ZOO Digital Group plc (ZOO) Earnings Call Transcript & Summary

Good afternoon, and welcome to ZOO's Interim Results Presentation for FY '25. So that's for the 6 months ended September 2024. So for those who are joining this is a live stream. [Operator Instructions] And then when we get to the end of the presentation, we'll take those questions in order. And hopefully, we'll get through all of them if you've got the time, but we'll implement a hard cut off after 1 hour. Okay. So for those who have not met us before, I'm Stuart Green, I'm the CEO. I was originally the CTO and took up the current role in 2006. I'm also a large shareholder in the business, having invested capital of my own over the years.

Hi, Phil Blundell, I'm the CFO. I've been with the business now nearly 6.5 years. I've obviously worked [indiscernible] as a CFO for many, many years.

So for those new to the story, we are a company that works in the entertainment industry. We're a tech-enabled provider of services and what those services are for is taking finished programs, so TV series and feature films and adapting them so they can be distributed globally on -- usually on streaming platforms and delivered in lots of different languages and which, of course, you do through combination, subtitling and dubbing. On this slide, you can see some of the platforms that we target with the services that we provide. The way we go about doing that is we're a tech-enabled company. So we create proprietary software that makes us very efficient at what we do. And we are also what's referred in our industry as an end-to-end vendor. So that's to say that we can do everything that's needed to take a finished program and getting it ready so that it can then be delivered on a streaming service or many streaming services in lots of countries and therefore, in lots of different languages. So that makes us kind of a one-stop shop and our customers who engage with us on that end-to-end basis assign titles to us, so maybe a new TV series, and we do everything that's needed to put it on to streaming services. Obviously, the entertainment industry, as I'm sure you all know, has gone through a somewhat turbulent time, particularly the Hollywood industry. And actually, our largest customers, some of which are listed on this slide, are large U.S.-based media and entertainment organizations. And the Hollywood sector has gone through a pretty tough time because there has been obviously quite a lot of change in the industry brought about by the transition to streaming and the move away from traditional models of consumption on TV. And what that does is bring about quite profound change in the business models of the organizations who can operate in the space. So with that shift to streaming, there have been -- it's been necessary for big studios to make changes in the way that they operate. One of the symptoms of those changes in progress was the strikes that occurred last year in Hollywood for writers first and then actors, which brought all production to a standstill. So the industry at the moment is really recovering from all of that change and actually is expected to continue to recover through the next calendar year. So during our first half year, what we have seen is actually the return of orders after a period of very low volumes of work as titles have completed and have been passed to us to work on. So consequently, as you'll see, when we get on to the financials, we're showing very strong growth on a year-on-year basis because of that return of work. We -- because we have this tech-enabled proposition, it means that we are very agile and very able to serve the requirements of our customers. And as the industry recovers, we believe we can get back to cash breakeven in the near future. So as a consequence, as the industry resumes because of our business model, we're in a very strong position to be able to capitalize on new opportunities that lie ahead. So just a few key points about our first half year. First of all, our trading was in line with expectations, and we delivered an EBITDA profit for the period and as we had indicated that we would. During the period, we've been streamlining the business. So -- and we'll talk some more about that in a moment, but looking to reshape the business and in particular, to utilize resources in India, where we have 2 facilities now, whilst at the same time, protecting the capacity and the capability we have for production. We've been strengthening our position in the market as an end-to-end vendor, and we'll talk a little bit about some of the things that we can point to there. And as I mentioned, we are expecting our target customers to return to levels of output that are not unlike until the peak period of 2022 at some point in the course of the next calendar year. So with that, I'll hand over to Phil to cover off the financials of the first half.

