ZOO Digital has returned to profitability following a restructuring programme that reduced operating costs and broadened its customer base, with the Sheffield-based business reporting stronger earnings despite modest overall revenue growth.
The company recorded a pre-tax profit of $1.2m for the six months to 30 September 2026, reversing a loss of $1.4m during the equivalent period last year.
Revenue increased 5.5% to $23.6m, while adjusted earnings before interest, tax, depreciation, and amortisation rose 79.2% to $3.5m.
Operating profit reached $1.4m, compared with a loss during the previous year’s first half.
The improvement follows a cost reduction programme and changes to the company’s service offering, which combines technology with specialist human expertise to prepare entertainment content for distribution in different languages and markets.
Chief executive Stuart Green said ZOO Digital had benefited from increased demand for faster delivery and a broader range of content formats.
The company’s results show a significant change in where its revenue is generated.
Localisation services, including translation, subtitling, and dubbing, recorded revenue growth of 46% to $16.7m.
By contrast, revenue from media services declined 37% to $6.9m, reflecting lower activity from the company’s largest customer and reduced demand for certain projects.
The difference between the two divisions demonstrates how the company’s recent performance has depended on adapting its operations to changes in customer demand.
Reduced dependence on major customers —
ZOO Digital has made progress in diversifying the businesses responsible for its revenue.
Its largest customer accounted for 26% of first-half sales, compared with 55% during the equivalent period last year.
Revenue from all other customers increased 72%, supported by stronger demand from established accounts and additional work secured through competitive tenders.
Four of the company’s five largest customers increased their spending substantially during the period, with growth ranging from 55% to 306%.
The change in customer concentration reduces the proportion of revenue exposed to purchasing decisions made by any single organisation.
It is particularly relevant because ZOO Digital previously experienced significant disruption as international entertainment businesses reduced production activity and changed their spending priorities.
The company has also reduced its operating cost base.
Operating expenditure declined 21% to $8.9m, compared with $11.2m a year earlier, following previous restructuring measures and lower depreciation and amortisation charges.
Operating expenses consequently represented 37.5% of revenue, down from 50.1% in the previous year’s first half.
Gross margins were slightly lower at 43%, compared with 45%, but the reduction in overheads more than offset that difference at operating profit level.
Technology supports a smaller operating structure —
The company has been incorporating artificial intelligence into its production processes to improve delivery times and reduce the work required to complete routine tasks.
Its accelerated dubbing offering is designed to complete suitable projects within seven days, compared with the four to six weeks management identifies for conventional production.
ZOO Digital continues to combine AI-enabled systems with human specialists, particularly where language, cultural context, and creative judgement remain important to the finished work.
The company says its internal development teams are also using AI tools to improve productivity, with engineers reporting time savings of approximately one to two hours per working day.
These operational figures are based on the company’s own assessments.
Cash EBITDA, a measure incorporating certain development and property costs, increased from $0.6m to $1.9m during the period.
The group held gross cash of $3.4m at 30 September, compared with $3.3m a year earlier.
Management expects further annual revenue growth and profit progression, although some first-half work involved non-recurring projects and the company continues to have limited visibility over future customer orders.
The half-year results show a return to profit following restructuring, with lower operating expenses and a substantially smaller proportion of sales dependent on the company’s largest customer.
