Nine Entertainment Co. Holdings Limited (NEC) Earnings Call Transcript & Summary

Okay. Well, thank you very much, everyone. First of all, I'd like to acknowledge the Cammeraygal people of the Eora Nation as the traditional custodians of the land on which this meeting is held. We pay our respects to elders, past and present and recognize the continuing connection and contribution to this land and waters. Okay. So what I'd like to do today over the course of the next hour, what I'll do is we'll show a quick video. I'll do an introduction to QMS, and I'm going to ask John O'Neill to come up and take you through the vast part of the presentation. Matt James, our Chief Revenue Officer, will take you through the connection with Nine, et cetera, as well. I'll come back, we'll do -- I'll finish off the presentation. We'll have a video, and then we'll get into Q&A from there to get through the questions. This has been lodged on the ASX. So this is up on the site already. Some of you may have looked at it, but we'll take you through the slides in a bit more detail. So without further ado, we'll just jump into a video. [Presentation]

Okay. Imagine what we would have done if we had the rights to the Australia World Cup team, but there we go. Anyway, moving on. And just post the sale of Domain, in January, we announced some changes to our portfolio, selling the radio business, selling our regional business and the acquisition of QMS. We've also just recently announced a Pedestrian TV sale and getting out of Future Women as well. So we really cleaned up the portfolio now to be streaming and broadcast, publishing and outdoor QMS as our 3 major platforms. So going forward, we think this is a unique cross-platform digital media proposition. And it leaves us as we go into FY '27 with 70% of our EBITDA in the hands of our growth assets. So we're very well placed and what we talk a lot about is the Sofa to the Street, and we'll take you through that today. But QMS is what we're here for today. And what I'd say is we took a long time looking at the outdoor sector and reviewing that and got to the point that this is the fastest advertising category that there is, and QMS is the fastest growing business within that category. And what you see today is it's highly weighted to high-margin assets with 96% of the QMS Australia business being digital. And importantly, more than 80% of the leases that we have out there are not up for renewal for another 4 years or so. That gives us a very good runway and allows us also to be very active in the market trying to go after new assets. Very complementary programmatic and data-driven capabilities and offers a strong long-term revenue opportunity for the Nine Group. So John will take you through most of this today as well as Matt will take you through some of those. Before we do that, I just wanted to touch on the trading FY '26 because there are some questions around that. And we were looking for circa 20% growth EBITDA in that, driven by the full year impact of the FY '25 accounts that had won, FY '26 new accounts and the market, which has continued to grow through there. What we've had is, we did slow slightly with the -- we slowed the Auckland Transport rollout, and that was a choice we made around what we did with some of the assets there as well as the FX impact. And the market in H2 has not been as strong, and that's across all advertising mediums, as you know, going forward. But we've outperformed on the City of Sydney, which is really the real premium jewel that we have in the contracts there, outperformed where we thought. So about 12% to 15% growth is what we're thinking for pro forma, I suppose, FY 2026. Important to note, we've only owned it for this quarter, and quarter 4 actual growth in revenue is actually stronger than what we saw in quarter 3, which is pleasing. And showing none of this from a long-term economic point of view and the fundamentals of the business, are very strong as well. So we're very pleased with where we -- as we head into FY '27. One more slide for myself talking about this, and this is what you'll pick up today. John will talk a lot about occupancy and yield, where we are with that, the opportunity for growth through that. This unique portfolio mix we've got. So the way we are slanted towards higher-margin profile assets, the incremental sites under existing contracts such as the Auckland contract, how that rolls out and the other ones as well, new contracts that we've won and will win as we go into FY '27. The annualized cost synergies, we flagged the $20 million over 3 years where we are going through there. And then Matt will touch a bit on the growth synergies with Nine. Okay. So just before, I just like to introduce you to John O'Neill. So John, just before he comes up here, just to let you know, he was -- he's been in the business since the inception of QMS, and he'll show some graphs here. But he was just awarded in -- at the 2026 World Out of Home Organization Leadership Award, presented in the Congress in London. He won the most exceptional leader and innovation within the global out of home industry. So very strong. And the OMA, which is the Outdoor Media Association, CEO talked about John as the driving force in advocating the efficiency of out-of-home because he genuinely believes in what the channel can deliver for advertisers, agencies and communities. So I just want to hand over to John because he won't say that when he's up here himself, but he has driven this business of QMS, and he should be very proud of that, and he'll show you what's happened and the future going forward. So John, do you want to jump up here?

