oOh!media Limited (OML) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the oOh!media Limited FY '24 Results Presentation. [Operator Instructions] I would now like to hand the conference over to Ms. Cathy O'Connor, MD and CEO. Please go ahead.

Thank you, and good morning, everyone. Thanks for joining us today for oOh!media's full-year results for the 2024 calendar year. As said, I'm Cathy O'Connor, the CEO at oOh!media. And today, I'm joined by our CFO, Chris Roberts. Before we begin, I would like to acknowledge the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation, and we pay our respects to elders past and present and recognize their enduring connection to this land. Over to Slide 3. Today, I'll begin with an overview of our investment case before recapping our full-year results. Chris will then speak to the financials in more detail before I give you an update on our recent progress against our strategy. I'll then provide some details on our outlook for the current quarter, and then we'll open for questions. So over on Slide 4. Before we get to the results, I want to recap the reasons why oOh!media is a sound investment proposition. The media landscape continues to evolve with many areas of traditional media in decline. Against this backdrop, the structural growth of the Out of Home sector continues to provide significant tailwinds for our business. And we see proof of that in the chart on the left, showing the continued evidence of a growing share of the ad market for Out of Home. The long-term growth outlook for Out of Home remains highly attractive as one of the best-performing categories in media, having now surpassed 15% of the total ad spend in SMI with expected growth of 8% this year. We at oOh!media are Australia and New Zealand's largest and most diverse Out of Home network, delivering mass reach of over 98% of metropolitan Australians weekly across 35,000 different assets. This makes oOh!media a powerful proposition in a fragmenting media market. And as the market leader, oOh!media is well positioned to leverage its scale and the capability of its experienced team to continue to innovate in the sector. We have also constantly demonstrated a balanced and disciplined approach to delivering profitable growth and shareholder value into the future. Turning to Slide 5. Our market leadership is underpinned by a more focused execution of our strategy, and we are making good progress to accelerate our growth ambitions in an evolving market. Our strategy includes energizing our go-to-market offering, unlocking the full potential of our significant network, and leading in the fast-emerging retail media space. By making it easier for our customers to work with us, providing them with access to the best assets and audiences, and partnering with retailers to explore new revenue adjacencies, we will continue to grow our market share in an improving Out of Home market. So I'll talk about this in more detail later in the presentation. Now moving to an overview of our full-year results on Slide 7. After a first-half performance that was below our expectations and those of our shareholders, I'm pleased that oOh! finished calendar year '24 with increased momentum with decisive action taken to drive revenue and market share growth beginning to deliver as intended. As a result, total revenue for calendar year '24 was in line with the prior year despite negative growth at the half, with momentum returning in H2 across all formats. We retained our strong contract discipline, maintaining robust gross margins while also achieving successful contract extensions and wins, delivering $38 million of incremental annualized revenue from 2025 onwards. Pleasingly, our RIO program continues its positive momentum with 3 new contracts signed in the period with major Australian retailers, Petbarn, Officeworks, and a pilot with Australia Post. Further, the decisive action we've taken to right size our cost base sets a firm platform for profitable growth in the year ahead. Looking more closely at our key financials on Slide 8, where you can see we delivered revenue and adjusted underlying EBITDA at the upper end of our December 2024 trading update. The business improved gross margin through a continued focus on contract discipline, delivering a gross margin of 44.7%, which is up 40 basis points from last year. We remain committed to cost discipline, which saw the underlying OpEx growth ex-RIO remain below inflation. On a statutory basis, the group reported a 6% increase in NPAT for calendar year '24 and EPS growth of 9%. Our strong balance sheet enabled a fully franked final dividend in line with the prior year, and gearing remains below our target of 1x EBITDA. Turning to the performance of our formats on Slide 9, where you can clearly see that after an underwhelming first half, momentum accelerated in H2 as action taken to drive revenue and market share gains began to take traction. Underlying revenue growth of 6% was offset by the decision to exit the Vicinity contract and renegotiate non-media contracts to protect margins. Growth performance improved in the second half, but we acknowledge our performance in this channel did not meet the market opportunity with a 1% decline for the year. Now Road is a high-impact and attractive format for advertisers. And despite poor execution in the first half, we improved through the second half. And pleasingly, we are already seeing markedly better performance in Q1 of 2025, with Road already up double digits on the PCP for revenue booked February year-to-date. Street and Rail grew 3% with strong second-half growth of 8%, driven by the Sydney Metro launch and an enhanced Sydney Melbourne Rail offering with Metro Trains Melbourne. The rollout of Sydney Metro assets is just over 50% complete, with 70% of the sites expected to be completed by the end of Q1 and the key sites within Gadigal Station in the heart of the CBD are due to be completed in the middle of the year. This will create further revenue upside for our exciting rail portfolio. The street contracts that were won last year will also be rolled out over calendar year '25 with Waverley Council expected to commence in Q2 and Northern Beaches Council, including Manley in Q3. Retail revenue was down 9%, largely due to the exit of the Vicinity contract, although the accelerated digitization of oOh!'s remaining portfolio did help to offset some of this impact. Excluding the revenue attributed to Vicinity, underlying growth in retail was 10%, the Fly and City and Youth formats both delivered strong double-digit growth, up 14% and 18%, respectively, and are demonstrating sustained growth, and that's due to our work in both our go-to-market strategies and sales team effectiveness for these products. Our share of the Australia and New Zealand out-of-home market was 36%, and our performance against the market has improved since Q4, with February year-to-date and Q1 pacing at 14% growth. I'll now hand it over to Chris, and he's going to talk about the financial performance of the group in a little more detail. Chris?