Thank you, Stuart. So this slide just gives you the financial highlights. I'll go into a bit more depth later on in the presentation. But -- so the key headline revenue growth of 29%. And as it says on the slide, the content that was put on hold during the strikes is now completed and the localization programs started in our first half. And we've seen significant growth across all our business lines, but the most significant was dubbing, which was up 81% in the period, again, giving you that narrative around new productions resuming and being completed to go on to the platforms. What is really pleasing though is our gross profit, $10 million versus $2.1 million. But what's more interesting from an investor point of view is that the actual gross margin was 37%. We set a goal about 3 years ago that we would get to possibly 40% gross margins. So as things have resumed, we've reduced our cost base. And now you can see from a gross profit point of view, that profitability coming through. As Stuart has already mentioned, at the EBITDA level, we generated a profit of $1.6 million. In fact, we guided at our AGM that it would be breakeven. So actually, we're slightly ahead. And that's been achieved even though we were unable to reduce our OpEx, particularly. I'll talk about that in a minute and the reasons why it's harder to reduce your OpEx in a business that has spent heavily on R&D and CapEx in the past. And that's the real reason why we had an operating loss of $2.5 million. It was all to do with depreciation and amortization on projects that were done in FY '22 and FY '23. The other very pleasing number is our cash. We were guiding around $2.5 million net cash. We've got over $4 million at the end of the period. We have no borrowings in our business. When you do look at the balance sheet, you'll see there are -- there is a term called borrowings, but they're actually IFRS 16 property leases. They're not actual borrowings at all. So in 6 months, we spent $1 million. That $1 million, actually, we spent $2 million on investing activities. So hence, why we had an operating cash inflow of roughly $1 million. Again, I'll talk about that. And then during the period, we have strengthened our debt facilities. So as revenues continue to recover, we have that working capital headroom. So at the prelims, we had the $3 million facility with HSBC in the U.S. We've now secured a further GBP 2 million with HSBC in the U.K. to allow us to borrow against our U.K. invoices. So we're in a very strong position to be able to grow the business model.

Thanks, Phil. Operationally, I will pick out 3 themes. Firstly, that we've strengthened our position in the market as a trusted end-to-end vendor, a couple of reference points on that. The first is that actually post period end, we were named as Netflix's Partner of the Year for the Americas. So this is a recognition that Netflix provides every year, and it's based on performance metrics of each of their partners. So they measure the quality of the work that they do and it's on-time delivery and so on. And this award is given to the partner that's performing the best. And clearly, that's a very clear indication of the standard to which we are providing these services to leading buyers in the entertainment industry. We have a KPI that we track ourselves, which we call retained sales. It's really a proxy for customer satisfaction because we -- what it reports is essentially of those customers who spend money with us in the previous period, how many of them have also spent money with us in the current period. And that metric is at 97.7%, which tells you that customers are very happy with the work that we do for them. And one additional thing to mention is that we went through a security audit by an organization called the Trusted Partner Network, which operates specifically in our sector, and that was in relation to our production platforms. And the outcome was a gold standard, sort of the highest standard of recognition. So that tells you also that we are trusted from a security standpoint, which, of course, is a very important consideration for our customers who entrust us with pre-release materials that obviously are very valuable to them. Secondly, we've streamlined the business during the period, whilst also protecting our capability and capacity to do work for customers. We've had to take costs out of the business, having built an organization to deal with a much larger volume of work prior to this disruption in the industry. So the reduction that we've been able to implement related to salary is $4.5 million. We've also continued to expand our freelancer network, which, of course, is the individuals that we work with for -- to do translation, to do voice acting and so on. And that pool gives us a cost-effective and scalable way to be able to tap additional resources to process more work. And then the third key point here is regarding global investments we've made, which Phil has touched on already. But just to be clear, we established an operation in Italy, in Milan, which is an important center and an important country for dubbing in our industry. And by having that location, that gives us access to particular customers and to particular projects that we would not otherwise be able to secure. And then importantly, we've continued to invest in our operation in India, where we have 2 facilities now, one in Mumbai and one in Chennai. And the Chennai facility is new. We've built it over the last year or 2, and it's now fully functional. We have staff employed there who are providing services to our customers internationally. And it -- those locations form part of our solution for our follow-the-sun strategy. So increasingly, we're finding in our industry that customers are looking for faster and faster turnaround of projects. As soon as they complete a new title, a new TV series, they want to get it on to their streaming service as soon as they can. And of course, the last step before they can do that is the work that we do. So in the last years, there has been a drive to shorten that turnaround time. And one way in which we can do that in a very cost-effective and scalable way is to have -- because all the project work is contained within our cloud-based platforms, we can actually move that work from one group of staff to another as -- throughout the course of the day. So as one team in one location comes to the end of their working day, they can hand over to a team in another location. That gives us a very effective way to provide a 24-hour service within our normal course of operations. Phil?

