Digital Domain Reports 2022 Results: Turns to Positive EBITDA of Media Entertainment Business Segment Driven by Record Revenue in 30 Years of the Business and Laser Focus on Core VFX business
03.31.23March 31, 2023, Hong Kong – Los Angeles, -- Digital Domain Holdings Limited (“Digital Domain” or the “Group”), Hong Kong listed visual effects (“VFX”) and virtual human technology company, reports full year results for 2022 that reflect the Group’s largely completed reorganization plan aimed to refocus its business on providing the highest quality VFX services to the world’s leading content producers (mostly Hollywood studios and global game publishers).
In 2022, the Group has recorded a revenue of HK$959 million (US$123 million), compared to HK$864 million (US$111 million) or 11% increase from the same period in 2021 – this is the all-time highest revenue in the 30 years of the Group’s operations.
Following Digital Domain’s refined focus on VFX services, closure of loss-making activities, combined with achieving over HK$780 million (US$100 million) in sustainable revenue scale of the business and significant investment in high-quality or lower-cost production hubs in Canada and India, the Group has transformed itself into a firmly profitable operation with a gross margin of 23% in 2022 compared to 14% in 2021 and 11% in 2020. This systemic change in the profitability of Digital Domain led to the Group reporting positive EBITDA of Media Entertainment Business Segment for first the time since 2014; in 2022, Digital Domain generated positive HK$6.15 million (US$0.8 million) EBITDA of Media Entertainment Business Segment versus the negative HK$304.7 million (US$39.2 million) in 2021. On the net basis Digital Domain reporting HK$215 million (US$28 million) net loss in 2022 (a reduction by 72% compared to 2021 net loss of HK$781 million (US$100 million) – those losses largely explained by impairments and write-offs of multiple non-core legacy activities accumulated by Digital Domain over the years before the Group’s focus shifted to building profitable and scalable VFX operations in 2021.
“Our 2022 results evidence successful completion of the Group’s reorganization aimed to build scale and profitability in our core VFX business,” commented Daniel Seah, CEO of Digital Domain. “We intend to preserve focus on profitability and positive operating cash flows and we’ll look for further profitable growth opportunities both in our core VFX business and in the commercial exploitation of our highly relevant technologies for artificial intelligence” added Mr. Seah.