So good morning, everyone, and thank you very much for making the time. It's certainly a great privilege to stand up here on behalf of the executive team at QMS and the wider team and to share our story. We are only 14 or 15 years young in the business. Having said that, we would hold the most experienced management team in the out-of-home industry by far. The people that we've taken along the journey and certainly my 30 years in the industry has seen us invent a number of brands that exist in the market currently, invent a number of the assets that you see in the market currently. And more importantly, the team that we've built have led strategy, commercial, sales, marketing and operations across airports, shopping centers, large-format bridges, the digital innovation aspect and the retail category. So the basis of our business is full of experience, full of experts, and it's been a wonderful journey, a great group of people that hold each other to account, which has probably contributed to the business to getting where it is. The brand vision clearly was to be leaders in digital out-of-home in Australia and New Zealand. We wanted to change the big canvas medium. We were desperate -- thanks, Matt. We were desperate to change -- I normally get someone to do the clicker for me. We were desperate to change the whole situation around out-of-home and challenge the way that out-of-home was consumed by advertisers and how we sold the medium. So it was all about transforming this big canvas media into a digital connected network. So as I said, the focus was all about innovation and being digital leaders in Australia and New Zealand. With that being the case, digital-first and quality over quantity was always where we wanted to be. And when you're building a business from the ground up, it's easy to take on a lot of assets because you think you need those to try to play the game. But from our perspectives, we held firm on our values, and we looked at quality assets and making sure that the premium aspect of that also enabled great return for us. The innovation and the data and the research and the creative is all part of the recipe that makes Outdoor really attractive. And the wonderful thing about where the industry is now and where it is going is clients are holding us to account more than ever before. Hence, the fact we've invested so much into being outcome-focused and working on a measurement system that makes us accountable and attracts new clients. So in summary, it is a wonderful opportunity to lead this digital scenario, and we'll continue to do that. Our portfolio was always margin focused. And you'd all be aware that in the early days when you're building a digital billboard business, a lot different to a static, there was a fair bit of CapEx required. So CapEx was invested, but we made sure that the focus of the assets we had were not only premium, but we could get the right returns. So they were the right commercial deals to enable us to deliver the right result for our investors and for our shareholders moving forward. The 2 key areas where the majority of margin is driven is in digital large format, and there's also -- and you'll see that as roadside when it's published and street furniture, which you'll see as Roadside, Other. They make up about 80-plus percent of the revenue that's spent in the industry as a whole, and that is where the margin is. So our aim across the board was to concentrate on quality, premium assets. We did that with national reach, with our large-format assets, the City of Sydney street furniture asset and the Gold Coast, and we'll talk about the City of Sydney and the premium aspect of it shortly. The retail full motion aspect of 7-Eleven. And I'm sure for those who have got kids in the room, those hot days, you're in getting Slurpees and stuff and filling up in your local community petrol-wise. So that was a full motion advertising opportunity that created great revenue for us. New Zealand was a really important part of the connection piece between Australia and New Zealand and clients that wanted to invest money in both environments. We have some static large-format assets as well. Again, premium, but they're part of a lot of the tenders that we control. So it's not an area that we plan on investing in moving forward. And as Matt said, we are 96% digital, well above the industry average of around 77%. And then the airport assets, again, we focused heavily on Canberra because it was a market that we thought was underrepresented from a digital aspect. So we built the 2 largest digital landmark locations in Canberra to drive real margin and value there. When we're looking at market growth moving forward, there's obviously a number of key things that drive that. But the existing asset base that we've got, the tenders and the new categories that we're currently playing with, there's a number of already contracted locations that we're looking to expand. And when we do that, we focus stringently actually on capturing audience in areas where we're not. So it's about fulfilling obligations and providing really unique and wonderful outcomes for our clients. So there's a lot of tenders in market. There's a lot of new opportunity. There's a lot of digital opportunity for ourselves to fill the gaps and drive real value for shareholders. But more importantly, I mean, shareholders is very important, but from a client aspect, to get people to buy into the aspect. The other key point away from asset growth is occupancy and yield, and Matt highlighted that earlier. Again, we've got a MOVE measurement system, something that's very foreign traditionally to the outdoor advertising market. We're now in a position where we can be really accountable for client spend. And what that's doing is encouraging clients that have never been regular users of out-of-home to really start to use the medium and to understand the platform and the process of the platform, the immediacy, the accuracy and the flexibility, which really brings this canvas to life in the real world. Growth in programmatic is another area, and you probably heard a lot about that. But this is all about driving nontraditional spenders from a revenue perspective in an environment that have never played there before. And we're seeing significant uptake from clients, and we're now in a position where we're well and truly outperforming the market in that