LONDON (ShareCast) - (Sharecast News) - Zoo Digital reported improved profitability and a return to cash generation in the first half of its financial year on Wednesday, saying its restructured cost base and growing demand for higher-margin services had positioned the business to meet full-year expectations.
The AIM-traded localisation and digital media group posted a 19% year-on-year decline in revenue to $22.4m for the six months ended 30 September, reflecting the unwinding of post-strike backlog work that had boosted the first half of the 2025 financial year, but said revenues had stabilised relative to the second half of last year.

Gross profit held steady at $10.1m despite the lower revenue base, lifting gross margin to 45% from 37% after the company implemented a substantial cost-rationalisation programme and expanded its media services offering.

Adjusted EBITDA rose 18% to $2.0m, while cash EBITDA turned positive at $0.6m compared with a $0.1m loss a year earlier.

The operating loss narrowed to $1.2m from $2.5m, and Zoo closed the period with $3.3m in cash, up from $2.7m at the end of the second half of 2025.

Current liabilities were reduced to $14.4m following action to pay down aged creditors, partly funded by drawing $1.7m on invoice-financing facilities.

Zoo said previously-announced cost-saving measures were now fully embedded, reducing fixed costs to $15.5m from $23.2m a year earlier and creating a more flexible, cash-generative operating base.

The group highlighted successful delivery of its new premium fast track localisation service for a major global streaming customer, turning around dubbing in 24 hours and subtitling in three hours - far faster than traditional industry timelines.

Zoo said demand for the service was expanding beyond localisation into end-to-end media services, with additional projects under way in sport and near-live content.

The company said it had integrated AI into multiple workflows with explicit customer approval, using a "human-in-the-loop" model to maintain premium quality while driving efficiency gains.

AI-enhanced workflows had started to generate cost savings shared with clients, and Zoo published an updated AI white paper during the period to reinforce its positioning as a thought leader in the space.

International operations had also been fully integrated into Zoo's technology-led workflows, with production centres in India continuing to scale and support its follow-the-sun model.

Trading improved through the half, with second-quarter performance exceeding the first across all financial metrics.

Zoo said customer confidence was returning as content strategies and internal structures at major studios stabilise, leading to a growing pipeline of new projects.

While the transactional nature of the business limited revenue visibility for the second half, the company said it was trading in line with expectations and remained on track to meet 2026 market forecasts.

The group said it expected further progress in deepening customer relationships and deploying its technology platform, targeting a return to revenue growth in 2027.

Chief executive Stuart Green said the company had "started to turn the corner" after industry disruption.

"We are now on a more solid footing with a rightsized cost base, stable revenues, improved profitability, and generating cash," he said.

Green added that Zoo was "positioned to benefit as the only truly tech-first end-to-end vendor in our market," and that the company looked to the future "with a renewed sense of confidence."

At 1435 GMT, shares in Zoo Digital Group were up 9.13% at 10.64p.

Reporting by Josh White for Sharecast.com.

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