Aardman, the Bristol-based animation studio behind Wallace & Gromit and Shaun the Sheep, has fallen short of its goal to return to profit, its annual accounts show. The employee-owned company aimed to record a small profit in 2025 after two consecutive years of losses, but was hit by production delays and what it described as a challenging market in children's content.
Revenue rose 8% to £20.4m in the last financial year, narrowing its loss from £4.1m to £1.1m. The studio said the timing of some significant deals and weaker income in parts of the business had hurt its bottom line.
Aardman enjoyed a recent creative high with Wallace & Gromit: Vengeance Most Fowl, which became the most watched animated film broadcast on British television since 2002, won two Baftas and received an Oscar nomination for best animated feature. But the accounts show a further strategic review was undertaken in early 2026 to manage inflationary cost pressures, resulting in several redundancies. Headcount fell from 297 to 230 people over the year, with permanent staff down from 128 to 110.
The studio also identified artificial intelligence as a principal risk to its business, saying AI and generative AI were reshaping parts of the creative industries, creating opportunities to improve workflows while raising legal, ethical and authorship issues. It said the technology must be developed and used responsibly and selectively, in ways that "support and celebrate human creativity and craft rather than replace it".
Aardman is hoping for a boost from a recently opened exhibition at Lightroom in London exploring its 54-year history, a third Shaun the Sheep film released last month, and an audiobook of Gromit's autobiography read by Martin Freeman.
Peter Lord and David Sproxton co-founded the studio in Bristol in the early 1970s and transferred majority ownership to staff in 2018 to safeguard its independence.