category. I'll briefly touch on MOVE. I will touch on the OMA, the Outdoor Media Association, and Elizabeth McIntyre, who heads that. She's been the catalyst with a group of us. I sit on the Board of the measurement system of the MOVE system, as well as the OMA. She's been the catalyst of driving accountability. She holds people to account. She will call people out. And that has flowed into the relationships that we have at agency level. She was the one that encouraged, when we built this measurement system, that we invented an Outdoor Futures Council. That Outdoor Futures Council is made up of senior media buyers from both independent and agencies and also clients direct. So we have a measurement system that's built for our clients in conjunction with our clients. So we haven't gone out and put all of the attributes in that we wanted to. It's been through consultation. And she, as I said, has held everybody account the whole way through. So I'm pleased to say that we have a world-class system. We have an Outdoor Futures Council that has embraced the system, and we now go with unbelievable tools to attack the market and drive new advertisers to the medium. When you talk about driving new advertisers to the medium and we talk about data and connectivity, by coming to the Nine business and our team comes in, and we're absolutely blown away. The excitement, the access, the resources, the talent, the people, the data sets they use just creates so many opportunities for us to get connected and provide better outcomes and solutions for clients. This is an absolute global-first. And it was the talk of the conference when I was in the U.K. last week, just about how wonderful it is to have a digital connected real-world advertising asset in out-of-home and be able to tie it up with the extraordinary platforms of broadcast and publishing. We've been working really closely with Maddy James, and you'll hear from him very soon. And our data scientists internally, and the Nine data scientists are working tirelessly again with agencies to make sure that we come up with the right solutions to be able to build the ecosystem and connect great results for clients. Again, a really proud moment since 2010. As you can see, we had 2% of the market share. A lot of talented people within our business that have worked across a lot of these contracts over the years, enabled us to work tirelessly and win these significant pieces of business. The 2013, the VicTrack Roadside contract, which is the most dominant digital roadside premium asset in Victoria. And for those of you who go down to the Australian Open or you get stuck in your hotel room and watch it on 9Now and Stan, you're in a position where you would see our digital billboards on the Richmond station platforms. They are probably 2 of the most dominant locations in Victoria. There's an array of quality locations on highways and freeways. So that was a huge win for us. The Manboom contract, which is part of our acceleration here in Sydney, saw us add another 22 digitals during that period. We've focused on absolute coverage, mass reach, but premium locations. So there's bridges and freestanding large-format digital signs that you will see. In 2022, we were fortunate enough to win the City of Sydney tender, without a doubt, the most connected and highest profile priority location in the world. 26 kilometers of digital-connected street furniture in an environment that doesn't have very many large-format signs. It's very, very unique. It's very different to anywhere else in Australia, the support from clients, the uptake from clients and the growth across that platform. And for those of you who were around Sydney with Vivid over the weekend in the last week or so, you would have seen it, but it's certainly that canvas brings things to life. We were lucky during the Olympics to be -- to basically become an Olympic partner. And the flexibility and the immediacy of this medium enabled us to actually put medal-winners up on these boards and communicate them through the city before the girls got out of the pool and were up on the stand. So it just shows we're in a real-life media situation where we can bring things to life, expand the canvas and expand the opportunity. You probably saw in the video, too, in 2024, we won a large-format tender with Vicinity shopping centers in Melbourne. It's the biggest 3D large-format location in Australia. And for those of you who have traveled to the U.K. and been to Piccadilly Circus and seen Piccadilly Lights and the Ocean Outdoor sign there, we were so adamant about trying to win one of these locations, so we could showcase the best 3D location in Australia, and we won that. So that's been a great win for us. And then in 2025, we won the Transport for New South Wales contract here. Again, the most premium digital network in New South Wales from a large-format perspective without any doubt. New Zealand, a really critical market for us, one that there was a lot of questions about. I know that Matt faced when Nine made the decision to buy our business. We had lengthy conversations about the value and the margin and the growth and the connectivity between Australia and New Zealand. In '21, MediaWorks, which is predominantly a radio-based network that you would all know about, sort of took control. We merged. And we sort of handed it over to them, and we sort of lost our way a little bit. And it was in 2024 when we decided to take control of the business again. The results out of New Zealand are extraordinary for us. We won the Auckland Transport contract. Now that is the biggest media contract in New Zealand. We controlled the large format and the buses and the trains, but the real revenue driver was the street furniture. So they made a decision to incorporate all of the assets and award it to us. That moved us to the leadership position in the New Zealand market clearly. And from a growth aspect, we've only rolled out 30% of the digitization in Auckland Transport. So there's huge upside there and great uptake from clients across Australia and New Zealand. We often talk about how to measure the out-of-home industry effectively, and SMI data is something that you would probably all use. And it's something that's reported on, on a regular basis. But from our perspective, you see that it really only registers about -- or takes in about 70% of the spend. There's a huge move into