ZOO Digital Group (LSE:ZOO) — Final Results for the year ended 31 March 2026

0:00 Good afternoon, and welcome to the ZOO DIGITAL GROUP PLC Final Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Stuart Green. Good afternoon to you. Thank you very much, and welcome, everyone. Thanks for joining us for this presentation of ZOO DIGITAL GROUP's FY '26 full year results. I'm I'm Stuart Green, CEO, and I'm Rob Cassell, CFO. So we'll we'll kick off. Here's an important slide. I'm sure you can all speed read that because we haven't got a lot of time.

0:48 We'll quickly move on to summarize, you know, who we are and what we do. I imagine there are lots of folks on this call who who knows pretty well, but for the benefit of those who don't So in a nutshell, we work in the media entertainment industry. Our customers are big streaming companies and content producers. What we do for them is take their original programming and also some back catalog lost back catalog programming, and do what's necessary to get that onto many different streaming services in lots of different languages. The the different language treatment is through subtitling and dubbing and and and various other things that we do as well. All of that we do using proprietary technology that we've created over fifteen plus years that gives us a competitive advantage in the market. It makes us very efficient and scalable in what we do, and we'll cover that in a lot more detail later on in the presentation.

1:43 Before we get into the guts of it, we'd just like to kick off with our investment thesis, particularly in light of the fact that those who followed the story will know that the last three years has been somewhat hellish in our sector because of lots of disruption that's taken place as big big traditional media companies have transitioned into the streaming world. But we're now seeing lots of indications that that through the other side of that. That's great news for us because we're we're now experiencing a return of levels of business that, you know, that that haven't been there for a few years. And and I think it's appropriate for us to just kind of refresh, remind, and and also refine this investment proposition. So Rob? Thank you. Yeah. So this really like, why why why would we like you to to have a look at ZOO and what we're doing? So first of all, we now have a business model that is generating profits and generating cash.

2:36 Hasn't always been the case in the last few years, but that's certainly where where we are now. Also, we're operating in a market, and we'll talk a bit more about this later, that is now growing after a three year hiatus when there's a lot of lot of disruption and and a lot of decisions having to be made. But on a not only is that market growing, we think we now have the opportunity to take market share, and that's due to the new services that we're offering, and we'll speak more about. We like to think we've already started to prove this. So we've we've announced recently that we've been very successful in a number of RFP proposals, peep people asking us about new business, new contracts, new customers, and we're already delivering revenue from them. We'll come on to see that this year has been a really important year for for ZOO, and there's been a lot of changes, a lot of reorganization.

3:29 But throughout that, we have we have been able to to maintain our product strategy and make sure that we're still able to compete for that business and been doing that very successfully. Now within that, we are a tech first business. And over fifteen years, we have been building IP and technology platforms that allow us now to really feel that we are at the forefront of of this market. And it's that investment that we feel is is is and will carry on differentiating us from competitors. Part of that, obviously, AI. We've now integrated that into the majority of our workflows, and Stuart, again, will will will take us through that. It's not everything, but it's certainly a big part of of of what we've been doing. And beyond all of that, what we've always done throughout all the disruption, throughout all the changes that we've made, is we've always delivered top quality to to our customers. And in fact, in f y twenty six, our quality scores improved. And again, we'll we'll we'll show you that later. And and without that, this is the this is the primary goal that we have to hit with. Quality is never negotiable. So having to go through these changes and maintain that quality has been a great success.

4:38 And and finally, we we already have and have had for many years relationships with with all my major buyers in in the market, and we can show that some of those relationships are now really going from strength to strength. K? Great. Thanks a lot, Rob. So for those who haven't got a huge amount of time, we'll just give you a really quick thumbnail of what we're gonna be speaking about in this presentation and the key themes that will come come across, you know, based on what we've accomplished in the course of the last year. Firstly, we've resized and reshaped the business to deliver profitable trading and cash generation. That's involved as restructuring our cost base, and it's also involved as embracing AI and implementing it throughout our workflows, and that is now delivering higher margins.

5:28 Our FY twenty six results as as Rob has mentioned that we're in line with market expectations, so that's obviously an important starting point. Our market has evolved. We've seen lots of change over the course of the three years. What hasn't changed is the need of our customers to have extremely high quality and authenticity in the work that we do, and that's particularly applicable to localization, of course, where those those localized versions of programs have got to be as good. The experience has got to be just as good in other countries. That's where people speak different languages as it is in the original country of where the program was was made. So quality and authenticity are absolutely key, and and What that means is that you've got to be really careful about how you go about doing this and And and right now whilst AI helps and we'll talk about that in a moment We do need humans to make sure that it's getting the answers right What is changing though is that our customers?

6:32 Require these results in a much shorter time period than ever before We're seeing a growing demand for content formats that are brand new to streaming you know kinds of things that we've seen on network television in the past. But but now they're coming to streaming, and they they are time sensitive, and they require very fast turnaround, and therefore, a need for a much faster delivery. What we're finding from our customers is that through you know the over the last three years obviously AI has emerged and they recognize that this should be have helped to them in some way so they very much want to be working with partners that are tech savvy that understand the tech that are enabled with technology and that can deliver these faster turnarounds perhaps through the use of AI because that's clearly a key driver for for where they're heading. So so actually our customers are favoring companies like ZOO that have those credentials, and again that sets us apart from many others who don't come from those origins.

