Zoo Digital swings to profit amid reduced costs

Zoo Digital on Monday swung to an interim profit on the back of a reduction in cost of sales, though revenue declined as physical media sales struggled.

The software provider to the movie and TV industry recorded a profit before tax of £0.4m for the six months ended 30 September, compared with a loss of £0.2m in the same period last year, as cost of sales dropped by 15% to £8.5m.

Revenue dropped by 4% to £14.2m due to an anticipated decline in legacy services and a 75% reduction in DVD and Blu-ray sales.

Excluding this expected decline, revenue grew by 7% as the company continued to invest in its cloud-based platforms after success with its ZOOstudio and the ZOO Localisation Ecosystem software.

Zoo Digital said this innovation has led to more owners of media content placing orders to assess its cloud-based dubbing service, while the opening of a new post-production studio in London resulted in significant orders from one global media content provider.

The AIM traded company said it is on track to meet full year expectations as its order book was stronger at the end of the period than at the same point in 2018, while Zoo also expects to benefit from new media services offerings from giants such as Disney, NBC Universal and Warner Media.

Chief executive Stuart Green said: "The over-the-top consumer video market is about to undergo a step change due to the forthcoming launches of several direct-to-consumer services from major media companies. These provide an exciting growth opportunity in media localisation and digital packaging given the increased demand for these services to enable international distribution.

"We believe that ZOO is well placed to capitalise on this opportunity given the benefits and competitive advantages of our cloud-powered services."

Zoo Digital shares were down 8.05% at 77.70p at 0957 GMT.