indie spend and direct spend. So take in mind that the numbers that we really work on internally, and I've been pushing hard with Matt, is the OMA reported data, which are audited figures that come from the suppliers and gives you a really good sort of position every quarter how the industry is tracking. In '25, the OMA reported a total growth of 11%, as you can see, and we outgrew the market in totality to 16%. You can also see that -- sorry, that was from an SMI perspective. But from a roadside scenario, OMA 10% to 18%, and Roadside, Other being street furniture, 9% to 16%. So I just -- if I go back, I can go back. Beautiful. There you go. So I think the most important thing out of all of the growth stories is that 39% of the growth in roadside, other, in street furniture for the whole country came out of QMS. We have 100 digital boards on the Gold Coast and the City of Sydney. There are thousands of panels, and our competitors have invested a stack of money in a lot of councils surrounding the city and other areas, but we still managed to grow the industry 40% on the assets that we hold. And from a large-format perspective, a similar scenario, we took 37% of the growth and wouldn't have developed anywhere near what our competitors did, so it was a terrific result. Just talking about profitability again. And you can see from an Australian aspect on the $1.45 billion of revenue that was listed as the money that was spent in the industry, 41% of that comes from large-format billboards and 22% comes from street furniture. So it's a pretty high percentage, 63%. There is a really strong push into retail as well at the moment as there's lots of talk around retail media. So we're seeing that about 22% is in retail as well. But the areas we're focused on currently, you can see that 60% of our revenue is in large format and 30% is in roadside other. So they're the profitable areas that we drive our margin. We over-index versus the industry. And then when you look at New Zealand, it's a similar sort of profile, 55% in roadside, and it will be 25% to 30% once we roll out the rest of the digital street furniture in that market. The most important thing to highlight in all of this is our business is 96% digital. We don't have a long tail of static billboards. We have a connected network that really sets ourselves up to be able to tune into Matt James' team and drive a complete connected outcome and solution for our clients. Matt spoke about lease expiry. This would be the best-in-class. This is the best in the industry. 82% of our longer-term contracts aren't even going to be discussed until FY '30. So it sets us up for great longevity, great long-term communications and a real confidence around what we're doing in the market and also long-term strategies in New Zealand, so 73%. So the profile is really sound and gives us a good chance to really plan good assets around that. When you're looking at the leases and you're looking at different margins that flow through the leases, which I'm sure you all will, there's obviously 4 key areas and different levels of margin flow depending on where they are. Obviously, the owned, license, concession and sales representation. Happy to answer any questions on that later, but that's basically how they're made up. This is the big one, the really exciting one for the sales team and for our business coming in and working closely with Matt James and the team here. There's 2 key elements to leveraging the new ecosystem, I think. And number one is, we have an opportunity to work really closely with Nine's broadcast streaming and publishing arms to make sure that they are always active. They are always on. We are able to personalize messages. We're able to tailor messages. So we can take these pieces of business and the shows and the programming and the news updates and the content to the environment where people are as a result of the new MOVE system that we've got. So this is a complete brand extension. It will keep Nine always on. No matter what division they're in, they will be active across our boards consistently. It's all about content relevance, as I said. So we're going to be able to serve ads where clients are really looking for those messages. And even discussing with Matt, this whole community notice board for really important messages from the government and stuff, we're going to be able to switch on very, very quickly in a unique environment that's never been done before. The second bit is the combination of the assets and the ecosystem. The feedback we've had from the agencies, and Matt will talk about this, but the feedback is extraordinary. They want great solutions, better solutions, better outcomes and ease of buying. And I think our connection piece, the way that we're working together and the way that everybody has embraced us coming into the business, it's really, really exciting times for this business moving forward. And AI is a really hot topic at the moment. And obviously, it's going to be a huge solution provider and an efficiency provider for our sales team, for our programming team, for our install team. Operational efficiencies and creative targeting are absolutely critical. And obviously, we are much, much less likely with fragmentation. We've got that resilience against the big tech guys. So we're going to put ourselves in a position where we're going to have stand-alone assets without that challenge, all of this wonderful information behind the scenes to do better targeting and be much more efficient. So having just a quick summary around our platform. The most important thing to note here is Nine, the group are going to do well in excess of $2 billion across their existing assets, well in excess this year. The whole outdoor industry we report on is $1.45 billion. The deeper connection that we are going to have with clients, the experiences that they've had dealing on the existing platforms and then extending us into the solution provides us not only a global-first opportunity, but a real opportunity to get deeper connection at agency and client level that will drive revenue, drive value for clients and drive huge value for shareholders. So the excitement around the data solutions and the strategic solutions and the feedback, as I keep saying, from agencies is extraordinary. I'll hand over to Matt James now, and he can talk about how we connect the ecosystem. Thanks, guys.