Thank you, Stuart. So a little bit more detail on the profit and loss account. We've talked about the 29% uplift in revenues. And here's a little bit more detail around the dubbing of 81% and the media services up 40%. Again, quite a lot of the media service work we do is around new titles. So that fits the narrative that we are seeing a return of new titles which need to be mastered and prepared for going on to the streaming platforms. Subtitling, only up 7%. And that's because during the prior year, a lot of our customers were selling back catalog to the big streaming platforms such as Netflix and Amazon, and they still needed subtitling work to get that onto those platforms internationally. Talked about the margin improvement to the 37%. That's really been driven primarily by the lowering of our direct staff costs. That's our production team, about $3 million in the first half of the year compared to the same period last year. And as I said previously, that 37% is getting towards our long-term goal of 40% gross margins, which would make us a profitable company. Operating expenses were only down 3%. And that's despite the fact that our salary costs were down 21% as we reduced our central head count quite significantly, of course, over the last 12 months. But there are certain things that we just can't influence in the short term, property leases, IT contracts, depreciation and amortization, which in the period were over -- was over GBP 4 million compared to GBP 3 million and a [ bit million ] the year before. So it will take a bit of time, but the key point here is that, that operating expense is not likely to grow as our revenues grow. And that means that our goal of getting to operating profitability can be achieved in a relatively short period of time as our revenues continue to grow. And the only other point I'd make on this is that there is an ongoing program to make us more efficient, ongoing program to move more of our activities to India. And we expect that by the new year, our breakeven EBITDA number will have dropped from $54 million on an annualized basis of revenue to $46 million of revenue, again, protecting the business, but also meaning that we can grow profitably and generate cash in the future. Sorry, the other thing I should have said is also we are also maintaining capacity at a level above the current market expectations. So we're not jeopardizing the ability to take the business up to $70 million or $80 million in the short to medium term. So maintaining a reasonable level of capacity for future growth. Just a couple of points around the margins by service. Just to reiterate that localization is subtitling and dubbing. We lump it together for commercial reasons. But we achieved a 31% margin in the period. That's not too bad, but we feel there's plenty of growth in that percentage over the coming years. Media services, we actually got 68% in this period, very efficient in terms of our external costs and also a much reduced internal workforce on that particular service. And that's pretty close to where we'd like it to be. We'd like it to probably get to 70%. And then overall, there's that 36%, 37%. In the long term, we'd like that to get to 40% going forward. And I think the last point to make is in terms of our direct costs in the period, which is our direct staff costs, they were around $8.6 million. We will get that down to about $6.8 million in the second half of the year. And then really finally, just to reiterate that we have a relatively strong balance sheet. We've got net cash. We have no borrowings in the traditional debt sense. What we do have is obviously IFRS 16 leases in the U.S. What we don't have anymore is an IFRS lease in the U.K. The Sheffield office is on a month-by-month basis at the moment, which gives us a lot more flexibility. And that really explains why our non-current assets have dropped quite dramatically from $34 million to $27 million. That's all mainly to do with IFRS, but also the fact that we are spending less on CapEx, depreciating more. We've reduced our R&D spend but it's still 0.9 in the first half of the year. We would expect to do the same in the second half of the year. But the amortization is significantly higher than that, which is why those assets are coming down. And when we talk about the leases, you can see the non-current liabilities, which has fallen from $6.9 million to $3.8 million. That's really the Sheffield lease when it was terminated by the landlord. So our key message here is we've got our facilities in place, which we're currently not using. We have net cash. We have a balance sheet strong enough to support the next stage of our recovery.