Thanks, Cathy, and good morning all. Slide 11, illustrates in the top 2 charts that oOh! has grown gross profit and maintained gross margins, notwithstanding lower-than-targeted revenue growth. As outlined in the first-half results in August, gross margins benefited from the exit and renegotiation of lower-margin contracts and demonstrated the business' commitment to contract discipline. The bottom left chart illustrates oOh!'s commitment to operating cost discipline with underlying OpEx growing at 2.1%, which is below inflation. However, the business has also invested in RIO headcount to win and grow our share of the retail media opportunity, which Cathy will address later in his presentation. The bottom right chart shows our adjusted underlying EBITDA margin of 20.3% is fairly consistent with the past 2 years. The 20 basis point decrease versus the PCP reflects the impact of the lower-than-expected revenues being partially offset through the cost controls outlined earlier. With the focus on better sales execution that Cathy touched on earlier, I expect that OS fixed leverage should support steady to growing EBITDA margins from CY '25 onwards Now going into some additional call-outs on Slide 12, in relation to items that have not already been covered by Cathy earlier. As I mentioned in the prior slide, operating expenditure before nonoperating items increased by 3%. This was impacted by a $1.3 million one-off penalty charge for the early termination of a lease relating to a single floor in our head office. The business does not require the entire footprint that is established when it moved into the site in early 2021. Nonoperating items of $3.5 million include $3.9 million of one-off consulting costs associated with growth initiatives, mostly incurred in the first half. Additionally, there is a provision of $2.6 million for the restructuring costs outlined in December of last year that related to the redundancies conducted largely in January this year. These costs were reduced by a $3 million gain on the sale of assets to Auckland Transport with the related street furniture and digital screens transferring to Auckland Transport on 31 December 2024. Depreciation and amortization decreased as a result of the reduction in retail asset footprint following the removal of the Vicinity assets. I expect this to increase modestly in 2025 as a result of the capital expenditure in 2024, and 2025 being higher than that during the 2020 to 2023 period. Net finance costs were up $1.7 million or 20% with increased CapEx, tax payments, and good payments increasing net debt. The income tax expense was lower due to a one-off benefit from the deductibility of employee share expenses from earlier periods. Going forward, a 32% to 34% effective tax rate range is what I expect for the business, which is somewhat higher than the corporate rate due to nondeductible entertainment expenditure and the nondeductible upfront rent payments made in earlier years. As mentioned earlier, the Board declared a fully franked final dividend of $0.035, which is in line with the prior year. Taking a look now at our cost out and investment initiatives in more detail on Slide 13. As announced in December 2024, we implemented a cost reduction program in early 2025 that is aimed at simplifying our operations and delivering improved performance. This restructure is expected to deliver circa $15 million in net savings in CY '25 with the cost savings coming from reducing spans and layers in the organization, restructuring and aligning teams to better serve our customers, and direct cost reductions. This decision improves the operating leverage in the business as positions the business to deal with any macro or advertising market uncertainty on the downside and importantly, sets a stronger earnings performance on the basis of current Q1 revenue growth persisting. As a result, we expect to have an operating cost base of approximately $150 million to $155 million in CY '25. We have also made a number of strategic investments to drive growth, including investing in technology processes and systems to enhance our speed to market by making it easier for our teams to book and schedule campaigns across our market-leading portfolio. Additionally, with the new RIO partnerships, which Cathy will talk to later in this presentation, we are investing in expanded sales teams to monetize and develop the revenue opportunity across in-store digital panels and broader Omni channel media sales and extending campaigns onto our existing retail network. We will remain disciplined with our costs moving forward and continue to invest in growing the top line. Moving to our cash flow performance on Slide 14, where you can see that CY '24 saw a free cash flow decline of $38.2 million, impacted predominantly by a short-term drag on working capital from costs that were recognized in CY '23 but paid in CY '24. These included concession rents that moved from variable rents payable in arrears in CY '23, to fixed rents paid in advance in CY '24. The settlement of tax liabilities and the make-good of exited contracts also contributed. The bulk of this drag was in the first half, where operating cash flow conversion was 12.5%, with a stronger second half generating a 51.1% conversion ratio and contributing to an overall operating cash flow conversion of 37.1% for the full year. The free cash flow outflow of $18.3 million in the first half was more than offset by an inflow of $26.3 million in the second half, noting that the second half typically has stronger seasonal cash flows. Capital expenditure increased by 13% to $45 million as the business continued to invest for growth with a range of digital panels launched during the year. Gearing decreased in the second half to 0.8x at the end of December versus 1.0x at June. Looking at our contract profile on Slide 16. You can see that oOh! maintains a diversified long-dated contract portfolio with 50% of CY '24 revenues expiring from 2029 onwards. As a reminder, our track record for contract renewal is above 95%, and we continue to bid rationally for high-value strategic contracts. It is also worth noting that no individual contract is worth more than 5% of our CY '24 group revenues. The Auckland Transport contract, which was scheduled to expire on the 31st of December 2024, has been extended to 30 September 2025. This represents 4% of group revenues and is included in the purple-shaded larger contracts component in the first column. We understand that Auckland Transport is currently intending to issue a new RFP in March this year. When excluding Auckland Transport, it is clear that the business is transitioning to a more in-mind key lease expiry profile. Projected FY '25 and beyond incremental revenue from the $38 million of contract wins during CY '24 further derisk this profile versus what is illustrated in this chart as do the balance of Sydney Metro and Woollahra Council assets yet to be rolled out. Our focus remains on maximizing network revenue while achieving sustainable margin, earnings growth, and importantly, returns on capital. With that, I'll now hand back to Cathy to take you through our strategy.

