Share Name Share Symbol Market Type Share ISIN Share Description
Zoo Digital Group Plc LSE:ZOO London Ordinary Share GB00B1FQDL10 ORD 1P
  Price Change % Change Share Price Shares Traded Last Trade
  +6.00p +10.00% 66.00p 343,169 15:57:21
Bid Price Offer Price High Price Low Price Open Price
65.00p 67.00p 66.00p 61.00p 61.00p
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 20.37 -3.57 -4.86 49.1

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Date Time Title Posts
24/5/201916:26ZOO Digital7,367
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Trade Time Trade Price Trade Size Trade Value Trade Type
2019-05-24 16:08:5766.0010,0006,600.00O
2019-05-24 15:31:2262.507,5004,687.50O
2019-05-24 15:11:2665.005,0003,250.00O
2019-05-24 15:07:5166.50750498.75O
2019-05-24 15:04:5566.506,7594,494.74O
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Zoo Digital Daily Update: Zoo Digital Group Plc is listed in the Software & Computer Services sector of the London Stock Exchange with ticker ZOO. The last closing price for Zoo Digital was 60p.
Zoo Digital Group Plc has a 4 week average price of 45p and a 12 week average price of 41.50p.
The 1 year high share price is 175.75p while the 1 year low share price is currently 41.50p.
There are currently 74,424,771 shares in issue and the average daily traded volume is 489,432 shares. The market capitalisation of Zoo Digital Group Plc is £49,120,348.86.
tkamp: Zoo's share price is a volatile as ever today. For me personally the investment case for Zoo has changed a lot since I sold out at 135p after the first batch of bad news. Before the bad news this was an exponential growth story for me, with accelerating sales growth and strong margin appreciation. If such a scenario were plausible a share price of 400-500p would have been warranted within 2 years or so. This was also a high-conviction scenario for me, as in that I had high conviction there would be a steep growth trajectory with few hurdles for several years to come. Recently I bought back in at 50p, but with a different story. I now realize it's path to 'greatness' is much less certain and that there are several things holding them back (management should be allocated blame for misrepresenting facts to investors though. e.g. not informing the market about a massive one-off $2.5M deal). I now see 2 scenarios for Zoo: 1. Sluggish, unstable, relatively low growth (e.g. 5-10% p.a.) with margins never reaching their high of 2017 again (2017 EBITDA was 11%). Basically in this scenario profits/cash flows will never be material and the company stand-alone has very little value. The only value in such a scenario would come from a competitor buying it up (presumably at a fairly low price, say 30-40p a share). 2. A positive tail-event takes place that catapults Zoo's growth. In the past such an event was the adoption of ZooSubs by Netflix (preferred vendor standard) that helped double Sub revenues within 12 months. A new such event could be Netflix giving ZooDubs preferred vendor status. If that were to happen the impact would easily be 10x that of the ZooSubs situation as Dubbing is way more expensive than subbing. If ZooDubs gets adopted by Netflix this share will easily surpass previous levels of 160p. Another positive tail-event could be widespread adoption of ZooStudio, or Zoo becoming a top-tier supplier of dubbing for another huge OTT vendor like Disney. I am not sure how likely either scenario is. While in the past I was very bullish I now wouldn't put much more than a 50% probability on scenario 2, probably even lower than that (~30%?). However, the value you would capture in scenario 2 is many times larger than the value you would lose in scenario 1 (e.g. 50% downside vs. 300-500% upside). I also think there is some upside to scenario 1 where maybe sales growth a low rates but margins do recover as Zoo invests less in new products. E.g. if you model 10% sales growth for the next 2 years and assume EBITDA margins reach 12.5% by FY2021 (only 1.5% above FY2017) then you get an EBITDA of $4.4M, which is 11.5x today's EV. Hence Zoo has really become a 'base scenario is negative but Expected Value is positive' type of investment. That's why I no longer have >50% of my portfolio invested in it but instead a much more modest amount (5-10%). If the price goes so low that the value at risk of scenario 1 becomes very low I will be adding more aggressively. PS: Peachie, with all due respect but you're acting like bit of a clown here. Propping up Zoo in every post and then all of a sudden selling out because you cannot handle the volatility? People who whine about short-sellers are people who shouldn't be investing in the first place. If you have conviction in your position you do not care about that, and even use the opportunities short sellers provide you with. The convertible isn't due for another 1.5 years so depressing the price now doesn't damage the actual operations of Zoo (in which, let me remind you, you are actually invested, not just a digital ticker) in any shape or form.
