

Investments in technology and automation drive efficiency and cost savings, improving service delivery and maintaining competitive advantage in the digital media services industry.

Negative Factors

Profitability Challenges

Persistent profitability issues and declining cash flow highlight operational inefficiencies, potentially impacting long-term financial health and investment capacity.

Cash Flow Management

The drastic reduction in free cash flow growth indicates challenges in liquidity management, which could hinder the company's ability to fund operations and growth initiatives.

Return on Equity

A negative return on equity suggests inefficient use of shareholder funds, raising concerns about the company's ability to generate value for investors over the long term.

Zoo Digital Business Overview & Revenue Model

Company Description

ZOO Digital Group plc, through its subsidiaries, provides cloud-based localisation and digital distribution services in the United Kingdom and the United States. It operates through two segments, Media Production, and Software Solutions. The company offers localisation services, including subtitling, scripting, dubbing, audio postproduction, and audio description; media services, such as content preparation, digital packaging/post-production, and metadata preparation; and asset health check services. It also provides various platforms, such as ZOOstudio, a secure platform that provides centralised system to manage localisation and media service operations; ZOOdubs, an end-to-end dubbing platform; ZOOsubs, a subtitling platform that enables talented translators to deliver perfect subtitles; ZOOscripts, a cloud-based scripting platform that provides centralized and accurate script reference for all localization workflows; and ZOOsign, a cloud-based dubbing contract management platform that manages dubbing contracts and assignment of rights. In addition, the company offers localization and media services to the media and entertainment industry. ZOO Digital Group plc was incorporated in 1999 and is headquartered in Sheffield, the United Kingdom.

How the Company Makes Money

Zoo Digital generates revenue through a multifaceted business model centered around its core services. Key revenue streams include fees for localization and subtitling services, which are charged based on the volume of content processed and the complexity of the work involved. Additionally, the company earns revenue from digital distribution services, where it partners with streaming platforms and distributors to deliver localized content. Significant partnerships with major studios and content providers enhance its market position, while ongoing investments in technology and automation drive efficiency and cost savings, further contributing to its earnings.

Zoo Digital Financial Statement Overview

Summary

Zoo Digital faces significant challenges in profitability and cash flow management, with negative net profit margins and a concerning decline in free cash flow. Despite some revenue growth and a manageable debt-to-equity ratio, the negative return on equity and poor cash conversion highlight inefficiencies.

Income Statement

Zoo Digital has shown inconsistent revenue growth, with a recent increase of 5.96% after a significant decline in the previous year. The company struggles with profitability, evidenced by negative net profit and EBIT margins. While gross profit margin improved to 36.35%, the net profit margin remains negative at -16.10%, indicating ongoing challenges in cost management and operational efficiency.

Balance Sheet

The company's debt-to-equity ratio is relatively low at 0.24, suggesting manageable leverage. However, the return on equity is negative at -40.26%, reflecting poor profitability and potential inefficiencies in using shareholder funds. The equity ratio stands at 48.03%, indicating a solid equity base relative to total assets.

Cash Flow

Zoo Digital's cash flow situation is concerning, with a significant decline in free cash flow growth at -89.31%. The operating cash flow to net income ratio is low at 0.08, indicating challenges in converting earnings into cash. The negative free cash flow to net income ratio further highlights cash flow management issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	46.78M	49.57M	40.63M	90.26M	70.40M	39.52M
Gross Profit	13.49M	18.02M	5.46M	33.93M	22.11M	13.64M
EBITDA	-5.15M	-333.00K	-12.61M	14.22M	7.82M	3.54M
Net Income	-14.31M	-7.98M	-21.93M	8.23M	2.63M	-3.16M
Balance Sheet
Total Assets	47.57M	41.26M	49.11M	64.25M	64.43M	24.85M
Cash, Cash Equivalents and Short-Term Investments	4.34M	2.71M	5.32M	11.84M	5.96M	2.95M
Total Debt	5.63M	4.66M	5.75M	8.38M	9.14M	6.79M
Total Liabilities	22.46M	21.44M	21.45M	29.11M	38.17M	22.01M
Stockholders Equity	25.11M	19.82M	27.65M	35.13M	26.26M	2.84M
Cash Flow
Free Cash Flow	-7.22M	-772.00K	-16.86M	8.77M	-628.00K	3.13M
Operating Cash Flow	-6.13M	1.49M	-11.94M	15.70M	5.48M	6.76M
Investing Cash Flow	-4.54M	-2.24M	-7.14M	-8.23M	-10.06M	-3.63M
Financing Cash Flow	-1.68M	-1.84M	12.64M	-1.60M	7.59M	-1.39M

Zoo Digital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.00
• 50DMA: Negative
• 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 Negative. The current price of 12 is below the 20-day moving average (MA) of 12.20, below the 50-day MA of 13.08, and below the 200-day MA of 17.14, indicating a bearish trend. The MACD of -0.44 indicates Negative momentum. The RSI at 36.63 is Neutral, neither overbought nor oversold. The STOCH value of 37.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:ZOO.

Zoo Digital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NET	73 Outperform	202.63M	38.94	―	0.73%	15.40%	-6.59%
CLBS	63 Neutral	70.15M	13.98	15.01%	1.87%	-7.07%	24.73%
SPA	56 Neutral	53.43M	320.00	0.90%	―	3.30%	-85.85%
BIRD	49 Neutral	10.99M	-3.85	―	―	-17.02%	10.29%
ZOO	45 Neutral	£11.55M	―	-33.64%	―	20.12%	64.40%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

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.