Thank you, John. Good morning, everybody.

It's the button in the middle, my friend.

It's the button in the middle. You've stolen all my slides anyway, John. Good morning, everybody. Look, I can't compete with Lord O'Neill of the outdoor industry here, but I have had the pleasure of working with John for nearly 15 years and working with QMS. And this is probably, from my side as Chief Sales Officer, one of the most exciting acquisitions and I think additions to our portfolio. And there's no doubt that the market absolutely shares the positivity and the confidence in terms of obviously QMS coming into the business. And I think that's really because the strategic rationale is very, very clear. And, again, John has touched on some of this. It now gives us probably one of the most comprehensive and complete ecosystems in the Australian industry across streaming, broadcast, publishing and outdoor. And of course, it means we can now work across the full purchase funnel with advertisers, brands and businesses in Australia. It unquestionably gives us a very differentiated market position as well, bringing a new cross-platform proposition that doesn't really exist, as far as I know, across the world. So again, Australian media companies and the agencies are really leaning into this. It's going to give us a much bigger role with clients as well, and I'll touch on kind of where we're going and what we're doing right now in a moment in terms of solving growth problems across the full funnel. And already, certainly from my perspective and from the sales team's perspective, we're already getting overwhelmed with client interest around how we can start really enhancing the portfolio to grow their business. And of course, the big piece of feedback and obvious feedback is that, obviously, integration is going to be the fundamental unlock in terms of how we make the whole of this ecosystem work. And I think, again, that is where we have an unprecedented proposition. So the market -- as I said, the market response has been incredibly positive. And from our side, it's now about really taking this sort of integrated advantage forward. And as you've heard, from the Sofa to Street, the ability for us to reach more people in these big cultural moments from obviously sitting on the sofa in broadcast or in publishing, whether it's digital or in print, to then having a physical presence in the market is going to be, again, unprecedented. Growing our revenue though, the revenue opportunities that we have are going to be absolutely significant and probably 2 key areas. I think the first one, as we mentioned, is around the retail media. This is estimated to be exceeding $3 billion and increasing over the next couple of years. And this probably continues to grow faster than the actual broader advertising market. Now we already play within the retail media sector today, obviously, from a broadcast perspective with big brands like Bunnings and Chemist Warehouse. But the opportunity now for us to really penetrate and grow in those revenues with QMS from a retail media perspective to be in street, to be in that transactional end of the purchase funnel is going to be a game changer for us. The second piece is the SME, the small to medium enterprise, and the business market advertising market. It represents more than $10 billion annually, subject to how you estimate, with hundreds of thousands of businesses still largely untapped by obviously premium media. So the combination now of us bringing together QMS outdoor, the data that John has talked about in MOVE 2.0, as well as obviously our own Nine ID data set is really going to help us accelerate into the SMB market, and this is going to offer significant growth for us. And again, obviously, in terms of proven results, we're now going to be able to combine some very powerful data sets to demonstrate value with obviously measurable outcomes. This is going to obviously give us clear proof of advertising through the purchase funnel, as I said, and I think one of the most comprehensive media ecosystems within the marketplace. So this acquisition is going to be about expanding reach. It's going to be about accelerating growth and increasing relevance to advertisers. And obviously, already, we -- as importantly, we're already leaning into some of these market-facing solutions. So what are the things that we're kind of doing right now? Well, firstly, our focus is obviously going to be around execution. We're actively integrating QMS into Nine's commercial offering right now and obviously bringing new capabilities to market. We're combining Nine's first-party audience data with QMS Location Intelligence to create more precise audience targeting. John touched on how we're going to be bringing our own Nine Tribes with the mobile IDs, again, to bring a first to the marketplace. We're using real-world movement and behavioral insights to improve planning, activation and measurement. As I mentioned, we're expanding our retail media capabilities across both digital and outdoor environments. And we're already starting to amplify major cultural and sporting moments across the entire Nine ecosystem, to maximize audience reach and impact. And we're improving campaign efficiency by helping advertisers reduce waste and reach the right audiences at the right time. And there are many practical examples that we're working on already underway in terms of integration, not simply adding outdoor as a business, but creating a more connected media company. And we're already working with probably the top 5, if not the top 10, brands and businesses in Australia today in terms of that integration. So a stronger proposition for clients and obviously, a platform for long-term sustainable growth for shareholders is really where the QMS integration and the overall Nine integration sits. The acquisition of QMS obviously strengthens Nine's market position, expands our growth opportunities and accelerates our ability to deliver integrated solutions for clients. And the market does truly understand this opportunity. And over the next 3 months, in particular, you're going to start to see these opportunities come to fruition. So as I said, our customers are embracing it, and our teams are executing against it today.

Thanks, Matt. Thanks, John. Okay. So I'm just going to wrap up before we can go. So look, coming back to those drivers that the team have talked you through, going through John talked a lot about the occupancy, yield, MOVE, et cetera, coming through, the portfolio mix and the benefits we have over the margins there. The incremental sites under rollout, so Auckland, et cetera. New contracts, we've already got AOM as coming, and there's some other ones that are close that you'll see. We haven't talked about the annualized cost synergies, but those are on track. We talked about those by FY '28 coming through. So those are on track as we work through those. And then Matt's talked about the sort of growth synergies with Nine as well and where we're starting to see some unlock as well. So we think we've got some really, really strong opportunities here, and we're feeling really good about the acquisition we've made. But if we look at QMS in its own right, is a very, very compelling proposition. But when you couple it with Nine, with its strengths of Nine, the multi-platform approach of Nine, our premiumization of how we can do that and the data, it leaves us in a really, really strong situation. So we're very excited about the future of QMS with Nine. Hopefully, you can see that coming through now as well. I'm going to do a short video, and then we're going to get into some Q&A. Is there a video? [Presentation]

Okay. So that's the end of the formal presentation. So we're going to go to Q&A. I'll take the questions and then pass on to the team. And if you get through that and you're still keen, we've got some sandwiches in Level 2. It would be great to see if anybody wants to hang around a little bit and continue the conversation. So I think we've got a roving mic. So anybody got a first question? Don't be shy. Yes, there we go.

It's Roger Samuel here from Jefferies. I just want to ask you about how do you go about growing the retail Outdoor Media business? Based on my knowledge, it's very competitive in retail outdoor. And yes, just wondering how you want to go about competing against the other players in the industry?

Yes. No, sure. And I'll hand over to John maybe to give a bit more color. But the retail media is a very broad category. We're already playing it in a number of ways. And you have to be careful where you do play in it as well from a margin point of view as well. So we're very focused on that. But as you can imagine, with our assets now where we are, we talk about Sofa to Street. We also talk about Sofa to Shelf as well. So we have -- if you think about the -- from a full-funnel point of view going through in the living room through, we know where people are traveling. So we'll know where all the tradies are going, at what time of day going through there, what they watch the night before, et cetera. With all that linking as they go to transact in the retail world, we've got a very strong funnel now going through. So we're exploring a few opportunities in this place at the moment. We've already got 7-Eleven as one of them, but there's a few opportunities we've got specifically that we'll go through over the next few months coming through, but a number of things. John, anything else to add to that?