martina pescatore: The Zoo share price should broadly mirror the success of the company in executing its strategy. Over the last two years it has succeeded in its strategy and the share price has reflected this. Moving forward, the company appears to have disruptive technology in a substantial market (dubbing) and appears to be gaining market share where they previously (one year ago) had 0% market share. If the company continues to gain market share and I personally cannot see them not achieving this, then the share price should again reflect this success and reward shareholders. The shares will never go up in a straight line, as they never do, even for star performers such as AMS, ASOS, etc. Patience and sitting on your hands is a good strategy in many instances with growth companies, IMO. NIA and DYOR
wilddcw: Lasata -'I notice Zoo share price was £7.50p in 2003...…what were they doing then?' They were at about 10p but have since had a 75:1 amalgamation. They were into DVD authoring software just as streaming took off. I had some about that time and they crashed when I was on holiday - I ignored them until the company had been turned around - this time buying at the bottom!
lasata: Thank you I notice Zoo share price was £7.50p in 2003...…what were they doing then?
brokenbuckles: Just one more point; if she had the insight and inclination to make money out of the Zoo share price, one would have thought she would have sold everything she owned a few years ago and put it all in Zoo shares. She didnt have then, I dont suspect she has now.
martina pescatore: Great post and analysis Mr T. We discussed and compared these two companies and their corresponding valuations a month or so back and the conclusion then was that either KWS was over priced or Zoo was underpriced, or perhaps a combination of the two. However, what interests me very much as a shareholder is value and from what I can glean is that Zoo could easily be priced at a higher ratio than KWS (in time, but how much time?) given the summary you have indicated above. The direction of the Zoo share price indicates that others think this too I guess. Time will tell I suppose. NIA and DYOR
martina pescatore: Based on KWS, a crude adjustment to revenues against mkt cap could imply that with revenues approximately 6 times greater than Zoo and if we assume similar profitability and growth prospects for both companies (ignore cash and debt at the moment) then KWS could have a mkt cap at circa 6 times greater than Zoo? KWS recent trading statement indicated ebitda of circa 22.5M Euros on revenues of at least 150M Euros (15% margin therefore, which is the same minimum figure that the Zoo FD talked about, but which Zoo are eating into whilst building out their zoodubs and I presume for their R and D in order to grow and capitalise on the opportunity) !!! (Personally, I prefer Zoo's strategy and market sector, with strong growth dynamics, to KWS's though, but let's not go there at the moment). No doubt however that KWS has seen great share price appreciation over the last few years though, and very well done to investors in KWS. KWS has a mkt cap of circa £1.05Bn divided by 6 = £175M !!! On this metric, KWS could be overpriced, Zoo could be under priced, or a combination of the two could be right. Alternatively, this could be a lot of nonsense !!! KWS do have more cash than Zoo at circa 30M Euros I believe, but they also have about 18M Euros of debt I believe, so net cash not overly material from a comparison basis. However, deduct 12M Euros (say £10M) from £175M and we have £165M, which with circa 74M shares in issue for Zoo would imply a comparison share price for Zoo of 222p per share. I am not suggesting this as a target price, but who knows what the Broker will come up with as a new target price when the company next reports its final figures in around June 2018. Based on what we know already, I would bet my hat that the Broker's target price will be above the current 97p. NIA and DYOR