Thanks, Chris. We'll now move to Slide 18. When thinking about our strategy, it's important to consider the performance of the out-of-home sector, which remains the best-performing category in media since 2021, and is projected to grow another 8% this year. Data supports the sustained spend shift from other channels toward Out of Home, and there are several compelling reasons for this. Firstly, due to fragmentation, it is increasingly hard to generate mass reach quickly in mainstream media. However, in Out of Home, our ability to do this grows as populations increase and cities and infrastructure continue to develop. And with that, Out of Home delivers mass reach at a lower CPM, generating higher ROI per dollar of advertising. And I'm also very pleased to say that improvements to our measurement system are close. Move 2.0 is expected to arrive in Q2 this year, and this will provide improvements in audience capture across all formats in metro and regional Out of Home for the very first time. The industry's new investments in digital assets, they are driving growth, and this will continue. Programmatic trading now provides a new way to buy Out of Home, capitalizing on the real-time nature of digital Out of Home. And the quality of creative in Out of Home continues to rise with increased innovation around dynamic creative campaigns and data-led targeting. And this provides highly impactful opportunities for advertisers in all categories. So it's all of these factors that are resulting in the significant transformation of the Out of Home sector, and they are what's leading to the record share of advertising that the industry is now achieving. So to capitalize on this structural growth and cement our market leadership, our strategy is laid out on Slide 19. We've renewed our focus on execution and to accelerate our growth ambitions, we're focusing on 3 core pillars: energizing our go-to-market, unlocking our network potential, and leading in retail media. So let's look at these in more detail, beginning with Pillar 1 on Slide 20. By energize our go-to-market, we mean making it easier for our customers to do business with us, and that will ultimately drive revenue and market share growth through better use of those 35,000 assets and faster client response times. We strengthened our senior sales leadership with deeper Out of Home experience and restructured our teams to better align with our customers' needs. We're investing in tools that will help our sales team unlock the best use of our diverse portfolio of assets, and this will enable them to respond to client briefs faster and more effectively. And we are reducing the complexity in our business, simplifying our product offering and preparing for the launch of MOVE 2.0, which will be integrated into our pricing models, and this will ensure we can optimize pricing more quickly and effectively across the network in real time, increasing the ease of buying, reducing response times and increasing effectiveness in meeting campaign objectives. On Slide 21, our second pillar is to unlock our network potential, where our priority is to pursue the right mix of high-value contracts at the right price. Our aim is to build a strategic portfolio of high-impact advertising assets that maximize audience reach while delivering strong value for investors. And our priority focus in terms of network is to deliver the #1 position in our largest formats, road and street and rail in the key media markets of Sydney and Melbourne. This means that we'll be the first Out of Home Company that our customers turn to, to reach their audiences. In calendar year '24, we cemented and expanded our presence in these key markets, securing the rights to the Westgate Freeway bill-board and a further 8 Road digital sites in Melbourne. In Street, we won Waverley Council to further build out our reach in the lucrative Eastern suburbs of Sydney alongside Woollahra Council. And we expanded our Northern Beaches reach to the highly desirable suburb of Manly. In