7:36 So whilst our market has evolved, with we have evolved to We said we've restructured the business We've launched what we call a fast track service and a seven day dub service These are all to address these very fast turnaround requirements from our customers We've implemented a follow the sun model which effectively gives us a twenty four seven service to our customers which is again is a an Impass has become an emerging requirement to the market. So as we look ahead we you know, we can we are expecting to take a greater share of of a market which is continuing to return to growth. We've reported a an encouraging Outlook for the year, so we had a strong first quarter of FY twenty seven, and that gives us a lot of optimism to return to revenue growth and further profit progression during our FY '27.

8:31 So with that, we'll head over now to the financial review, and will take it from here. Fantastic. Thank you. Yeah. So I'm going to start just with some some some quick quick highlights. To reiterate what Stuart said, we we hit market expectations in the year. Now what you can see there, so revenue has fallen. So it's fallen by 15% down to 42,000,000. That was expected. The reason it was expected, f y twenty five benefited from a backlog of work that came from f y twenty four because of the writers and writers and actors strike in Hollywood. So we knew that was coming, but there's also been a subdued demand for for dubbing in the year. And that really reflects a less original content being being created by by our customers.

9:18 But it was expected. So we knew we were going to going to see declining revenues, but we also knew we had to to get the business back on the right foot again. And that's really what you can see in the following graphs. So despite our lower revenue, our EBITDA has increased from 1.1 to 4,000,000. Our cash EBITDA, which I've I've got the details of what that is down there, but it really reflects the underlying cash generation of of of the business. And that's moved from a loss of 2,700,000 in in f y twenty five to to to positive 400,000. So so not a huge amount, but certainly back in that position where we are now generating cash. And as we've said, we expect that to to to increase as we as we as we go forward because we've got the right size base. We finished all the reorganization.

10:04 We finished rightsizing the business. That was completed in the year. And also, gross cash, for those who've been following ZOO for a while, there were certainly some concerns about cash over the last couple of years. But as you can see there, yeah, cash balance is still is still looking healthy. And so bottom line is we've right sized the business. We're generating profits. We're turning those profits into cash. And we feel that's now created a platform, not only financially but operationally, that is allowing us to to get on the front foot for FY twenty seven. Okay. So looking at things in a more detail. So this is a summary of our p and l. So, yeah, revenue is down. I've discussed that as to why that would be there. Looking at customer concentration, so historically, we've always had a very large customer. In f y twenty five, that was 61% of the revenue. In f y twenty six, it's come down to 44%.

11:02 Now, yeah, 44% is still quite large for customer concentration, and we expect that that percentage to to carry on declining. Excluding that largest customer, the rest of our accounts have grown by 22%. So within that revenue number, there really is an underlying generator of growth that reflects the fact we are being able to diversify our customer base through the services that we've we've been developing. Within there, you can see so we've got our cost of sales line, and we've got our operational cost. Now, we've managed both of those down to a level that is allowing us to to certainly deliver EBITDA profits. Within our cost of sales, we have a mix of of third party freelancers that do all the translation work, and we have ZOO employees.

11:50 And we we try and keep that mix at about fifty fifty, and that we've been able to do that in the year. And That means we have a good balance between knowledge, experience, relationships with customers from our employees, but also the flexibility of a of a of a freelancer base that we we can work with. So we've brought we've brought those costs down, and we've been able to do that. And that's been what certainly has helped significantly reduce that operating loss, but as I say, generate some positive EBITDA numbers, and most importantly, that that positive cash cash EBITDA figure. So we we always like to see this. So so there's really two parts to the the business, they're they're they're linked, and I'll come on to explain that. But we classify them as localization media services.

12:38 And localization is more creative part of what we do. It's it's dubbing, it's subtitling, translation, scripting. Media services is when we get some content, we have to get it ready for broadcast on a on a streaming platform. And and there can be various amounts of work that have to go go on to to do that. So that's more of a technical service, whereas localization is more of a creative professional sort of service. And so localization has fallen, but not by the amount that dubbing has fallen. And that's because we've got a very exciting new revenue stream in there, generated around 2,500,000 in f y twenty six that we call Fast Track. And Stuart will explain more about this later, but it is incredibly accelerated levels of delivery for these projects.

13:25 And it's really helpful with live content, with time sensitive content. And we had no revenues for that in FY twenty five, 2,500,000 in FY twenty six. And currently, it's around 10% of of our run rate existing revenue. So that's been a huge success story for us. Within media services, now we've got a slight decline there. Often when you see that drop in localization, you'd associate a drop in media services. Because quite often, if we're doing the localization work, we'll end up doing some media services as well. But we've been working hard, and we've been able to to support those revenues through a lot of actually licensing deals that have gone on in the industry, where customers are buying content from other customers. So they don't really need as much localization, but they do need that that technical service.

14:11 And looking at the gross profits, localization margin has dropped a couple of points. That's primarily because dubbing has reduced. Now we have reduced the the cost base for dubbing, but we haven't done it as much as as as the revenues would imply. And that's because we want to maintain the capabilities of the organization within dubbing because we are confident that this is going to return. And also, lot of the the wins we've had, a lot of the contract wins, have been for companies that can provide all services. So strategically, commercially, important that we maintain that. And and we've done that, and we expect that to recover in f y twenty seven. And with media services, we've actually been able to improve the margin there. A lot of that has been able to to utilize the operations that we've got out in India, which are now fully integrated, up and running, do the same work that we're doing in The US and The UK.