martina pescatore: Good growth companies need various attributes and I believe that Zoo is now exhibiting many of these, whilst the market that Zoo is operating in is also growing strongly, therefore there are many positive dynamics in Zoo’ favour. I have no doubt that Zoo is growing strongly and is operating within a favourable market sector. Everyone can now see this. Furthermore, it is also likely that Zoo will continue to grow strongly given the size of the dubbing market that Zoo is targeting and by the fact that they currently have barely scratched the surface of the $1.4bn pa market. How to value a growth company does need careful consideration though, otherwise as the share price rises and overzealous holder could easily be selling the shares when he/she should actually still be accumulating the shares, given the strength of growth. After all, who doesn’t want to hold as many shares as possible if the price is likely to go up? Therefore, for me, even though it is tempting and never wrong to sell with a profit, it could be the worst investment decision to sell now. For me it therefore comes down to valuation. Is the value of Zoo fairly reflected in the current share price (88p) and mkt cap (circa £65M)? What profit would Zoo have made in this FY on revenues of at least $28M if they weren’t investing heavily in Zoodubs? $4.2M on a 15% margin? $4.2M=£3.0M PBT? Zoo should pay no tax for a while. Zoo is growing profits strongly and in order to have a PEG below 1.0 then eps growth needs to be at a higher rate than the PE ratio applied in the valuation calculation of the company. Crudely then, if Zoo is growing profits at a rate of 50% (I think it is much higher actually but don’t have the numbers to hand) then they could be valued on a PE ratio of 49 (let’s say 45 for arguments sake) and we have a starting point for assessing value, IMO. 45 x £3.0M = £135M. £135M / 74M shares in issue = 182p. Oh and then we have the revenue and profits and growth to come from existing services plus zoodubs for a number of years henceforth I expect, not to mention the value from any as yet not launched services. My conclusions therefore are that I should not be a seller but should in fact be a buyer at these price levels, and indeed the direction of the share price strongly indicates that the market has reached similar conclusions. These are my thoughts and others must do their own analyses etc. NIA and DYOR
martina pescatore: My current thoughts regarding the opportunity for Zoo, and no advice intended… Also, I apologise in advance for the length of this post, but as we all know, it helps to write things down, shares one’s thoughts and ask for valuable contributions from others. So do please contribute. Currently, there are circa 73.5 Million shares in issue. Zoo, without zoodubs and zooscreen is at just ahead of breakeven, with revenues of $16.5M for the previous year to end 31 March 2017 and a minimum of $12M for the first six months to end Sept 2017. In fact, it is likely IMO that the company could make circa $1.0M profit for the current year excluding zoodubs and zooscreen. So let us assume £0.5M profit excluding zoodubs and zooscreen. The broker has said that Zoo currently have about 10% of the EMEA (Europe, Middle East and Africa) market for subtitling, a market valued at circa $300M. However, from my calculations and the data we know, Zoo’s annual revenues from subtitling are not $30M (10% of $300M), they are in fact, likely to be around half that, at circa $15M, IMO. Therefore, from this I deduce that the service offering that Zoo has in zoosubs is providing significant cost savings for content owners. Hence, they are winning business and growing market share. Now, the zoocore and zoosubs platforms launched in 2012 and the subtitling service was launched in 2013, so let’s say five years ago. Therefore, zoosubs has taken circa five years to achieve 10% of the market, ostensibly supported by the new technology approach and the savings that the content owners can achieve, I presume. NB: There is no doubt that the quality is also as high as other subtitling services otherwise zoo would not be succeeding at all. The company has therefore demonstrated both technical development and implementation of the platform and service as well as demonstrating execution of the service offering, together with a start from virtually zero in respect of clients who had not used Zoo for such services before. Selling other new services (eg dubbing) to existing clients (the door is already open theory) should therefore be somewhat less complicated I presume. So, moving onto the opportunity that is dubbing and the new zoodubs platform and service offering. The EMEA market size for dubbing is reported to be $1.2Bn per annum and growing at circa 8-10% pa currently. Let us assume that zoo can similarly achieve 10% of the EMEA dubbing market over a five year period (and that the EMEA market does not grow), therefore broken down this would neatly suggest incremental 1% market share growth every six months. Let us assume that similarly, the zoo market offering is at half the cost for the content owners, but no compromise on quality of course, therefore the calculation for revenues for the first six months (Oct 2017 