Rail, we are partway through rolling out premium assets in the brand-new Sydney Metro line with the Melbourne Metro Tunnel coming online later this year. In retail, we already maintain a portfolio of centers with the highest overall footfall in Australia despite exiting the Vicinity contract. We are continuing to expand our digital footprint in our existing centers to ensure that we maintain this strong position in retail. And finally, increasing the digital penetration of our street furniture portfolio remains a priority as it will be a driver of growth in this format. Our final pillar on Slide 22 is to lead in retail media. We're committed to building a market-leading independent retail media business that taps into new revenue streams. We're doing this by partnering with retailers to establish and operate their end-to-end retail media network, both in-store and online. This includes establishing and maintaining in-store screens, but also a retailer's entire omnichannel market offering, including the monetization of digital and e-commerce assets where requested. This leverages our expertise not only in screen rollouts, but also in deep media sales experience, and it also leverages access to a broad range of advertisers, and that's not something that is easy to achieve as a stand-alone retailer. And why? Well, retail media is a fast-growing market and is projected to be worth $3 billion in Australia in 2027. RIO presents us with an opportunity to participate in this growth channel and thereby create a new annual recurring revenue profile for oOh! with long-term service revenue contracts with major businesses in an attractive emerging category. Our new long-term partnerships with well-known Australian retailers, Petbarn, Officeworks and a pilot with Australia Post validates our offering and our point of difference in this new channel. So across our 3 strategic pillars, we're confident that our renewed focus on execution will enable us to drive continued revenue and market share growth by providing innovative solutions for our customers and making it easier for them to work with us in multiple ways, which takes us to the outlook for the year ahead on Slide 24. As both Chris and I have said, we are pleased to see the action we've taken in the second half drive momentum for the business in calendar year '25, with 14% growth year-to-date to February, and Q1 media revenue pacing up 14% on the PCP. This is an acceleration of the 2% growth we saw in Q3 of 2024 and the 5% growth we saw in Q4 of 2024. This outlook will be complemented by the rollout of new assets over the remainder of the year, and we expect our focus on execution to drive further revenue and market share growth. The calendar year '25 adjusted gross margin is expected to be broadly in line with calendar year '23/'24, and our restructuring initiatives will deliver net cost savings of $15 million. This lower cost base sets a strong platform for the year ahead. Calendar year '25 CapEx is expected to be between $45 million and $55 million, largely funding new advertising assets and contingent upon development approvals. Gearing is expected to remain below 1x adjusted EBITDA. So before handing over to questions, I am encouraged by the progress we've made in the second half and into Q1. The business is carrying strong momentum in a rising market with the actions that we've taken in the second half, driving better performance and double-digit revenue growth in Q1. We have delivered gross margin growth through strong contract discipline and the rightsizing of our cost base, coupled with growth investments, set a strong platform for 2025. Finally, the Out of Home sector will continue to experience structural tailwinds. And as the leader in this sector, we will benefit as Out of home performs against other media. And in closing, I would, of course, like to thank our team at oOh! for their ongoing dedication and effort and our shareholders for your continued support. So with that, we'll now open the line for questions.

