Zoo Digital Group Plc · LSE:ZOO
Zoo Digital — H1 FY23 Earnings Presentation
45 slides from Zoo Digital's earnings presentation, Nov 8, 2022
Slide 1: Interim Results FY23
4 700 DIGITAL GROUP PLC _ NTEIM RESULTS 23
Slide 2: Disclaimer
Interim Results FY23 This document has been prepa red by ZOO Di gi tal Group pl c (the “Company”). It should not be reproduced, redistributed or passed to any other pers on. This document, the talks gi ven by the presenters , the i nforma tion communi ca ted during the deli very of the presenta tion
Slide 3: Stuart Green, CEO and Phillip Blundell, CFO
Interim Results FY23 Stuart Green, CEO Phillip Blundell, CFO • Co-founder and CEO since 2006 • Senior finance professional and Chartered Accountant • Over 30 years experience in team building and executive • Over 20 years experience in software industry management in the TMT industry • CFO roles wit
Slide 4: Rapid progress continued into H1 FY23
Interim Results FY23 • Rapid progress continued into H1 FY23 • Near doubling of revenue, record profits and good cash conversion • Strong growth across all service lines • Content production market continues to grow • International operations performing well • ZOO well placed to continue to grow mar
Slide 5: Interim Results FY23
Interim Results FY23 Page 5
Slide 6: Financial highlights
Interim Results FY23 • Revenues increased by to • EPS of (H1 FY22: loss per share of (H1 FY22: $26.9 million) driven by strong growth in 2.02 cents) localisation and expansion of media services • Cash generated in the period of • Adjusted EBITDA1 more than doubled to • Cash flow from operations of w
Slide 7: Operational highlights
Interim Results FY23 • Localisation grew to due to the high proportion • The mastering service processed significantly greater volumes than the of new titles processed, with subtitling doubling in the period and prior year with further expansion planned dubbing increasing fourfold • International op
Slide 8: Financial and Operational KPIs
Financial KPIs Revenue up 91% to $51.4 million Opex as a % of revenue (H1 FY22: $26.9 million) improved by EBITDA margin1 improved by 6.3 points to 24.6% 5.5 points to (H1 FY22: 30.9%) 14.2% (H1 FY22: 8.7%) Operational KPIs Number of freelancers2 1 Adjusted for share-based payments up 27% to 12,343
Slide 9: Income statement summary
Interim Results FY23 Revenue 51,422 26,927 91.0% Cost of sales (34,941) (18,357) (90.3%) Gross profit 16,481 8,570 92.3% Revenues Operating expenses Operating expenses (12,671) (8,332) (52.1%) • Localisation up 150% • Fixed operating expenses up Operating profit/(loss) 3,810 373 921.4% 52% • Media s
Slide 10: Revenues and gross profit by service line
Interim Results FY23 Revenues Localisation 32,325 12,906 150.5% Media Services 18,241 13,122 39.0% Revenues Software Solutions 856 899 (4.8%) • Localisation – return of new productions Total 51,422 26,927 91.0% • Media Services – impact of new services • Software Solutions – as expected Gross profit
Slide 11: Balance sheet summary
Interim Results FY23 Non-current Assets Assets 28,359 14,297 • PPE up 87% due to significant expansion of global capacity Trade and other receivables 18,692 14,634 • Intangible assets up 42% due to new long-term property leases Cash 10,818 8,214 • Investments in new subsidiary and JVs of $3.8 millio
Slide 12: Interim Results FY23
Interim Results FY23 Page 12
Slide 13: Monetisation Models of OTT
Interim Results FY23 Monetisation Models of OTT (accessed through a connected device/streaming)* On demand Linear TVOD SVOD AVOD FAST vMVPDs Consumers purchase Unlimited access to a On demand content Linear content available to content on a pay-per-view content library for a available to consumers f
Slide 14: DTC content spending at major content producers
Interim Results FY23 DTC content spending at 8 major content producers Deadline, February 2022 – Wells Fargo est. Amazon Has Tripled The $bn, 2020-2025 Number Of Original Films Forecast And Series Since 2018, Says +10% It Spent $13B In 2021 +15% 93 The company is focused on delivering 85 “more high-
Slide 15: ZOO's Proposition
4 y Lote) Interim Results FY23 ZOO'S PROPOSITION Page 15
Slide 16: Quote: I coulda been a contender
“You don't understand. I coulda had class. I coulda been a contender. I coulda been somebody, instead of a bum, which is what I am, let's face it.” Page 16
Slide 17: Preparing new titles for distribution and localisation
Interim Results FY23 Final Results FY21 From completion of a new title, work is required to prepare technical materials for distribution (“ ”) and adapt for different countries, languages and cultures (“ ”) Media Localisation Subtitling Dubbing Pre-production Producti on Pos t-production Media Servi
Slide 18: Service line and language offering
Language Offering Subset or local languages only Global languages Media services specialists End-to-End Vendors All services Service Line Offering 100s of independent dubbing studios Multilingual subtitling specialists Subset of services Some multinational dubbing studios Corporate market suppliers
Slide 19: Our customers are the world's biggest content creators
Interim Results FY23 Our customers are the world’s biggest content creators that distribute TV shows and movies to vast multilingual audiences via global streaming services. Page 19
Slide 20: Five pillars differentiate ZOO in the market
Five pillars differentiate ZOO in the market and provide competitive advantage Innovation Scalability Collaboration Customer Talent Create value-adding Operate an Work with like- Secure preferred Engage with software technology extensive freelance minded, world-class partner status with experienced
Slide 21: Interconnected ecosystem of production and management software
• Interconnected ecosystem of production and management software platforms • Focus on efficiency, quality and security • A tech-enabled dubbing solution removes the need to own and operate facilities in every country Page 21 Interim Results FY23
Slide 22: Secure, scalable global servicing capacity
Secure, scalable global servicing capacity made possible by our global ecosystem • Regional hubs, dubbing studios, partners and freelancers work together in the ZOO technology ecosystem • Guarantees consistent security, process efficiency, production quality and rapid scalability across the world •
Slide 23: Growing a connected global network
Growing a connected global network through acquisition and strategic partnerships ZOO Korea ZOO Turkey • Enhanced existing facilities • Investments in strategic partners • Flexible, multipurpose facilities • Supporting all service lines • Alignment of regional hubs • All operations in ZOO’s platform
Slide 24: Services charged based on minutes of runtime
Services charged predominantly based on minutes of runtime Freelancers paid on same basis Current contribution margins are lower than the business at maturity, due to being in a heavy investment phase Projects allocated based on quality of service Framework agreements and capacity with large custome
Slide 25: Continuing execution of the strategy
Continuing execution of the strategy • Continue strong profitable revenue growth • Continue expansion of freelancer pool • Complete further international investments • Develop further ZOOstudio licensing opportunities • Extend ZOOstudio client integration • Open South India hub in Chennai Page 25 In
Slide 26: Outlook
Interim Results FY23 • Strong order book across all service lines with good visibility for H2 and a pipeline of work from established, satisfied customers • Further expansion of international operations to deliver revenue growth and improved visibility across multiple service lines • Clear opportuni
Slide 27: Investment highlights
Invested in front of demand Proprietary tech provides scalability and differentiation Strategically aligned with the world’s biggest content Total Content Spending at Major Media creators and streaming services, ZOO addresses their and Tech Companies ($B) Large and current needs and anticipates futu
Slide 28: Final Results overview
Services Final overview Results 2021 FY21 Page 28
Slide 29: Appendix
4 y Lote) Interim Results FY23 APPENDIX Page 29
Slide 30: Income statement
Interim Results FY23 Unaudited Unaudited Audited 6 months to 6 months to Year ended 30 Sep 2022 30 Sep 2021 31 Mar 2022 $000 $000 $000 Revenue 51,422 26,927 70,403 Cost of sales (34,941) (18,357) (48,296) Gross Profit 16,481 8,570 22,107 Other operating income - 135 204 Operating expenses (12,671) (
Slide 31: Balance sheet
Interim Results FY23 Unaudited Unaudited Audited as at 30 Sep 2022 as at 30 Sep 2021 as at 31 Mar 2022 $000 $000 $000 ASSETS Non-current assets Property, plant and equipment 12,952 6,935 13,317 Intangible assets 9,746 6,876 9,514 Investments 3,819 - 4,154 Deferred tax assets 1,842 486 1,846 28,359 1
Slide 32: Cash flow statement
Interim Results FY23 30 Sep 2022 30 Sep 2021 31 Mar 2022 Unaudited Unaudited Audited 6 months to 6 months to Year ended 30 Sep 2022 30 Sep 2021 31 Mar 2022 $000 $000 $000 Cash flows from operating activities Operating profit for the period 3,810 373 3,146 Depreciation 1,768 1,097 3,022 Amortisation
Slide 33: Addressable Market
Addressable Market ($million) • 8-year market forecast by customer 3,000 Assumptions: 2,500 • Market annual growth 7.5% 2,000 • US streamers will continue to take market 1,500 share 1,000 • Market growth will be driven by International expansion by 5 companies 500 - • ZOO current market share 4% FY2
Slide 34: ZOO Revenue Progression
ZOO Revenue Progression ($million) Assumptions: 450 400 • Media services growth rate 10%+ 350 • Subtitling growth rate 15%+ • Dubbing growth rate 45%+ 300 • Overall revenue growth rate 24%+ 250 200 150 100 50 Sources: 0 1. Year 1 is FY22 Actual Year 1 Year 2 Year 3 Long-term 2. Year 2 and 3 are cons
Slide 35: ZOO Operating margin progression
ZOO Operating margin progression (%) 80 • Media services gross margins grow from 58% to 70%+ 70 • Subtitling gross margins grow from 35% to 37%+ 60 50 • Dubbing gross margins grow from zero to 25%+ 40 • Overall revenue gross margins improve from 31% to 35% 30 20 • Operating expenses as a % of sales
Slide 36: Proportion of respondents who enjoy watching dubbed content
Interim Results FY23 60% Proportion of respondents who enjoy watching dubbed content Italy Brazil 50% India Germany Turkey Spain Mexico Saudi Arabia 40% China Argentina Japan 30% France Poland Indonesia USA 20% Australia UK Canada Sweden 10% South Africa Denmark Netherlands Norway Finland 0% 0% 10%
Slide 37: Board of directors
Interim Results FY23 Gillian Wilmot Since 2019 Extensive board level leadership in private and public environments with industry experience across B2B, Chairman technology, advertising and communications. Strengths in value creation, operational insight and corporate governance. Mickey Kalifa Since
Slide 38: Shareholders and % of capital
Interim Results FY23 Shareholder* % of capital Canaccord Genuity Group Inc. 14.61 Stuart Green (CEO) 12.92 Herald Investment Management Ltd 12.72 Invesco Ltd 8.02 Stonehage Fleming Investment Management Ltd 4.65 Deka Investment 4.03 Sarasin & Partners 3.86 Based on an independent analysis of ZOO’s s
Slide 39: ZOO Digital is committed to building a responsible business
Interim Results FY23 ZOO Digital is committed to building a responsible future- focused business • Cloud software gives customers an energy and infrastructure efficient approach • Significantly reduces the need for purpose-built studios • Reduces time and emissions for voice actors and directors • H
Slide 40: Reducing carbon footprint, zero waste, health and wellbeing
Interim Results FY23 We enrich the lives of our people and enhance their We work to make it easier and more efficient for Disruption favours the brave. We are always skills through access to industry-leading learning & customers & freelancers to use our localisation looking for a way to do things be
Slide 41: Netflix subscribers
-4y KeXe) NETFLIX SUBSCRIBERS Netflix Subscribers As a share of population, Q2 2021 estimates Russia | 01% Indonesia [J 03 Vietnam ff 03 india fj 04 South Africa [ff 06 Source: Comparitech Interim Results FY23 Page 41
Slide 42: Percentage of streaming services' content by decade
yy Lore) Interim Results 123 PERCENTAGE OF STREAMING SERVICES’ CONTENT Percentage of streaming services’ content, by decade of release 2020s "0s ‘00s 1990s 'B0s’70s Older 1 i Page 42
Slide 43: Major US streaming services
-4y KeXe) MAJOR US Streaming Services Regularly Reporting Paid Subs Weft NEST] Ar'22 Global Paramount Mar. '22 Global unt: 39.60, Showtime OTT and one Discovery Apr. '22 Global ork Kitchen and other svomy = Lionsgate Dec. '21 Global (OTT and Storzplay Arab Streaming Services Reporting Another Reach
Slide 44: Population that cannot speak a foreign language
-4y KeXe) Interim Results FY23 Yo OF POPULATION THAT CANNOT SPEAK A FOREIGN LANGUAGE Speaks no fo! © @land geist Q Glandgeist SS coun escuce % of population aged 25-64 that can’t speak any 3 9 foreign language Aad) 0-15 r oo ON s-25 Highest SSI urteatnadorn TAS 54% 9 Lowest @ Lanageist.com Page 44
Slide 45: www.zoodigital.com
www.zoodigital.com