15:04 And that's been able to to to allow us to provide the same service, the same quality with a slightly lower cost base. So all in all, those changes plus the change in mix has increased our gross profit percent from 36% to just under 42%. Now here here we've got a a brief summary of our balance sheet. And, you know, I I joined ZOO a year ago, and that was after ZOO had come through a a couple of difficult years as as many of our competitors had with with all the disruption in in the in the market. And there's a real question about sort of cash. Are we gonna have to raise money? There was a real question around how do we stretch creditors too far in protecting that cash. So that's really where we started. And I think not only in terms of the the business model, the profitability, the product development that we've been able to do, we've really been able to to show some improvements there. So as we showed on the first slide, cash is is up.

16:10 But probably the main number there was we've reduced the trade and other payables number from 18,000,000 down to just under 13,000,000. So that's a substantial reduction. Now we've done that in three ways. We've used some of our invoice financing facilities. So you can see we've used 1,400,000 of that. We've got around 8,000,000 in total we could use, so it's a small portion of of of the total. So that's helped. Does the cash we've generated at business has helped as well? But also, if you look at the trading of the receivables line, you see we've made a significant reduction there. So that's really reflecting the fact that we've been able to increase the speed at which we build for the services and the work that we're doing. And also, we've been able to increase the time reduce the time it takes to get paid. So all of those three things together, using sensible financing options, generating cash as a business, doing a better job, billing and collecting cash, has meant that we've been able to to rebalance the the balance sheet quite quite nicely and certainly in a better position than we were when we were at the end of f y twenty five.

17:16 Final one here. A quick look at at the cash flow. I mean, this is really repeating what we've said before, that we're able to to take those profits and and generate cash from them and and and make sure that that's coming through into the business. Probably one point to pick up here is the investing activities line. So the the the main bulk of that is the investment we make in our in our platform. So it's the capitalization of of r and d salaries and and work that's going on there. And that's really important for us, because this is the platform on which we're we're able to do these make make these make these improvements. So we've capitalized about 1,700,000 us up on last year, so 1,500,000. So despite paying down those creditors, we've been able to increase that level of investment.

18:05 And it's probably not a surprise to know that the biggest project within that, and the biggest spend, is actually the integration of AI into our various workflows and what that's been able to to do for us. So, yeah, hope hope hopefully, that's all clear. It's a whistle stop tour of the the the main financial statements and the the the results that are now up up online if you want to look through in more detail. Thanks, Joe. Thank you very much, Rob. Yeah. So I'll I'll pick up now and cover off the developments that have taken place within the market and how we've responded to those those changes. So, obviously, as I've said, we've had three years of disruption in our industry, and and there's been lots of change that has has come with it. I think I think the way to think about streaming now is that it is replacing TV.

18:55 And if you think about TV for a moment, traditionally and historically TV has been a local market service, so think you know BBC ITV serving You know serving a UK audience cannot please serving France and so on so what's happening is that because because the revenue potential from licensing for, you know, for big studios in through network television and and and generating ads there is is diminishing, and, obviously, the whole world is moving over to streaming, the the same kinds of content that previously we would have enjoyed through network television, indeed still do, will be moving across to to to big global streaming platforms. That's already happening, and it's and, you know, more of that is happening going forward. So think of think of streaming think of global streaming service now as becoming the television of of the future, but delivered on a global to a global audience rather than a local audience.

19:55 So so that's kind of a key change that has sort of emerged over this period of time. And one of the things that has come with that then, of course, is that streamers are looking at types of content that would have been common that have are common on on conventional local network television, commissioning similar type types of content to go on streaming. So you're seeing sports, live sports coming to streaming, of course. You're seeing some news. You're you're seeing sort of daytime TV type content lots of different kinds of Material often which is very time sensitive sometimes which is delivered live and therefore if you're now a global TV provider You need to be sure that you can deliver that content to your global audience in a timely fashion So what that is doing obviously is creating a demand within our industry for the kinds of services that we provide but on dramatically shorter time scales than has ever been case before.

20:58 So what we're finding from our customers is they're looking for service providers that firstly have got the credentials and and the capability to deliver that first rate service as the is as I mentioned is absolutely crucial, but also that are progressive and are able to embrace technology to be able to utilize it to their benefit, whether that's to, you know, to save costs or more significantly, we're seeing to accelerate time to market, then, you know, they want partners who have that capability and and clear that is playing to our strengths So if we look at how we have evolved the business over these three years to respond to that need that we have seen and anticipated over that time Firstly as we said we've restructured the business with with with right size We're now Optimized to deliver profitability and generate cash. We've got a much leaner and efficient model and a one that is scalable We've we've you know continue to be progressive and innovative in our development of technology and also our adoption of the parts technologies, including, of course, AI. So one of the things that we've been very busy with over this period has been selecting AI solutions and incorporating them within our workflows where they make sense and where we can use them to the benefit of our customers. And and and what they what they are doing is is is is

22:29 enabling us to deliver a more efficient service, but also improving the outcomes for for our customers We'll cover this in more in a second, but I just want to emphasize here that because of the nature of the outputs that required by our customers the you know, we absolutely have to have human supervision on the use of AI to ensure that there are no glitches, issues, mistakes that could be very damaging for our customers and then as a consequence for us as well. And so we've we've delivered we've delivered on this requirement. We've been successfully and routinely now on a monthly basis serving customers with these accelerated services. We've demonstrated that we can do it consistently at scale We are as far as we know from our customers We are able to offer them the fastest turnaround speeds that are available in the market We've been delivering our fast track solution for some live events and near live events and You know and we are continuing to innovate to do more of that and to do things even even faster. So the the outcome of those of that progression of the period has been as you've seen return to profitability and delivering a second a second year of positive EBITDA following this big industry disruption.

