ZOO Digital released robust FY2018 results today delivering $28.6m of revenue in FY2018, 2% ahead of our forecast, and representing a 73% Y/Y increase. FY2018 saw the Group solidify its reputation as a significant player in the localisation market with the launch of innovative technologies such as ZOOdubs. The outlook for the market and the group remains buoyant with the board confident the Group is ‘just entering an exciting period’. We reflect that in our newly published FY2020E forecasts.
The Group delivered an Adj. EBITDA of $2.4m slightly ahead of our $2.3m forecast. Localisation services encompassing both subtitling and dubbing grew by 148% Y/Y to $21.4m. Fully Adjusted PBT was $0.5m in line with our estimates, but the reported EBIT loss of $5m reflects the $4.6m negative fair value embedded derivative adjustment linked to its convertible loan. The adjustment is a non-cash accounting adjustment.
ZOO delivered significant enhancements to its platform in FY2018 including the launch of ZOOdubs and ZOOscripts. Its increased service offering propels the Group forward to becoming a ‘one stop shop’ service provider for the media localisation and digital packaging services in all languages.
During the period the Group strengthened its board with the appointment of Mickey Kalifa in October 2017. Post period, Phil Blundell will join the Group in July 2018 as CFO. Both appointments bring a wealth of listed technology company experience. Senior appointments were made in Latin America in March 2018 and Asia more recently as the Group expands globally.
Remaining conservative, we slightly increase our FY2019E revenue estimates to $33m from $32.1. We take the opportunity to introduce our FY2020E estimates, where we forecast a c.16.5%Y/Y increase in revenue to $38.5m and a 24% increase in adj. EBITDA to $4.1m, underscoring the operational gearing of the Group.
The outlook for ZOO remains positive with the robust market dynamics experienced in FY2018 anticipated to continue. Ongoing growth in digital entertainment content and expanding distribution channels are expected to drive demand for high quality localisation & digital packaging services for the foreseeable future.