So just a few words about the market and how things are playing out. Obviously, we're very much -- our [ fortune as a ] business is very much dependent on the market in which we operate. And as I've said, particularly the Hollywood market has undergone a great deal of change. And that change is still ongoing. But there are multiple aspects of the way in which these organizations are reshaping their businesses, all of which we believe actually will be advantageous for ZOO. Insofar as, they create new requirements that we are well placed to serve. And our customers are -- will be better disposed towards working with organizations like us on an end-to-end basis than the way in which they have perhaps worked in the past. So just taking a few key areas in turn. Firstly, in terms of content production, so what I should make clear is that at the moment, Los Angeles has not recovered since the strikes of last year. And obviously, there are lots of actors and studio workers who aren't getting the work at the moment based in Los Angeles. And it's clear that what's happening is that this -- the production of content is moving to other locations. And there has been a trend for that over many years actually, but it seems that it's accelerated now as a result of the changes that the industry is going through because actually, it's possible to produce content much more cost effectively in other territories than it is in Los Angeles. And obviously, some of the changes that came about as a result of the subsequent to the strikes potentially have sort of highlighted the expense associated with producing content in that part of the world. So when you stand back from this though and look at the global entertainment industry, what you find actually is the demand for content is growing. And in fact, the industry as a whole is growing at about a 4% CAGR over the course of the next 5 years. The consumer demand for new and great entertainment content is as strong as ever and is continuing to rise. And what that means for us is that the kind of work that we do, there will be increasing demand for it because there will be more content produced. That content will be going in lots of locations and therefore, will need to be localized. So our scalable business model means that we're very well positioned to be able to adapt as content volumes are restored following this hiatus. Secondly, there is a greater exploitation internationally of content. So streaming companies, once they have content, clearly, they have global reach and want to be able to provide that content to audiences in lots of countries. And therefore, that will in turn drive demand for high-quality localization services of the kind that ZOO provides. We already offer services in 80 -- more than 80 languages. And we have key locations around the world with points of presence that enable us to do that work very efficiently, very effectively into a very high standard. The order book in the short term is subdued and we expect that to continue for a little while longer. But when volumes are restored because of the way in which we've changed the ZOO business over this period, we've reduced our internal costs and the cost of servicing our customers. again, we'll be in a very strong position to be able to recover as that -- as those volumes come back. Our customers -- these target customers, the big media companies in Hollywood and elsewhere in the course of reshaping their organizations have become more streamlined. So they've taken costs out of their business. That's meant that they have reduced their head count. With lower head count, inevitably, it's not practical for them to have relationships with many partners, with many vendors. And therefore, we're seeing a greater preference to working with partners who are trusted, who can cover a wide range of services. And ZOO very much fulfills that remit. And in fact, that end-to-end model that I described earlier, we're seeing increasing preference amongst large buyers to work with vendors on that basis. And as one of very few end-to-end vendors in our industry, again, that puts in a very strong position. So stepping back from all of this, the way in which this market is evolving, it has been painful through this period. But as the volumes of new content come back, which they surely will, we believe, over the course of the next calendar year, ZOO is in a prime position to be able to capitalize on those opportunities. I'd just say a few words about AI. We actually published a white paper last month that sets out how we see AI as an opportunity. We titled it will robots take over the world of localization, which seems a bit perhaps sensationalizing it. But certainly, what we're hearing from investors quite widely is an expectation that at some point soon, it will be possible to do and deliver the services that we provide by using AI technologies. So that's both the translation to create automated subtitles and also voice synthesis to create automated dubbing. What we set out in a white paper, and please, you'll find it on our website, do go ahead and download it and take a look. But our position on this, having spent 10 years or more working with AI ourselves, our position is that for the end of the market that we are serving, the very high quality, high demand where authenticity of the localized assets is all important. We don't believe that current technologies for AI are capable of meeting that requirement just yet. And therefore, for the foreseeable future, we see that human operators, human translators and voice actors will be central to this process. However, AI provides a fantastic tool to assist us and the folks we work with to do this work more efficiently, more scalably to be able to take care of their administrative aspects of it and so on. So AI is certainly a fantastic opportunity for us. We're already using it in a number of areas. But it's not the panacea in our -- for our market that some investors perhaps imagine it might be. So I just wrap up with our outlook statement then. So as I mentioned, the entertainment industry is still in recovery. It's been ongoing for a little while. The strikes ended in November of last year, but we are still in that kind of recovery period because the changes are much bigger than simply the restoration of work following those strikes. There's actually a much more fundamental thing happening here, which is that big media companies are adapting their businesses to -- in order to make this full transition to a future, which is all about streaming. We think that, that will take through the next calendar year. And in fact, market commentators in our sector, I expect that in the course of calendar '25, things in our industry more widely will get back to where they were. For ZOO, what that means is that the timing of when that inflection point occurs is a little bit difficult at the moment for us to call. So the -- our full-year outturn is obviously dependent on seeing continuing improvement in trading, which obviously we've seen in our first half. But at the moment, we -- visibility of our final quarter is very limited. That's not unusual. And that's certainly in previous years at this point in the year, we wouldn't normally have great fantastic visibility of our Q4. But what's different at the moment is just that our customers are still in transition. They're still making changes in the way in which they work. They're changing the projects, making changes to projects on an ongoing basis. And therefore, it's a little less predictable at this point, given the evolution in our market than it would be at other times. Within ZOO, our ongoing restructuring of our cost base provides us and will provide us with a very strong platform to get back to a cash breakeven position, which we can see in the near term. As a result of the cash we have on hand as well as the debt facilities that Phil has explained, we have sufficient working capital to meet our requirements for the foreseeable future. And excitingly, we -- in the course of this period of time, obviously, we've been engaging very much with our customers to kind of understand their changing requirements. And we have identified a whole range of new opportunities that are emerging now that were not present before the disruption began that for us, we look upon those as fantastic avenues for us to explore in order to be able to add incremental revenues in new areas. And in particular, just a couple of areas worth mentioning are around the return of licensing of content, which for a number of years has been something that the major studios have chosen not to do. They've chosen to retain their own content exclusively on their own platforms. But we're now seeing our customers returning to licensing out their premium content. That, again, creates opportunities for us given that it calls on the work that we do. And the second area where we're seeing increasing demand is in accelerated delivery of localized materials. As I mentioned, the -- our customers want to get their content to market very quickly. And this is creating -- this creates some really interesting challenges in our industry that we are incredibly well placed to solve given the tech-enabled nature of our service offering and the cloud-based platforms within which we provide all of our services. Thank you very much for listening. So what I will do now then is turn over to the questions, which we have quite a few that have been posted. I'm going to go through these in the order they appear on my screen. I'm not sure if that's in chronological order or reverse chronological order, but we'll just take them in turn, and we'll try and get through as many of these as we can in the remaining 30 minutes or so in this session.

