Xilam Animation 2024: A Rocky Year, but Is the Cat Still in the Fight?

The release of Xilam Animation’s 2024 annual report has painted a stark picture of challenges faced by the French animation giant. Revenue tumbled, losses mounted, and strategic shifts were forced by market headwinds. Yet beneath the surface, the company’s financial discipline and catalog strength hint at a path to recovery. Let’s dissect the numbers and weigh the risks against the potential for a comeback.

Revenue Decline: A Perfect Storm or Self-Inflicted Wounds?

Xilam’s total revenue for 2024 fell to €26.6 million, a 33% drop from 2023’s €39.7 million. The steepest blow came from a 41% plunge in sales (excluding grants), driven by canceled or delayed orders from U.S. streaming platforms in the children’s segment. This underscores the industry’s reliance on a few major clients—a vulnerability that hit hard when demand shifted.

However, the catalog division proved resilient. Despite an 11% annual decline, H2 2024 saw an 8% rebound in sales, fueled by renewals like the Sony Pictures Networks India deal for Oggy and the Cockroaches. The company’s three flagship franchises—Oggy, Zig & Sharko, and Chicky—accounted for 66% of catalog revenue, a testament to their enduring global reach.

The Write-Downs: Accounting Wounds, Not Financial Bleeding

The €26.7 million net loss—versus a €4.9 million profit in 2023—was not a reflection of poor operations but of harsh accounting realities. A staggering €28 million in write-downs dragged down the bottom line:
- €25M impairment on catalog and projects: Falling market confidence and underperforming new titles forced adjustments. Accounting rules barred revaluing rising stars like Oggy but demanded cuts for struggling projects.
- €1M on halted developments: Canceled or reworked projects due to reduced client demand added to the pain.

Excluding these non-cash charges, Xilam’s core operations were nearly break-even (-€0.2 million), thanks to cost-cutting (€3M annual savings) and improved cash flow. The company emphasized that liquidity remained intact, with €7.3M in cash and no debt.

Financial Fortitude: A Cushion for the Storm

Xilam’s balance sheet is its saving grace. Free cash flow hit €7.9M, and operating cash flow surged to €17.2M, fueled by reduced working capital needs. Total equity dropped to €51M from €74M due to the loss, but the debt-free status and strong liquidity provide a safety net.

The company’s focus on catalog management—boasting over 2,800 episodes—also offers a steady revenue stream. While new productions fell to €15.3M (-50% YoY), 70% of this came from non-proprietary “servicing” work, signaling a strategic pivot toward lower-risk, client-driven projects.

2025 Outlook: Betting on New Bets and a 2026 Turnaround

Xilam is doubling down on high-potential projects to rebuild its order book. Key bets include The Little Prince, a preschool series adaptation of the classic, and Buddybot, a preschool show. Management aims to stabilize revenue in 2025 and achieve growth by 2026, leveraging its catalog and partnerships.

Yet risks linger. The streaming market’s unpredictability, especially in the U.S., could prolong headwinds. Competitors like Netflix and Disney+ are tightening budgets, and Xilam’s reliance on a few major franchises leaves it exposed to shifts in viewer preferences.

Conclusion: A Cat with Nine Lives?

Xilam’s 2024 results are undeniably grim, but its financial health and strategic moves suggest it’s far from dead. The €28M write-downs were a one-time hit, and the company’s debt-free status and €7.3M cash buffer position it to weather the storm.

The catalog’s resilience—accounting for 35% of total revenue in 2024—provides a stable foundation, while new projects like The Little Prince (targeting the lucrative preschool market) offer growth avenues. With equity at €51M and a path to breakeven operations, Xilam’s intrinsic value likely exceeds its current market cap (€63M as of April 2024).

Investors should monitor two critical metrics:
1. 2025 order book growth: A rebound in new production orders will signal a recovery in demand.
2. Catalog performance: Continued H2 growth in sales like 2024’s 8% uptick could validate the franchise strategy.

In a sector where content libraries are king, Xilam’s 2,800-episode catalog remains a moat against competitors. While 2024 was a rough year, the cat’s claws are still sharp—give it two more years to prove it can roar again.

The verdict? Xilam isn’t dead, but it’s on life support. For patient investors willing to bet on its turnaround, the pieces are in place—but the next 18 months will be make-or-break.