Xilam Animation (XIL) H2 2024 earnings summary

Executive summary

• Revenue declined 41% year-over-year to €23.5 million due to reduced orders from US streaming platforms in the kids' segment, but the company maintained a strong cash position and is debt-free.

• Net income was heavily impacted by €28 million in catalogue and development project write-downs, resulting in a net loss of €25.6 million; excluding write-downs, net income was near breakeven.

• Shifted focus to the young-adult segment and international markets, with 75% of sales generated internationally and 53% from digital platforms.

• Nine series and one feature film were in production, including three new proprietary productions and three renewals.

• The company is leveraging its strong brand, flagship franchises, and solid cash position to rebuild its order book amid industry downturn.

Financial highlights

• Total sales for FY 2024 were €23.5M, down from €39.7M in FY 2023; total sales and grants reached €26.6M, down from €45.7M in 2023.

• Operating income before write-downs was €-1.4M; net income group share before write-downs was near breakeven.

• Exceptional write-downs of €28M, mainly due to catalog and project impairments, led to a consolidated net loss of €25.6M.

• Free cash flow remained strong at €7.9M, supported by reduced working capital needs and lower investments.

• Positive net financial cash of €1.6M at year-end, with cash and cash equivalents at €7.3M.

Outlook and guidance

• Strategic pivot towards young-adult content and major European channels to offset the slowdown in kids' content demand from streaming platforms.

• Revenue is expected to decline further in 2025 due to a low order book, with growth anticipated to resume in 2026.

• No significant additional fixed cost reductions planned for 2025; focus remains on talent retention and operational capacity.

• Upcoming releases include The Doomies on Disney+ and the family feature Lucy Lost.

• Three major new projects in production for 2025, with more under discussion.