So a question from Nicholas. Do you have any insights into the way in which Disney's recently announced Department of Technology enhancement might influence their demand for outsourced localization post-production services as opposed to aspects of post-production less relevant to ZOO such as visual editing. You will appreciate that we are under non-disclosure agreements with our customers, and that limits very much kind of what we can say of what we know of their plans. So unfortunately, I can't really offer a response to that question. Sorry about that. A question from Laurent. What should, in your opinion, trigger a recovery in the Los Angeles content production, higher competition for subscribers, industry shakeout and price increases leading to improved profitability of streaming companies? I think the demand for content production in Los Angeles will return. I think what we're seeing is some of a protracted hiatus at the moment. It is the case, however, though, that more and more content is being sourced from other locations. And as you'll read in our statement for our interims report, we -- it's possible to produce given the sort of incentives, tax breaks and so on that are available in other parts of the country -- in other parts of the world, I'm sorry, it's possible to produce TV series outside of the U.S. for maybe half the cost producing in North America. And obviously, that's very attractive. What it means, though, is that inevitably, those productions may be in different languages. But what recent experience with streaming has shown is that consumers are much more accepting of watching content that's not in their native language. And indeed, if you look to some of Netflix's huge successes in recent years, you'll find that many of those actually come from other countries and are originating in different languages. So I think what you will see actually is that those big media companies in Hollywood are moving to a situation where much more of their budget is spent on content procured in other countries. This is the question about higher competition for subscribers, I think these big media companies are all competing with their own streaming services going internationally. Obviously, winning subscribers and retaining them on a month-to-month basis is a big challenge that they all face. I'm sure that there will be further consolidation and change within the industry. I think there's lots more of that to come. Next question is, there was a huge depletion of cash in this period. Where was most of it used? And will the amount used to be different in the next half period?

