ZOO Digital Final Results: Lower Revenue, Stronger Margins and a Return to Growth in Sight

ZOO Digital Group PLC has ended a difficult restructuring period with a substantially leaner cost base, better margins and an encouraging start to its new financial year.

The headline tension in these final results is clear. Revenue for the year ended 31 March 2026 fell 14.7% to $42.3 million, primarily because of weaker demand for dubbing. Yet adjusted EBITDA climbed from $1.1 million to $4.0 million, while operating cash inflow more than doubled to $3.5 million.

That suggests the turnaround is gaining substance, although ZOO still reported an operating loss and remains dependent on a genuine recovery in customer orders to deliver the next leg of progress.

The original company announcement contains the complete audited results.

ZOO Digital's key FY26 figures

Metric	FY26	FY25	Change
Revenue	$42.3 million	$49.6 million	-14.7%
Gross profit margin	42%	36%	+6 percentage points
Adjusted EBITDA	$4.0 million	$1.1 million	+260%
Adjusted EBITDA margin	9.4%	2.2%	+7.2 percentage points
Cash EBITDA	$0.4 million	$(2.7) million	Improved
Operating loss	$1.6 million	$6.5 million	Reduced by 75%
Loss before tax	$3.8 million	$8.3 million	Reduced
Operating cash inflow	$3.5 million	$1.5 million	+136%
Year-end cash	$3.6 million	$2.7 million	+32%
Current liabilities	$14.3 million	$18.3 million	-22%

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, with share-based payments removed. It is intended to show underlying operating performance, although investors should remember that it excludes genuine costs such as depreciation and amortisation.

ZOO also reports Cash EBITDA, which deducts capitalised development and property spending from adjusted EBITDA. This improved to a positive $0.4 million from a $2.7 million loss, providing a closer indication that the core operation is now generating cash after internal investment.

How profits improved while revenue fell

ZOO's central achievement was protecting profitability despite a smaller revenue base.

Gross profit slipped only slightly, from $18.0 million to $17.6 million, even though revenue declined by $7.2 million. As a result, the gross margin rose from 36% to 42%.

Administrative expenses fell by $5.1 million to $19.4 million, while operational fixed costs dropped 19% to $13.8 million. Across FY25 and FY26, the group reduced its annual fixed cost base by $14.4 million, including $7.5 million of savings delivered in FY26.

The measures included reducing headcount in the US and UK, moving into smaller premises, integrating international operations and transferring more fulfilment activity to Chennai, India.

This is significant because it indicates that ZOO may not need revenue to return to its previous peak before delivering improved earnings. Management believes the reshaped model contains operating leverage, meaning additional revenue could generate profit faster because the fixed cost base is now lower.

The harder part is proving that the revenue recovery will arrive.

Dubbing demand remains the weak spot

Media localisation revenue fell from $30.3 million to $24.2 million, with the decline entirely attributed to lower demand for dubbing.

FY25 benefited from a backlog of work following the Hollywood actors' and writers' strikes. That made the comparison more demanding. ZOO also said major streaming platforms had changed their content strategies, while customers consolidated lower spending among fewer suppliers.

Media services held up better, with revenue of $18.1 million compared with $19.3 million. A shift towards licensed content helped because this work tends to require proportionally more media services, such as preparing content for distribution, than dubbing.

Customer concentration also improved. ZOO's two largest customers generated 59% of revenue, down from 68%. That remains a high concentration, but the direction is positive and revenue from other customers and new engagements increased during the year.

Fast Track is becoming commercially meaningful

One of the more interesting developments is ZOO's premium Fast Track service for live, near-live and time-sensitive content.

The company says it has delivered dubbing in as little as 24 hours and subtitling in three hours. These projects use ZOO's cloud platforms, global freelancer network and follow-the-sun model, where work moves between teams in different time zones.

Fast Track now represents around 10% of group revenue. That makes it more than an early-stage experiment, although the company did not disclose its precise profitability or customer volumes.

The service could help ZOO address demand from streaming platforms expanding into sports, episodic programming and other content where delays reduce commercial value. It is also positioned as a premium, higher-margin offering.

ZOO is integrating artificial intelligence into transcription, translation, script preparation and voice recording, while retaining human oversight. The opportunity is greater speed and efficiency. The risk is that AI could also displace parts of the localisation work ZOO currently sells. Management's challenge is to remain a beneficiary of that shift rather than becoming a casualty of it.

Quality appears to have been maintained during the restructuring. ZOO's external quality score rose from 98.4% to 99.3%, based on assessed work representing 55% of FY26 revenue.

Cash generation improved, but liquidity deserves attention

Cash and cash equivalents rose to $3.6 million from $2.7 million, supported by a $3.5 million operating cash inflow and better customer collections.

Trade and other receivables declined from $12.9 million to $8.0 million, while trade creditors were reduced from $10.4 million to $5.9 million. Current liabilities fell by $4.0 million to $14.3 million.

However, ZOO drew $1.4 million from its US invoice financing facility. Invoice financing allows a company to borrow against unpaid customer invoices. The US facility has a total limit of $5.0 million, while the separate £2.0 million UK facility was unused at the year-end.

Total borrowings were $4.7 million, broadly unchanged year on year, including lease liabilities. The group therefore has financial headroom, but its cash position is not especially large and some of the improvement involved using financing to reduce overdue creditors.

The directors concluded that ZOO remains a going concern and said forecast profitability, lower monthly costs and available facilities provide sufficient headroom. A dividend was not disclosed.

What investors should watch in FY27

Trading in the first quarter of FY27 was described as strong and encouraging. The board expects a return to revenue growth and further profit progression during the year.

ZOO has secured framework agreements covering multiple services for two major studio customers and has received initial orders. Request for proposal activity has also increased, but associated order volumes are not yet known.

The positive case is that restructuring is complete, margins are materially better and Fast Track is opening a potentially valuable source of higher-margin work. If revenue grows from here, the leaner cost base could translate that growth into stronger profits and cash generation.

The risks are equally clear. Group revenue is still falling, dubbing demand remains subdued, customer concentration is high and order timing can be unpredictable. The business also remains loss-making at the statutory level, with a FY26 loss before tax of $3.8 million after a $1.5 million impairment against joint venture investments.

The next important test is whether encouraging first-quarter trading and recent contract wins convert into sustained revenue growth. ZOO has demonstrated that it can operate more efficiently. FY27 now needs to show that the reshaped platform can grow.