Yes. Look, I think Matt James highlighted the growth aspect of the revenue in the category. It's been something, at QMS, we've been looking at for a couple of years. And as I said, myself, I've been fortunate to be involved in the first digital panels that were rolled out across all of the signs that you see in all of the categories you see at the moment. So we've got a great understanding of the market. We've got a really good understanding of returns in the market. And we've been exploring options that will provide significant value in a retail category that's currently not represented. It will be significantly -- look, it's just a huge opportunity. It will be true national, regional as well, and we're a long way down the track in securing that and making an announcement. So standby for that positive piece of information. As I said, understanding the footprint really well, it was critical that we didn't go in, in environments where we couldn't get the return we wanted, but the partnership is very close, and we'll make that announcement as soon as we can.

Thanks, Roger. Yes, Fraser.

Fraser McLeish, MST. A couple from me. John, just on -- can you talk us through the sort of the process of winning new big contracts? And is it not just whoever wins it is the one who's prepared to sort of give the best economics back to the site owner? That's one question. The second one, just I think you had a slide talking briefly about your sort of cost -- site costs. How are you sort of revenue share versus fixed site costs that aren't linked to revenue? And I've got one for you afterwards, Matt.

Sure.

Okay. So I mean, first of all, just ask the first question again for me.

Yes, just about winning new tenders and projects.

Sure. So as far as that goes, we've got really strong commercial structural guidelines that we stick to. And the partnerships from an out-of-home perspective aren't always about the best upfront financial return. It's about the quality of the locations and the expertise in winning permits and being able to install the locations in those areas. It's also about the historic relationship that you've got on being able to deliver long-term revenue solutions for those guys. So look, there's a combination of all of those scenarios. It's not necessarily always about paying the most because if that was the case, in a lot of instances, early doors, one of our competitors had the VicTrack business. There was 15 digital locations up for permit. They couldn't get any of them. They didn't get permits for any of them. I'm not quite sure what their financial scenario was, but we certainly didn't win it on paying crazy money. But what we did win it on is partnership and expertise, and we were able to get all of those permits and get them built over the period. So that's answer one. And the second question again?

Yes. Just how much of your sort of costs on site costs are revenue share versus just fixed payments?

Look, it depends across the portfolio. I'd have to go back and get you the exact details there. But I think from a margin aspect, Martyn, do we declare those numbers? We don't? Okay. So look, across the board, you'd find depending on where the signs are and the revenue, you can write on the signs, depends on the margin play, but it's pretty even across the board, to be honest.

Even what? So half your costs are revenue related, will go up and down or variable, if you like, in site cost?

There's certainly variable opportunities, but some -- probably more than half of our portfolio would be locked on fixed costs.

And then, Matt, just having New Zealand assets where you don't have anything else in New Zealand, I mean, does that make sense longer term?

We'll look at this at the moment. Obviously, it's in a big growth phase, the Auckland contracts at the moment and New Zealand. So we're a bit loath to do anything with that at this point in time. And so we'll see how that rolls out, I think, over the next 6 months or so, a year. And then we'll look at the longer-term situation there. But the asset at the moment is very strong, big growth areas. We think there's a lot of opportunity. But you're right, it doesn't go with the rest of our portfolio at this point.

It's David Fabris from Macquarie. Just curious, have you got any examples you can share where Nine or QMS has been able to use that multi-platform approach to drive higher share of your customers' wallets?

I mean it's quite early because we've only obviously owned it for under 3 months at this point in time. Matt might be able to talk to a couple of them. We have had a couple of times where we go to market. And as you can imagine, right, if you're sitting there as a media business, Now, what we've got, when you go to market, a lot of the time, you can sweeten deals, put it that way, with inventory and so forth. You can do that. If you're doing 9Now, you could give a bit more inventory. But now we can give -- if we're doing a pitch for Nine, 9Now, we can do -- give a pitch and maybe give a little bit of inventory in the outdoor side and vice versa. So that does go through. Is there anything? Matt, have you got any...

Yes, I'll talk confidentially because I'm literally leaving this meeting and going into one of the major 4 banks for that reason, touching on the data piece because we're basically launching a big new campaign with them, of which we'll be bringing together both outdoor and the broadcast entities. This is also a client, and why they're excited around this, that we have done some pretty considerable matching from a data perspective and from an ID and a customer relationship space. So immediately, we're going to be able to turn that on and then basically do a full-funnel, new reach campaign across banks. So that will probably be one of the first ones that comes out of the block of that significant across our ecosystem. And then there's a couple of other big burning ones in the retail space as well that's going on at the moment. So there's -- I can't talk about the individual brands. But yes, they certainly start to accelerate. So we just wanted to get that proposition. As Matt said, we just -- we've been wrapping some inventory around certain broadcast buyers because obviously, that's one of the most powerful bits that we have now in terms of the broadcast juxtaposition between outdoor as a broadcast entity as well as our own streaming and broadcast platform.

What we do see now, especially in a market like we're in at the moment, we see a lot more briefs than we used to. And that's where we're at this point in time. So previously, we have these Friday sessions with the sales teams where we look at the weekly sales pipeline and revenue and so forth. You can do that for Nine, and you can do that for QMS. We do that for sessions. And then there's -- what you can do is you can see what the pipeline is on QMS is like. If it's not on Nine's pipeline, you can then go and then pitch and stuff, and vice versa. So we're seeing a lot more briefs in market that we would have done as a stand-alone -- both stand-alone businesses. The market has been a bit soft at the moment. So we haven't converted at this point in time, but there are some ones that we're working on.

I think the other thing to highlight is our strategy team at QMS have never been as busy. So the briefs that are coming in and the connectivity between strategy at Nine and ourselves is really starting to work. The relationships are getting stronger all the time. And as Matt said, not only one of the big banks, but there's a number of cars that are wanting to play in the space and insurance companies. And so it's -- look, it's a really exciting time.

Yes. Got it. And just another question. I think I saw earlier 80% of your revenue is contracted to FY '30, very high digitization of your portfolio. CapEx is, kind of, $50 million a year. So how do we think about CapEx from here? Is it kind of peaked? Or is it going to step up with New Zealand? Or how does that kind of trend?

Yes. Look, I think from New Zealand, we've got our CapEx pretty much under control. We're seeing the street furniture rollout. There'll be another few hundred panels roll out in there. From a large-format perspective, we'll continue to look for opportunities, but only where commercially they make sense. And then probably the most pleasing thing is a couple of the agreements that we're looking at finalizing are CapEx-free. So the companies themselves that we'll be representing will be rolling out the CapEx, and we'll sell and market it.

Yes. Maybe Martyn, do you want to say a few words on that?

Yes, I'll just add on that. So in the appendix, we provided the CapEx for FY '26 forecast. So you're right, it's about $50 million. But within that maintenance CapEx is just under $10 million a year, which is significantly under the run rate of PP&E depreciation, which is roughly about $45 million. So the kind of -- the reverse answer to the question is, we'd like the CapEx to be higher because obviously, that provides growth into the future. So we don't know what the CapEx -- we've got a budget for CapEx for FY '27, but that's to support the contracts that we've currently got. We'd like to think we can get more contracts going forward. And obviously, some of them will be with CapEx. But to John's point, some may not be with CapEx. But yes, maintenance CapEx is just under $10 million.

Yes. We are benefiting from a lot of investment from Quadrant, don't forget, into the business. So those big contracts we've got, the 5 or 6, we went through these in a lot of detail when we went through the process -- acquisition process. So there's a lot of CapEx that they've already sunk into the business. So we are taking a lot of benefit of that going forward. Yes, at the back.

Matt, it's Eric Choi from Barrenjoey. Just had a couple on trading. So just the first one is, if you look at your large format or QMS' large-format billboard growth in the first half, sort of 12%. And then on that slide, you sort of said there was like a $3 million to $4 million EBITDA impact from the market. If you kind of work that all together, does that mean that 12% is probably dipped to something in the high single digit for the second half? No?

No.

Wrong?

No. The revenue double digit for the H2 and the quarter 4 is stronger than quarter 3 within that. And quarter 3 revenue was double digit, and quarter 4 revenue is double digit, and quarter 4 is stronger than quarter 3. So look, the market -- advertising market, as you know, is pretty soft. The thing with QMS is still growing double digit in a market like that. And what you do see as well as quarter 4 has come back, and June is very strong as we go through, and you can see that the pipeline of like an outdoor business versus a broadcast business is shorter, right, so the cycle. Because if you are a broadcast or streaming, you have to do creative, which is probably a bit of an investment for a lot of brands, whereas with an outdoor business, it's a bit more static. So it's a quicker return back to market. So you can see that, and we're starting to see that. Do you want to say anything, John?

Yes. And look, the other pleasing thing is being 96% digital, the opportunities are available this afternoon. So if I want to take a photo of you if you ask another nice question, I'll chuck it up on a billboard on your way home, and your kids and your mom can take a photo. So...

Don't do it.

So in those instances, being a traditional seller of out-of-home, we never had an opportunity to do any of that. We have to have months and months of planning to get creative, printed and then actually get the skins put up or the posters put up. So revenue opportunities are last minute.

And don't forget that they have a very -- quite a sophisticated model around how they use the inventory that they've got. And if you've got those 4 different ways of the way that the business can work, whether you put the CapEx in, whether it's a lease model, whether it's a rev-share model, whatever it is, the revenue that comes through can really be used across the sites in the best optimal model for the margin for us. So it's an important point that versus other mediums as well. So that's where they do a lot of really good work around moving the margin.

Can I ask one more? Sorry.

Yes.

Might not -- I don't know if it's nice or not nice, but I'll just go.

You might be up on the billboard if it's not nice.

Just obviously, you're not going to give us FY '27 guidance, Matt, but you would have an internal budget of what you think QMS looks like. And if I'm just looking at our new information, sort of on a half year basis, it's kind of $5 million worse, but some of that's timing. So if we annualize it, can we just -- can we logically conclude any changes to your budget would be less than $10 million into FY '27? If that..

No, do you have a crack on that? Can you answer that one?

Well, we're obviously not going to give you the budget, no. But what I can say, as Matt said, so Q4 was roughly in line with our business case. And so without giving you the number, what I can say is that, yes, the market has come off. We are anticipating a bit more of a softer market in the next few months. But it probably means that -- I mean, our business case for FY '27 was obviously less than the numbers that QMS had in their IM. I'd say it's probably those 2 numbers are closer now than what they were before. But we're still budgeting to be pretty much in line with our original business case. Yes, if that's helpful.