Yes. I think the person has looked at the year-on-year comparison of cash rather than the 31st of March to the 30th of September when we actually only spent $1 million. And as I pointed out earlier, that $1 million, we spent $900,000 on R&D. We spent $1.4 million on deferred payments on investments. So in fact, from an operating cash point of view, we were positive in the period, just about $1 million. In the second half of last year, the cash balance went from $16 million to $5 million. That went on trading losses. Obviously, we're not in that position with that level of cash anymore. So I think the good news for any shareholder out there is that from an operating cash point of view, we generated cash in the first half of this year. And with no more deferred payments on previous investments with a very low CapEx requirement and a reduced R&D spend, we are in a good position to again maintain the cash balance relatively close to where it was at the end of September, which was $4.3 million.

Thanks, Phil. Next question comes from Sid. In your last call after first half, you had said you will respond to the unanswered questions after the call, but that never happened. Actually, we did respond to questions, and we included the answers within our quarterly investor newsletter. So perhaps said, maybe you don't subscribe to that newsletter or for some reason, it didn't read you. You can read all of the back additions of our investor newsletter on the website if you go to the Investor Relations page. So you will find all of the -- all answers to the questions that we run out of time to cover in the call there. If you're not a subscriber to that, then you might want to consider signing up. We send out a quarterly investor newsletter and provide useful information, hopefully, about our industry and events that are happening and of course, developments into. Next question is from David. How many major studios have adopted ZOOstudio? So for those who are not aware, ZOOstudio is one of our technology platforms that we provide to our customers to give them an efficient way to manage their internal operations in place planning and placing orders for the kind of work that we provide. There are currently 2 major studios who have adopted that platform. One of them is in active use. The other one has been undergoing some corporate activity and the rollout of their streaming service internationally has been postponed. And our expectation is that, that customer will use ZOOstudio once they begin that international rollout. We're also obviously in dialogue with other potential customers about the use of ZOOstudio. Another question from Laurent. How are your competitors doing? Are there some major competitors that ran into financial difficulties and we're not able to invest in their offerings, tech or products? Well, I can't really comment -- I can't really comment and I haven't got the inside track on competitors. We -- just to be clear, in our -- given the kind of clients we're servicing and the high standard that's required there, in our universe, there are only 5 major players who can offer an end-to-end service offering, but a much greater number of companies that can offer one or more of the services in one or more languages. In particular, there are lots of small independent dubbing studios in lots of countries around the world. And we know that many of them have gone through difficulties over this period. And clearly, the disruption for many has created an existential threat, and we're aware of some have gone out of business. For the large players, there are others in a similar sort to ZOO, we know have all had to undergo some cost cutting of their own. So that's been a sort of industry-wide situation, not just in our sector, but more broadly. And I imagine that for a number of them is ongoing for them as it is for us as well. Are you able to gain -- the follow-on question from Laurent. Are you able to gain share? If yes, which markets? We do -- obviously, our focus at the moment is in kind of recovering as our industry recovers. So we're very much focused on getting to the point of cash breakeven at the earliest opportunity. But yes, absolutely, we believe that we -- over the medium to long term, we can win market share. We think that we have a winning proposition. It's very versatile. It's very scalable. It's an end-to-end offering. Customers are moving more to that way of working, and there are very few players to choose between. So yes, we do expect that we will gain market share. And it will be across that range of services that we provide already, localization and the media services necessary to get materials in the right technical format so that they work properly in the streaming platforms. Next question from Mark. Given the change from AI, do you envisage having to spend more on R&D? Well, actually, we don't plan to spend more on R&D. So we do have an R&D team that has contracted a little bit through this difficult period. But we're very committed to our R&D efforts and to continue to innovate across all of the areas in which we work. We have -- a part of that team is dedicated to working on AI technologies. So it's a very active area of work for us. We've already adopted some technologies. We're implementing our own in other areas. And it's really just part of our -- fundamentally part of our journey. From the very beginning, ZOO has -- part of our strategy has been to innovate and create technologies that give us efficiency and bring scalability. So that's really all to do with automation. And AI is essentially is just another -- is another approach that can bring about automation of processes. Another question from David. Please, can you provide an update on your revenue concentration?

Yes. So our largest customer in the first half of the year was 2/3 of our revenue. And that's as a result of projects that were already in the pipeline a year ago that eventually were resumed and completed so that we could do the localization. However, in the market guidance that we put out, that customer drops to 40% in the second half of the year. And going into next year, we expect it to be no more than 1/3 as we start to pick up revenue from some of the other big clients that Stuart has been talking about.

Another one from Laurent. Did the modalities of contracts change in the past 2, 3 years? I would say, no, not materially. And for the benefit of everyone, the way we work with most of our customers is that we have a framework agreement in place with them. Every period of time, 3 years, 4 years, something like that, they tend to go through a process of reviewing their partners, potentially selecting new ones depending on performance and so on. And part of that is to put in place a framework agreement, usually something like a master services agreement, which sets out pricing and everything else. And once that's in place, going forward, those customers will essentially assign projects to Zoom. And we do those projects. We don't have to negotiate prices. Those are already kind of pre-negotiated, so both we and our customer knows exactly what that project is going to cost them. So that hasn't really changed in the last 2, 3 years. And the follow-on question from Laurent is, [indiscernible] become more cost sensitive, will cost savings need to be passed on to clients? Well, obviously, at a time like this, when these studios are striving to reach the point of profitability for their streaming services, then clearly, costs are always important. But what I should make clear is that for the kind of services that we provide, which remember, are related to very high end content, so content that cost millions of dollars to make often, then the things that our customers value the most are, number one is quality and authenticity in the localization and the media services, and increasingly, time to market. So as I mentioned already, there's a real drive to shorten that time to market. So cost is, of course, always important. It's not the most important thing. And in fact, in our world of services that we provide, there is a sort of a general sense in the industry of the going rate for these services. And in fact, with some customers have operate a standard price list. And basically, if you provide services to them, then all vendors kind of operate on those prices. Because of the way in which we operate as a tech-enabled business and leveraging technology wherever we can to make us efficient, that generally means that we are more efficient than our competitors and therefore, are less sensitive to those price pressures. Another one from Laurent. Can you describe the types of contracts your company typically enters into with clients, how cost related risks are shared between clients, freelancers and ZOO? Where the framework agreements are used and how contracts are acquired through competitive bidding or based on relationships? I think I probably preempted all that, and I think I've...

Pre-agreed price lists. It's all transparent in the industry. Freelancer knows what they're going to get per minute. We know what we're going to get per minute, and it's probably the same as our competitors. We just have to make sure that we deliver it as efficiently as we can. So our internal costs give us the edge to make more money for ourselves.

Another question from Sid. Do you have any data on your market share growth/decline recently? We don't. It's actually very difficult to know exactly how the market is progressing because there are so many changes that our customers are making in the way in which they operate and are continuing to make changes. So it hasn't settled yet, and therefore, it's very difficult for us to know what the kind of -- what the new addressable market is. We think that in the course of time, we don't think that the addressable market, the size of the addressable market will have materially changed. But in the short term, it definitely has whilst our customers are kind of reshaping and changing the way in which they operate and changing the kind of content that they commission, so... Sid again asked why do you have limited business visibility in Q4? Is this because you have fewer longer-term contracts and relying more on one-off short-term projects?

Simple answer is that Disney has moved away from giving out 6-month schedules to its suppliers and is being a bit more short term in its approach. There's a major reorganization going in within Disney, and we have no idea what the outcome will be. We've decided to take a prudent view of future Disney revenues, as I explained when we talked about customer concentration. And hopefully, they will get themselves sorted and we can go back to a similar arrangement that we had 6 months ago. But at the moment, the reason we mentioned limited visibility is around Disney specifically.

The next question is from [indiscernible] in 2 parts. I'll take them one at a time. So the first part is the company lost almost 1/4 of its value the day before the results. Have you any thoughts on this? I guess the question is, do I know -- we know why? Our understanding is that there was a large -- a fairly large trade that moved the share price a little bit and triggered stock losses on private trading accounts and that creates obviously a cascading effect. So as the share price drops a little further, there are more stock losses than the trigger and so on. So for what we've seen, it was all retail transaction driven that price fall. Anything to add?

