FY23 was a standout year by any metric as ZOO Digital reported 28% revenue growth (+25% organic) and a 7.1 percentage point increase in adj EBITDA margins to a record 17.1%. Group revenues of $90.3m are consistent with the Group’s July trading update ($4.7m below our previous $95m forecast) but adj EBITDA is $1m higher at $15.5m. FY23 revenues could have been even higher if not for a slowdown in Q4 which has continued into H1’24. This slowdown has been well documented, as a number of major media organisations are reorganising operations (e.g. Disney has cut c.7k employees YTD) with streamers pivoting from a period of market share capture to a new focus on profitability. On a medium-term view, ZOO could stand to benefit from these changes (e.g. as an E2E provider ZOO could benefit from supplier rationalisation), but FY24 will be impacted by these changes and the first double strike in over 60 years. FY23 was a significant year, and our newly introduced FY25 forecasts demonstrate what ZOO can achieve once the streaming market returns to normality. We remain at a Buy.