[Operator Instructions]. Your first question today comes from Entcho Raykovski from E&P.

So my first question is around the outlook and the Q1 pacing and digit growth for Feb year-to-date, you've given us some very useful color on road, but I'm just interested in whether you're seeing that growth across all categories and whether -- well, from your perspective, it's driven by market share gains? Or is it just the market picking up in the start of calendar year '25? And then as part of that answer, if you could give us some perspective on what has changed in Road because that is obviously a pretty big turnaround from where you were tracking over the course of calendar year '24. And then I've got a couple of others, but I might wait for the answer to this one first.

Sure. So thanks. In terms of the outlook, it's certainly a broad-based recovery. We have across all the markets and territories that we operate and across a range of products. So it's not driven by any one dynamic. That's the good news and also a broad range of categories. So we've seen a lot of category growth in some key areas and also big categories like food and retail continuing to grow. So that's good. It's a broad-based outlook. I think the market in terms of growth is strong for out-of-home. But increasingly, we are moving closer towards the market, and we actually had a share gain in January. So feeling very good about both the Out of Home trajectory, but also our competitiveness within that. In terms of Road, executing the basics is what it's all about. We have a compelling portfolio of large Road assets. We're adding to it all the time, particularly in Victoria, where historically, we have been somewhat weaker, and that's really starting to pay dividends for us. We think Road is the new replacement for free-to-air television. It's high impact, it's mass reach, and it builds reach very quickly for a cost-efficient price point. So I think we're seeing all those things play into the outlook.

Okay. Thanks Cathy. And then secondly, on the gross margin guidance for '25, what are the dynamics which are impacting the expectation for flat margins? I mean I'm sure that the temporary extension of Auckland Transport is helping. But then within that, can you provide us with a little bit more color on the profile of new contracts, the gross margin profile of new contracts, I assume that's somewhat dilutive. And if it is, where do you see better gross margins to get to that sort of flat margin outcome?