23:56 We've deployed fast track for both subtitling and dubbing and media services to do the really accelerated turnarounds. I'll expand on that in a second. We've got a dubbing propositions, again, that significantly reduce the time it takes to produce dub soundtracks, but without necessarily incurring additional cost on the part of our customers and And all this has enabled us to strengthen the relationships that we have with our studio Clients who recognize that we are in a very strong position to be able to service them with these emerging requirements. So on fast track then, so what essentially this is something that is enabled through a combination of two key things. The first is our progressive technology, the fact that we have automation, and I've been building for fifteen plus years automation throughout these workflows, and more recently have embraced and implemented AI to to take that even further. So that those technology platforms differentiate us.

25:02 You know, we're we're the only company in in the industry with this kind of capability, and and that gives us a competitive advantage. But it's combined with a second crucial component, which is our ability to fulfill the services using those platforms with talented people delivering across, you know, eighty eighty plus different languages. And part of that, and particularly delivering delivering results at the speed that's now required, we we need to have this always on capability. You know, we need to be operate twenty four seven. We have a way to do that which is really efficient, and we call it our follow the Sun model. Essentially, we have multiple facilities around the world, and we have staff within those facilities who can who can conduct the work, the required work during their working day, and then towards the end of their day, they can hand over to colleagues who are in a different location that's typically West of where they live.

26:01 That means that they can then continue to do the work in their working day, and in this way by continuing to hand over projects Over the course of twenty four hours. We have basically an always on service, so that's that's absolutely crucial to the fulfillment of these services at these kinds of speeds So we see looking ahead we see three important areas where we where growth can Where we can see growth coming for the business The first is as a result of these new content strategies that our customers have developed, and a big part of that is to do with this new emerging requirement, this this this addressable market expansion that's coming about because our customers now want the you know these These new kinds of content to be localized and delivered really quickly, and that's obviously calling on our fast track service and it's it's creating Incremental revenue stream it already accounts for about 10% of our revenue. We think that will grow going forward and And and it comes in sort of to the use of these accelerated services comes in sort of two areas where the service needs to be super accelerated really fast turnaround then as You know in most areas you can charge effectively what amount to rush fees for those things you can charge a premium because of course you will incur additional costs in fulfilling at that pace But what we

27:33 can also use this new capability for is to deliver the services at the same standard prices that we've You know that that are competitive in the market, but are much shorter time frames than is typically a Possible through competing organizations, so we can so it's enabling us to To have a significant competitive advantage over others in our sector the second area of profitable growth opportunities lies in in the fact that what we recognize our our customers understand that these these new technologies that are appearing AI and others represent opportunities for them. So they they they recognize then that they need to be working with partners who are prepared to embrace those those technologies and who understand them and can incorporate them and capitalize on them and and and share the benefits with them. So again, this is this is this is an opportunity for us to take market share because we are more like the kind of partner that our customers want to work with going forward than perhaps they have traditionally worked with in the past.

28:42 And then the third area is the is the point that we've always made about our business, namely that as as more consumers watch content through streaming services, there is an imperative on the part of those global providers to identify content that will appeal to audiences in lots of different countries because, of course, that obviously extends the value of their investment in creating that original content. What that means, of course, is that it that content needs to be localized into more languages, so it's more accessible on a global basis. So it's, you know, it's we're seeing ongoing growth in streaming coming from international markets that is in turn driving growth for for localization So we talked at ZOO around five strategic pillars, and so we'll in second I'll be providing you an update on those on our progress against those pillars in the year. I want to start actually just to talk about our quality KPI.

29:43 This is something that we introduced a year a year or so ago to indicate the, you know, the caliber of the services that we provide. As as we said the the customers that we serve they need the highest quality of provision and and So some of our customers measure the performance of their vendors They they basically produce a rate card. You know, they they they benchmark their their suppliers. They they measure their performance, and they report back that performance to the individual vendor. So the numbers you see on this chart actually are not are not not based on some a pit subjective opinion of of of ZOO and and our staff. They're actually measures that are derived from stats that are supplied to us by some of our major customers.

30:34 Anything this is showing this this number, headline number here is an indication of the quality of the service we provide and 98 and above is sort of world leading So as you can see we're doing we're doing somewhat better than than that I think a really important point to recognize here is that we have gone through three years of Industry disruption and that has led to significant disruption in the ZOO business and Rob's already explained that in the last year alone Our head count was reduced by 17% You know, when you do that, you expect things to break, and in our case, had things broken, you would have seen that evidenced in these quality scores. So what's really quite remarkable is throughout this period of disruption, we have maintained industry leading quality KPIs, and that's because we're you know because of the way in which you go about doing the work we do, but also because of the meticulous and careful way that we planned for making that for going about that restructure to ensure that we, at no point, we were at risk of disappointing our customers, of impacting our quality scores that could in turn have been detrimental to our ability to to continue to do work for those customers.

31:54 As I mentioned, AI is now implemented all the way through our workflows. I won't spend a lot of time on this chart other than to kind of just point out that it's indicating where we've already implemented it, where we're already working on on on further developments, where we've got plans in the future. We first used it at the interim results. So if you look back to that date, you can compare and see the progress we've made. Save you the bother, we've made a lot of progress even in the the last six months, and all driven by these emerging requirements that we see from our customers. I mentioned Follow the Sun. Here's a slide just to sort of highlight it. These are the locations of the business that and so, you know, a project might begin in in Los Angeles if it's been if some content has just been produced in a in in that time zone.