No, I think that's a fair summary. Unfortunately, there's a lot of volatility in our share price. And as quickly as it goes down, it can go up again. So I think that we give an awful lot of visibility. We spend a lot of time talking to small investors. We put a lot of information on our website. So in that sense, when you're looking at the prospects of the company, you probably have more information than most companies give you. So ultimately, you got to make your own decision.

And in fact, the second part of Rod's question is due to this sort of price movement, is the company still suitable for small investors? I mean, obviously, as Phil says, you have to make your own investing decisions. But essentially, share price movements are exactly, I'm imagining what you want in a company, obviously, moving in the right direction once you've invested. Further question from Sid. Is business expecting underperformance in Q4? This seems to have spooked the market. Well, let's just -- we have covered this point, but it is worth kind of elaborating a little bit more. So historically, in the ZOO business, we -- typically, we get up to 3 months visibility in our order pipeline. So our customers historically would come to us and say, here are these projects I want you to do. And that happens every day, every week, we get projects coming in. And they move forward, there's this sort of visibility that we have that tends to -- historically, it's tended to extend for about 3 months. Now our largest customer a year or 2 ago actually made a change and they started to give us longer visibility. So we started to get 6 months visibility, and we're optimistic that, that could extend even further. And of course, that's amazing when that happens, and it gives us an opportunity to be able to plan and forecast. And unfortunately, that customer has sort of reverted to the -- to that sort of piecemeal allocation of projects. So we have mentioned this time that visibility at this point in our year, we've mentioned that visibility in Q4 is limited. But actually, that is entirely usual. That's what would happen. That's happened. That has been the case in every prior year at this point in the year. But what's different at the moment is that our customers are all undergoing changes. And right now, as far from our perspective, are unpredictable. And therefore, when we forecast, there are certain assumptions that we can make about sort of a baseline level of business that is informed by history and what each customer, the kind of volumes of -- the number of projects we get from each customer on a monthly basis, and we can kind of model that. And we use that in our forecasting and then that obviously finds its way into the market guidance that you would read in analyst research notes. But what's different right at the moment, as I say, is that the -- our industry and our customers are still changing. They're still implementing changes. And so there isn't -- it hasn't stabilized. Their buying patterns have not yet stabilized. And therefore, we wanted to just make it clear that things are -- at the half year point, things are on track. We haven't got visibility in Q4. We don't usually have visibility in Q4, but these are not normal times. Some kind of new normality is going to arrive. We think it will be in calendar '25. It will look different from what we've seen in the past. But we think overall, in terms of addressable market, we don't think that in the [indiscernible] of time, that will be diminished. At the moment it is, and therefore, that kind of predictability is not there as it was before. So the question is, is business expecting underperformance in Q4? No, we're not expecting that. We think that on the balance of probabilities work should continue, but we can't know for certain at the moment because we don't have those orders just yet. And your comment, this seems to have spooked the market. Yes, I can understand why that would spook the market. But obviously, we have an obligation to be transparent and we have done that and made that situation. Anything you want to add to that?

Yes. No, I think the point is that we want to make sure that we don't put profit warning between now and the end of March. Hopefully, we can put out a positive trading update instead. And also, it drives the agenda of making sure we are continuing to be as cost effective and as efficient as we possibly can to make sure we're generating cash going forward. Great. So we come to the final question. So you've got a couple of minutes to post any further questions you have before we wrap up. So the final question is from David again. What are your expectations from the excellent news of you achieving Netflix preferred fulfillment partner for the Americas? Well, firstly, it is great news. Obviously, I covered it in the presentation, but it's a fantastic accolade. It is a matter of fact. That's the way that, that system works, and we achieve the best metrics, and therefore, we're recognized as a result. So I think that bodes very well for the work that we do for that particular client. Netflix has not been a huge customer in recent years, but we think that this is -- this provides an opportunity to be able to elevate our position with that customer and secure new business. Yes, absolutely. Very positive. Yes. Okay. So no new questions have arrived. That was the last one on the list. We managed to get through everything, and we still got 4 minutes. So thank you all very much for joining us. I appreciate your time and we'll see you next time.

Thank you.

Thanks.