to end March 2018) could be 0.5 x 1% of £1.2Bn = $6M revenues. Is this possible? So, as a logic check, $6M for six months equates to $1M per month or close to $50,000 dubbing revenues per day. Perhaps this is too much today and this week, but as I suspect it will grow incrementally, the revenue rate could soon get to this level. So, I conclude that it could be possible. As zoodubs integrates both the proprietary dubbing platform and zooscreen technologies, net profit from dubbing could be 20% - 40%, but let’s assume 20%. Therefore, this could add 20% x $6M = $1.2M (say £1.0M) of profit for the six months to end 31 March 2018. By extrapolating this forward, therefore for the following year as a whole we could be looking at 3% of the EMEA dubbing market = $18M revenues (£3M profit) from zoodubs alone, added to the circa $20-24M revenues (£0.5M profit) from the existing business. Totalling £3.5M profit for the year to end 31 March 2019. Projecting forward, this could be £5.5M profit to year end 31 March 2020, based on 5% of EMEA dubbing market. Projecting forward, this could be £7.5M profit to year end 31 March 2021, based on 7% of EMEA dubbing market. Projecting forward, this could be £9.5M profit to year end 31 March 2022, based on 9% of EMEA dubbing market. Can the zoo dubbing service achieve this market penetration this quickly? Well, if the cost savings illustrated above are attractive to the content owners, and if the voice actors like the tools (anecdotal evidence, suggests that they do, as does common sense), then I believe that it can. Also, bear in mind that the zoo dubbing service via zoodubs incorporates zooscreen. Now, currently if a recording studio wants to create a dubbing track for a movie, the movie content could be available in an unsecure form, such as dvd, making it vulnerable to piracy. With zooscreen, the content is secure and protected from piracy, also saving the cost of producing and distributing dvds. What is not to like about it. No wonder it has been winning awards. Remember these words from the recent IABM award for innovation: In their feedback about ZOOdubs, the IABM panel highlighted: “This is not just an app but an entire service. An elegant use of the cloud that leverages all its advantages of speed, flexibility and scalability to transform the process. A real innovation of how dubbing will work in the future." It is possible then that less than 1% per six months or even greater than 1% per six months could be achieved, who knows? So lastly, if we believe and consider that zoodubs can achieve the above, I have put the profit forecasts that I have suggested on a forward pe of 30 (could easily argue for 40 or greater with the growth in profits indicated) and we have: 2017/2018: possible profit of £1.5M = mkt cap of £45M = 61.2p share price. 2018/2019: possible profit of £3.5M = mkt cap of £105M = 142.9p share price. 2019/2020: possible profit of £5.5M = mkt cap of £165M = 224.5p share price. 2020/2021: possible profit of £7.5M = mkt cap of £225M = 306.1p share price. 2021/2022: possible profit of £9.5M = mkt cap of £285M = 387.8p share price. The above are all based on the current circa 73.5 m shares in issue and are all hypothetical of course. There is of course many a slip between cup and lip and none of the above is guaranteed. For me it is simply food for thought in trying to understand the possibilities and trying to value my shares now and over the next year. As the market starts to value the company more on projected future earnings, rather than the past, I can see great potential share price appreciation possibilities here. NIA and DYOR
kcr69: Sicknote, I am glad you bought back in for three reasons 1. Forget Cannacord, it was clearly you who triggered the 6p sell off a few days ago as you unloaded your wad on the unsuspecting market. Don't need any more of those events. 2. The volume of posts dramatically reduced in your brief absence. 3. Obviously none of my business, but I really didn't want to see you put even more money into Triad and Premier Oil. I think the first is an outright basket case, and the second, which incidentally I hold, and I think will eventually come good, but expect a long long time for any decent share price appreciation to be realised. Major difference between Zoo and Premier oil. The management control the destiny of the Zoo share price through execution, whereas the banks, bondholders and hedge funds will control the share price of Premier Oil for some time to come, irrelevant of delivery of Catcher etc. Best wishes and good to see you back.
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