32:48 Our staff there will work on it until the end of their day. They'll hand over most probably to our their colleagues in in our office in South Korea who will pick up and continue with that and so on. It will pass it will pass around the world until that work is fulfilled. So that gives us that twenty four seven capability, and it's possible because we have in the in the in the in the period, we've ensured that we now have project managers with the right skill sets, the right sort of that, you know, Service specific knowledge in each of the key locations so that we have we can are able to offer that continuity and Then these are the five pillars that we report against in each set of results These are, you know, kind of what drives us. Innovation is at the at the heart of everything that we do. As we've said, we've introduced fast track and seven a day dub service. Those are major innovations that are now driving lots of new opportunity in our industry.

33:46 For our customer pillar, we have you know, we've seen good diversification and expect to see more of that in the year ahead. On collaboration, our full of the sun model is now fully implemented, and we're using that on a daily basis to fulfill fast turnaround projects for customers on Talent we have we're increasingly leaning on our offices based in India, so when there are vacancies for additional staff, we'll always look first now to India and say is this is this a is this a position that could work efficiently out of one of our Indian locations, and if so, we'll we'll progress in that way and then on scalability the fact that we have moved more of our cost to be variable and we have this global ecosystem means that we have an inherently scalable operation now and perhaps more so than we've ever had before So in summary then I'll just wrap up just by saying that we've seen a stabilization in the market after three years of disruption finally and thankfully We now see the market stabilizing and we're now seeing much more customer activity that, yeah, as we mentioned, is gives us has given us a strong q one and an optimism for the year.

35:06 So customer demand is resuming after this this protracted fallow period. We've reshaped the business. We now can be more profitable, and we can generate cash even at a lower revenue. We have restructured the cost base, and we have implemented AI to enable us to deliver higher margins. And again, that's been evidenced in in the year, and you'll see, I believe, more of that in years to come. We have Been able to capitalize on this opportunity for these new content formats that are coming to streaming that have the effect of expanding our addressable market So that's that's you know incremental opportunity that right now we are incredibly well positioned to to take advantage of.

35:52 As a result of these things, we expect going forward, we should take be able to take a greater share of a growing market. We mentioned the first quarter trading trading of FY twenty seven. It was we've had a strong first quarter. That's very encouraging for FY twenty seven. So we remain optimistic, and we believe we're on track to return to revenue growth this year and progressing the profit in the course of the year. Thank you very much. I'll now hand back. Perfect. Stuart, Robert, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

36:43 As Stuart Robert, as you can see, we have received a number of questions. If I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you. Okay. Thanks very much. Alright. I'm going to start with one that comes from Gary. The question is the board has mentioned that f y twenty seven has started strongly. Without requesting specific guidance, what operational indicators are you currently observing that suggest a return to revenue growth? Is that one you wanna say, Rob? Yeah. I mean, obviously, the the operational indicator is revenue. So what we've what we've seen in q one is is a really good response from the RFP wins, the the the the conversations we've been having with with customers. And and as Shu was saying, there's there's almost this people have got more comfortable with with what their content strategies are. The reason why they issued those all those RFPs is because, you know, they were really starting to get the idea as to where they wanted to to go go in this new world.

37:44 And we've really started to see that that come through. So whether it's actually projects we're working on or even the projects we're talking about for q two, it's it's been a really strong quarter quarter for excuse me. So, you know, we we we can't say much more than that. But as as Stuart said, you know, I'm I'm sure some of you won't won't see the analyst, though, may ask about that. But we we are saying that we we expect to return to revenue growth, and we expect profit progression. And what we've seen in q one supports that statement. So I I I think that's probably the best answer I can I can give for that right now? Right. Thanks, Rob. So here's a follow on question from Gary. Fast Track has contributed approximately 10% to group revenue in its first year. Can you expand on whether this revenue is new business, or is it replacing traditional localization revenue? That's a great question. It actually falls in two categories.

38:38 So so there is brand new business that's coming about through this market expansion feature that I touched upon where new types of content are coming to streaming. Because those because that content is time sensitive, it means that localization has got to be done much more quickly. And so consequently, there is a new demand that has emerged in, you know, in the course of the last year that that right now, we are very well positioned to be able to fulfill, and and obviously we're getting on doing that, and we're doing doing that on a monthly basis. So that's kind of one category another category is just the general requirement that we're seeing across most of our major clients to have The results of our work delivered back to them more quickly than before So so one of the features that we're seeing at the moment in the market is that there's quite a lot of licensing activity going on between the big companies.

39:35 So a big, you know, a big traditional film studio, for example, might license might do a licensing deal for a whole catalog of TV series that might go off on a on a different streaming service. So so that will be a deal that has has been negotiated. Once it gets closed, what operationally, what needs to happen then is that that content owner has got to deliver all those materials to the streaming service in the right form so that they'll they can be uploaded onto that platform and and then obviously become become consumable by by the audience and to do that requires at the very least some media services But it may also require some localization if that streaming service wants to go into a Into in into other countries Obviously if if if they don't already exist subtitles for for a particular language there, then they need to be created But even if the subtitles already exist There's almost always some work that's got to be done to effectively conform There's a term pre existing subtitles so that those subtitles are compliant with a particular for requirements of the of that end platform so So all that actually is is is great margin work. It's stuff that we you know that we can do internally through through our internal staff and and so it is you know a feature of

41:07 of those kinds of deals that as soon as that material can be delivered to the license to the licensee the sooner the licensor will get their cash So they want to do that faster than before so so they're looking so they're looking to work with partners who who can do things more quickly, and we think that we're kind of winning market shares or that. So, you know, a traditional provider they have used in the past is past is maybe saying, yeah. I can do that for you. It would take us four weeks. We're coming along and says we can do it in a week, and and, You know if there's a significant price differential then you know we we can win that business and so we're seeing we're seeing some of that as well Okay, I'm going to jump around a little bit here just to mix things up a bit So this is a question from Christopher who asked, for those of us who haven't been able to see any analyst forecast issued today, given the strong first quarter of twenty seven in the report, have the forecast for the year been upgraded?