Sure. Thank you for that, Entcho. Your assumption is correct. Certainly, the retention of Auckland Transport for at least 9 months. Obviously, we're confident in the bid that we'll be putting forward when it's ready, but the rollover certainly helps. As we said clearly in the past, these significant high audience contracts such as Woollahra, Sydney Metro, et cetera, that we had announced last year are at a gross margin that is lower than the group average. So that does put some pressure on the margin downwards. But the critical thing with our business is with a 70% fixed cost base, which is roughly the split in our rent as well, it's all about leverage. So where we generate strong revenue growth, that is very supportive of our overall gross margins. And the second aspect is there is opportunity within mix to also support strengthening margins, particularly in Road, which Cathy touched on earlier, that's a very important gross margin contributor for us. And while it's still small, hopefully, we can continue building our office in time, and that is also very useful from a margin perspective.

All right. Thanks Chris. That's a really good color. And then the final one, I mean I just noticed you mentioned the asset sales to Auckland Transport, which drove a $3 million gain. Can you give us a little bit more color on what drove those asset sales? I mean, does this suggest that Auckland Transport are looking to reduce reliance on OML and other external providers ahead of the retender?

Excellent question, Entcho. I'm going to answer that in 2 parts. As a general thematic, what we've seen both in New Zealand and in Australia, councils are increasingly moving to separate ownership of the fixed assets to the lease of the media. So what is increasingly more typical is at the end of the lease the assets will transfer over to the council for a nominal dollar. Auckland Transport, as is the case of other legacy contracts, that's generally not the case, it was provisioned under the original contract that was written around 1998, '99 that there was to be at the end of its existing term, a mutually agreed negotiation for the transfer of those assets. And so we judged that it was in our commercial best interest at the end of last year to follow through with that, and we duly did so.

Your next question comes from Jamie Laskovski from Goldman Sachs.

So just firstly, on the Auckland Transport. Just any update or color you can give on the RFP process and how that's tracking? And then just relative to the guidance, it would be good to know what you guys are assuming beyond the September period in that GP guidance for FY '25. And then just on the Petbarn and Officeworks and Australia Post partnerships, if you could provide some color on why they choose to work with you? And then finally, just on Sydney Metro, if you can provide some update on how that rollout is progressing versus 6 months ago. So I think the commentary was for first half '25 compared to late 2024 to early 2025 previously.

Okay. Let's take that from the top. So Auckland Transport, we were advised that it will be a brand-new RFP that will be issued -- the original guidance was February, March. We've now been told it's March. So at this point, at some stage in the month of March, we expect a complete new process to commence for that contract. It's probably too hard to predict what happens from September '25, if I understand the question.

Broadly, we expect at this stage a blended outcome. So based on a 95% retention of contracts, our assumption is we retain that, but at a margin that won't be similar in the fourth quarter to what we're currently earning under the short-term extension.

Okay. I had just talked briefly to Petbarn and Australia Post. What we're finding in our discussions with retailers is there is, in fact, a real need at that small to midsized retailer to be able to solve for what they all see is a growing potential revenue stream in a retail business. Because we are already in the media space, because we can do things like deploy assets quickly as part of our core capability, the opportunities for partnership are proving very real. And we can get a retailer to market very quickly and stand up a network very quickly. So we do see a role for ourselves with both Petbarn and Australia Post Officeworks as an independent player in this space. At the very big end of town, you'll see big retailers will do their own things in store, as you would imagine, given their scale. But it's in that mid-range of customers that most of the further conversations are going on, and there are several more in train at the moment. So it is an independent enabler of a media strategy, not just in-store, where we started with these screens. But in fact, the need for the average retailer is much greater. So our sales capability and our access to customers, it's not really something they can get to easily as a stand-alone retailer. So it's a great example of us leveraging our strengths into their needs and developing good partnerships in the process. So in terms of Sydney Metro, we are about 63% built in terms of the assets that were originally planned as part of that initial contract, and we expect to have that completed by midyear. We have some very exciting assets in the Gadigal Station going in, and they'll be live in the Sydney CBD midyear. It's all tracking ahead of expectation. