ZOO Digital Group, the cloud-based localization and media-services company, announced on Friday that it is experiencing a decline in revenue during the first quarter of fiscal 2024. However, the company remains optimistic about a turnaround in the second half.
The dip in first-quarter revenue can be attributed to a disruption in the flow of orders across the industry, which is impacting ZOO’s performance. The revenue generated during this period fell below the company’s expectations, considering it was already anticipating a weaker quarter compared to the previous year.
ZOO Digital Group has primarily been affected by two short-term market factors that are impacting the wider sector. Firstly, streaming companies are deferring costs as part of their cost-cutting measures. Secondly, the ongoing strike by the Writers Guild of America, which has entered its third month, is also contributing to a decrease in localization and media services work on new titles.
Despite these challenges, ZOO Digital Group anticipates being in a stronger position due to a consolidation of its supplier bases. The company has been selected as one of the few vendors for several customers, which is expected to increase its market share. As a result, ZOO Digital Group believes it is reasonable to expect revenue growth to return in the second half.
In addition, the company has received revised guidance from auditors regarding the IFRS 15 accounting rules. These revisions indicate an anticipated increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $2 million in fiscal 2023. However, there will be a downward restatement to adjusted EBITDA of around $1.2 million in fiscal 2022.
Overall, while ZOO Digital Group is currently facing challenges in the first quarter of fiscal 2024, the company remains positive about its prospects for growth in the second half.
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