42:05 You could go No. So so they they haven't been been upgraded. They I think they're only released fairly recently. And as we said, the yeah. It's it's a quarter. So we've we've had a strong quarter. We are expecting year on year growth. We're expecting profit progression. So so, yeah, it's it's a strong quarter, which is is definitely encouraging for for our year, but certainly not at the point where I would imagine the analyst, and it's a question for him, would be wanting to to change those forecasts. Thanks. So another question from Gary, which has got two parts, so I'll take those in turn. The first is with the rapid development of AI, how do you anticipate it will change the localization industry over the next three to five years?

42:53 Thanks for asking, and it actually gives me an opportunity to touch on a point that that will is an important point for me to make, particularly for those who haven't followed the ZOO story and are new to it who may think of ZOO as a localization company, you know, like many other localization companies in the world that have obviously seen AI in in many cases eroding their business. So a key a key feature of the localization work that ZOO does is that it relates to media, and it's and it's the vast majority of it is entertainment content, so it's essentially dialogue between people who are usually acting and playing parts and and and and that's so what we're dealing with is the low localization of the spoken word, and that's a very different requirement from translating a written document like You know an annual report a user manual a patent or whatever it may be So I think that's an important point for everyone to recognize that localization with that we do is is not about Translating text in a literal way. It's about dealing with the spoken word and when you think about the spoken word the spoken word is very Nuanced is idiomatic.

44:15 It's you know It's rich with cultural reference and all sorts of things which means that when you are when we are localizing some content for a particular, language, we have to think about the the context of that, you know, the the the country, the the environment within which that will be consumed, the cultural dimension to that, you know, what people readily understand. So for example, there may be reference to someone who is very famous in The UK and the content, but is virtually unknown in France. So you've got to think about that. Okay. So it's important in this the way this is conveyed that the audience understands the significance that Whatever reference to Margaret Thatcher is a former prime minister of The UK, so that may not be appreciated elsewhere So you've got to think about ways in which you convey the information so that it so the audience Understand has an understanding and it's and it's in a done in a contextual way So it's essentially it's highly contextual and what that means is that it's not just putting it through an AI system at the moment certainly Doesn't give you anything like that can you want it you know it it will tend to treat things as being literal so for example figures of speech tend to get translated literally So as a result of that If you're using AI for the kind of work that we do, then you have to curate very carefully a kind of what's done in it and of course There is always the danger and this isn't specific to us This is in any application of AI There

45:45 is always the danger that if you trust it too much, errors will appear in your output because you're not scrutinizing. And if you're using it to do a bit of research, and it gives you some information that plausibly looks looks Okay, but is factually completely wrong. You know you wouldn't know that unless you went off and then validated that so the same is very much true of of localization and in our world when as this as this as we are using AI, which we are we're now doing to help us you know with the first pass of some of the translations. We need to be sure that we are curating that output and ensuring that it is of the highest quality, and so we can't you know so our our the people who quality control that who are overseeing that can't be complacent They've got to almost assume that it's that it's got it that it's got it wrong and and and look to verify that it's actually got it right So it requires a kind of different mindset and a kind of understanding about the way I AI works and about about what's important to our customers. So in terms of how it will exchange change the localization industry, I think the broader localization industry, I think it will have enormous impact on. I think its use in our sector is much more nuanced, basically.

47:03 So the second part of Guy's question is then, what gives you confidence that ZOO will emerge as a long term player in this evolving landscape? So the the the obvious question is of course, well, AI is getting better every day. At some point, surely, it's able to eat your lunch, and and, you know, and and and you'll be toast at that point. We we we think that that We're not sure that that will ever happen Certainly for the kinds of content that we're dealing with for our customers because for them they want to be absolutely certain It's done to the highest standard and therefore I think you always you're always going to need a human in the loop to curate it to check it, to make sure it's it's accurate, that there are no issues, that it will be properly understood. It has the same meaning, or it will convey the same emotion because we're talking about entertainment content here as as the original did it in its original, in its original language.

47:56 So, so we think that that's always gonna be necessary. And what that means in practice, of course, is that it's something that's difficult then to insource unless you've got experts language experts who can oversee that for every language that you want to produce So so consequently we think though we are confident that ZOO will emerge as a long term player in this evolving landscape because we are very cognizant of the capability and limitations of AI. We're a tech first business. We have integrated within our workflows. We are using it to our benefit and to the benefit of our clients, and we expect to continue to do that. And of course, it will continue to evolve, but we will evolve with it Next question from Matt how strong is the pipeline compared with this time last year?

48:46 Rob. Yes. It's strong. It's good. I think we're in a better place than we were at this time last last year, you know, for for for the reasons that we've given, really, whether that's the new RFP wins, the new business coming through. You know, we you know, we we've had a very encouraging start to the year, and we're we're we're feeling confident for f y twenty seven. Great. Thanks. Next question comes from Andrew. You've referenced being invited to RFP since interims last November. Of two RFP successes you have notified to the market the only successful ones, and our other invitations still ongoing? So so we have not failed with any RFPs. Some of them are ongoing. Some of them have haven't concluded, but nonetheless, we've been, you know, we've assigned work to do for those for those customers.