Any others? Yes, at the back. Then we'll come to you.

Conor O'Prey from Canaccord Genuity. Maybe a question for John. You've moved from private equity ownership to being back within the kind of public sphere. Any change in the way that the dynamic around bidding for contracts, return metrics, any more constraints on you now that you're perhaps in a public environment versus the private before?

No. Look, I mean, Quadrant held us to account. They were pretty stringent operators. I'm sure you've all met Chris Hadley on the journey. So you don't -- you can't pull anything away from him. So I think moving into this environment, it's created more opportunity for us, to be honest. We've got a really proactive executive leadership team and working within some pretty stringent guidelines. It's still providing extraordinary opportunities. So I'd say there's more positivity now, now that Nine can see collectively where we can take this, which was obviously their vision and why they bought the business. No capital restraints in real terms as long as we can get the right return for shareholders. So with that being the case, it's a much more exciting venture for the next 3 to 5 years than where it was, to be honest.

Yes. You got to remember, Quadrant were selling, right? So they're in that process. And we're not selling for some time, so if ever. So from our point of view, this is a long-term gain, and we'll look at everything in a commercial way, very commercial way and work with John. It's been interesting because you're right, because we were worried about the dynamic as they came into our business as well. And I'll be quite conscious of not sort of drowning them a little bit too much. And so we've kept them, the businesses slightly separate at this point in time. And John reports into myself, part of the executive team, and John has really embraced that. And the team have really embraced that, which I'm just a bit nervous sometimes that we just overwhelm them as well because they're the shiny new toy for us, for certain people. So we're quite conscious of that and going through that. So it's an interesting dynamic. But I think from our point of view, we see huge long-term opportunities. And you think about those 82% of our contracts are all sewn up, if you like. That leaves us in a good opportunity for a very offensive play in the marketplace where we see opportunities. What John has done really, really well and really impressive growth is it's into the best margin areas we can go, and we will continue with that strategy. The strategy has worked really well. I think where we will do is continue that and then look for the revenue synergies with Nine as well as the cost synergies are pretty given. But then the revenue opportunities over the longer term, we think is really good. We had some experts globally come down and look at it. And when we were showing, we mapped every site that we've got in QMS with the MOVE data with the Nine unique ID of what's going on, we can really tell if you said like, "Okay, you want to target premium watch buyers," we will tell you what the best sites across the whole of that to hit those premium watches because we know that they've looked at it in The Sydney Morning Herald or they've watched a show, whatever. So nobody else can do that. We know the tradies, where they're moving at 7:00 in the morning, we know what post code they've come from, what they watched last night and what journeys they're taking. And some of that stuff is really exciting. So yes, it's good. Yes. The lady second from the back.

It's Ailsa here from UBS. Maybe a 2-part question on MOVE 2.0. Firstly, it's been in the market for about 3 months. Now keen to hear if you guys will call out any assets that's benefited from the improved measurement. And then maybe a second part to that is, feedback we've been getting is MOVE 2.0 provides better or an improved measured for static assets. So wondering if you're seeing that as well across your asset base.

Okay. Good, good. John will take that.

Yes. Look, I think so across the board, all of the assets are benefiting. The fundamental challenge has been that we haven't been able to capture audiences all the way around Australia, and now we can, regional areas as well, and MOVE is now measuring all formats. So we're in a position where the uptake has been terrific. As we are highlighting, there's been a few headwinds. So the market has been a little slower. But if you go back and have a look at when the out-of-home first launched a measurement system, the industry in its entirety doubled within 12 or 18 months. This is a system that has been orchestrated via our clients and via our independent agencies and agencies in consultation with ourselves as a group. So they wanted this information, so we got it for them. And we've invested millions of dollars in the system. So as far as that goes, I think all -- the whole environment will benefit, and that is the intention from an Outdoor Media Association, to attract more users into our medium and make sure that they are using the flexibility, the immediacy, the accuracy of all of the assets to really drive growth. And the second question again, sorry?

Just the difference between static, and digital inventory feedback we've been getting is static sort of had an uplift in measurement that wasn't there previously. I'm wondering if you guys have...

Well, the whole MOVE measurement system was designed around digital because clients wanted to make sure that they were getting bang for their buck. So as clients are educated more and they gather more information and become more confident, digital will continue to grow and static will continue to decline. And if you have a look at where the market is, it's still a great big canvas static boards. But the challenge is that the quality of those assets consistently around the country don't weigh up with the digital. A lot of those static boards have been there for 40 or 50 years. So you're talking about old-style locations that just don't attract the premium aspect that clients want. So I'd be very surprised if static continues to grow or even looks at growing. We would anticipate in the next 2 to 3 years that there'll be a significant increase from the 77% that the industry operates at digital, way north. So that's the way forward. There'll still be a play for some static, but it will be a digital medium.

Thanks. Any others? Okay. Look, okay, if we run out of questions, look, just thank you for your attendance today. Really good. We're going to have some sandwiches on Level 2. I'd be delighted if you could join us, and some of the executive team, I think, will be up there as well. Hopefully, you can join us. If not, thank you very much. I hope you enjoyed it. And any questions, into Nola. Thank you.