49:42 So I would say that out of that RFP activity that we saw a bit of a flurry of, you know, towards the end of last time of year, we have been you know, the act was far on us have been very favorable, and we really do feel that we are very much on the radar of big buyers when they are looking at vendors to provide these kinds of services and We you know increasingly confident that we will be successful as these processes conclude Question from another one from Christopher. Rob mentioned you expect the percentage of the revenue from the largest company to fall as a percentage of group revenue. Do you expect it to fall in absolute value, or is that decreased purely because of the increase from other customers?

50:31 I would say it was gonna be mainly from the increase in other customers. So and I have to be very careful because, you know, obviously, we talk about our largest customer, and it's about their content and what they're doing. So I would say that the relationship is still very strong, as strong as it's ever been with them. But what we have seen is is really we've seen that diversification of the customer base, and we're seeing a lot more business from a wider range of of customers. So so that that that is the the main driver of that. Yeah. And I I think that's probably the most I can I can say? Okay. Great. Thank you. That's a good one from Glyn. It says a question for Stuart on share price. I've been an investor for more than a decade. Unlike yourself, seen the major ups and downs.

51:22 Whilst you can't dictate the market value of ZOO's share price, are you happy with it being 90% down on highs? What are your ambitions or goal to see the company growth reflected in the marketplace on the share price? Okay. Well, of course, I'm I'm not happy with the way that the the company is valued at the moment. I think, you know, it's I think it's like was it point three of sales or something like this? Yeah. One two five point three sale. Yeah, so I mean but by any measure that's you know, that's a Terrible valuation, but it's it's very much I believe a reflection on what has happened over the last three years of the the disruption that's occurred within the market of our lack of visibility through that period on on on what we might expect from our customers. And and therefore as a consequence of that, you know, in our trading updates, we've had to downgrade expectations. There is a role of that. So there's some, obviously, some recent history there that's all tied into that disruption within the market and the you know, how incredibly difficult it has been for us to predict how things will play out and at what pace I don't think anyone in the industry really expected this this this disruption would last for as long as it has for for three years so So I I think I think that you know that sort of that that perceived risk and uncertainty is very much priced into the shares at the moment.

52:51 So yes, of course, I can't I can't dictate the market price, and I can't really speculate on how the share price will progress from here. That wouldn't be right for me to do that. But I think one could reasonably expect that as we see stability in our market and an increasing predictability in the business that we receive and the way in which we guide the market on the assumption that we see a return to growth, which is very much what we're expecting, and that growth is profitable and cash generative generative, then you would expect in a in a in normal circumstances, you would expect You know a well performing market to reflect that and the share price to adjust in line with it I Believe I believe Rob said in the 25 interim results presentation fast track was around 10% of run rate turnover He then mentioned he mentioned the same percentage in today's presentation for current run rate which is eight months later that doesn't feel like growth, or am I missing something?

53:58 Yeah. So so with with so when we talk about that 10%, really, that's been around that level in in h two. So when we did the interims, was probably more talking about the the the current situation. The fact is still and we're saying around, so, you know, some some months it's now now a bit higher. And the the fact it's still 10% of revenue, but but actually, you know, that that's that's based on the the absolute amount of of revenue that we're we're generating. And if you look at our results for last year, h one had higher revenues than h two, so h two is a real sort of low point. And we're predicting overall growth for the year in in in f y twenty seven. So there there is growth. There there is growth in in Fast Track, but there's also growth in the in the underlying business.

54:54 So, hopefully, hopefully, that clears that up. Great. Thank you. So next one comes from Andrew. You mentioned in last year's interims November presentation that you anticipated original content production to be increasing over the next kind of year. Have you seen any tangible progress on this front? So I would say the most tangible signs that we have seen at the moment to support our belief that originals are returning is related to the level of dubbing orders that we're seeing currently.

55:40 So, you know, dubbing in this in this in this this period of the last three years, the we we've seen a much lower volume of new original content coming through, and the work we've done has been much more skewed to to older content a catalog content and and one of the consequences of that is that if it's catalog content then there's usually very little dubbing Because what's happening is that someone has got some has got some content that's licensed it to a streamer say that streamer May then commission it to be localized for different markets, but because it's it's typically on a kind of limited time frame It's you know, it's maybe a a two year licensing deal They won't invest in dubbing it because dubbing is an expensive thing to do. They will instead just pay for subtitles to be created in those new languages. So what it means is that when you're dealing with a new original content, you see a fair amount of dubbing orders.

56:42 If you're dealing predominantly with catalog content, then you see very little dubbing content or dubbing orders. So over the last sending over f y twenty six, we've seen a significant reduction in dubbing compared with with prior periods, and that's a function of what what I've just described. So in our in our order book at the moment, we're seeing much more content that requires dubbing services, and therefore, you know, that that for us is a clear indicator that there is a return of of of original content coming that, you know, has been absent for some for some time. Okay, we've got a few a few left So here's the one from within is a Question on fast track and the seven day dub service or same day subtitles.

57:40 So even the second tier would be industry leading, you know, if you can deliver the same quality and same capability. So the question is, why would you not set this as your baseline? I we can deliver five times faster than our peers at baseline level and 10 plus times on the uber fast track capability. So I so I think I I think so I think I think, then, what you've what you're asking there is pretty much what we are doing. So we are we are hearing from customers that they want things more quickly. So our offer is so so we don't so generally, we're not going pitching up and saying, yeah, we can do we can do your dubs. It will it will take us five weeks. You know, we're we're we're pitching up and giving them an honest indication of how long it would take to to do that. And if they're prepared to work with us in the way in which we operate, then we will be possible for us to fill that work more more quickly.

58:41 So so we are in effect, you know, if you like our our sort of de facto offering is is one that has much shorter time lines associated with it than others are offering. What tends to happen is that customers come to you, and they say, we've got this content. We need these services, and we need to deliver by this date. Can you do it? So that's sort of the way in which most Conversations play out with customers and then essentially as a vendor you have to say whether you can do it or not and and because we have fast track this capability now, we are much much more likely to be able to say yes when that when those questions come along than perhaps we would have been able to do previously, and much more likely than we think our competitors will be able to to say yes.

59:35 So thanks for that question, Glenn. So I think we just got a few last ones here. Are you winning market share due to your technology focus? The answer is yes. We believe we are. We we believe we are because our customers want to work with technologically capable partners. And again, that's something that has changed over the three years. You know, three plus years ago, customers weren't really weren't really asking about your technology. You know, for them, it was really all about the fulfillment of the services. They wanted to know can you deliver to the quality that we need in the time frame that we need it and at this price and How we went about doing it was less of a concern to them, but what we increasingly see and and I'm and I'm sure this is all catalyzed by AI and everyone is seeing it and trying it and appreciating it and realizing the impact is having in lots of different industries that that our customers kind of want to know that if a a I can be used for all these services, then they're working with someone who's prepared to use it in order to benefit them as the customer, so so that the benefits of that adoption will will play out into into benefits of the customers whether that's a lower

1:01:05 prices or or faster turnaround or whatever may be important to them so So yeah, the short answer is that we do believe we're winning market share because of that technology focus that we have Why are able to do that much faster turnaround times than peers? Hopefully, we've covered that now through the presentation. It's it's a it's a combination of those two things. It's the tech, and and part of the tech is is the use of AI. But it's also the operating model, the follow the sun model. That means we've got a twenty four seven offering. So, you know, someone comes if a customer comes along and says, I've got this project now, and I need it, you know, turnaround in x. Can you do it? Then, you know, there'll be someone you know, there'll there'll be staff at ZOO who are working whatever time of day that arrives that we can take that on boards, begin it, and although it may get fulfilled in other locations, There's nothing to delay the onset of that of that work So so that enables that combination of those two things and that was the the much faster turnaround times and The phone questions can anyone else do what you can do We are so so obviously our our customers Given that this is an emerging requirement for them Don't obviously don't want to feel that we're the only game in town that we're the only company that can do this.

1:02:36 So there are they are eager to try other vendors with these services. So so we know that our customers are putting some of this work to other vendors, But equally, we also know that the feedback from that is that right now, you know, we are you know, we're we're knocking the ball out of the park on this relative to what others are able to do. And it's and it's not just you know, it's not just being able to do a project to a, you know, a challenging deadline. It's about consistently and scalably on a, you know, Week to week basis be able to fulfill this kind of work Across a whole pipeline of projects so so as far as we know with the only company that is doing that consistently now getting regular business as a result of this think this is the last question. What is the what are the main drivers behind the higher levels of RFP activity?

1:03:38 Okay, so that's a good question. So in our industry these big buyers Periodically will go to the market to make sure that they are they they're working with the best vendors, and they're getting the best prices So it's it's a it's a procurement type process that typically they'll go through every three or four years As you know we work for big content producers and streaming companies. They're obviously not that many of them so in the course of a typical year we would We would see I know two three maybe four in an unusual active year of these RFPs coming through But what happened towards the end of last calendar year was we suddenly got a flood of them. Lots of customers who came forward with with with RFPs.

1:04:28 That's really unusual. That doesn't you know, it just they don't bunch together in that way. That's not that's not typical. And we believe it's a symptom of the fact that There's been three years of disruption customers are coming out the other side of that so so one Time has elapsed since they last did this with they they need to do it now because they're now getting ready to be able to get back into the the the you know more regular work, and and they want to be sure they're working with the best Partners, but also it's due to the fact that they recognize that their requirements have changed So they they do want to work with now more technologically capable companies in a way that they didn't really care in the past. They do want companies who can offer more aggressive turnaround times than they've had before.

1:05:17 So I think it's it was it's just an opportunity to them say okay We're we're gonna be off to the races shortly. Let's be sure working with the best partners, and and we kind of saw lots of this this activity and and as as we've said, we've been we've been fortunate to be selected as a result of a a number of them, which is which is great. That's great, Stuart. Robert, if I may just jump back in there, and thank you for addressing all those questions for investors today. But, Stuart, before we direct investors to provide you with their feedback, which is important to yourself and the company, could I please just ask you for a few closing comments? Yeah. Sure. I I think for those who've been at Folders for a long time and are still following us, thank you. Appreciate your your your patience and resilience. If you aren't new to the story, then I hope what we've said today is is interesting to you, and and ZOO looks to be an interesting company to get more involved with.

1:06:15 We are we're really excited about about what the future holds. In in our f y '23, We reach revenues of 90,000,000 and an EBITDA of $50,000,000. We've had three years of turmoil. We now see you know the road ahead whilst Visibility is limited, and we you know we don't have a crystal ball We feel like the all the pieces of the jigsaw are kind of falling into place now and that we have the right platform and the right opportunity and the market has moved in our in our favor and that you know, we can see look to growth and profitable business ahead. Fantastic. Stuart, Robert, thank you once again for updating investors today. Could you please ask investors not to close this session? As you know, I'll be automatically redirected to provide your feedback, which help the company better understand your views and expectations.

1:07:07 On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.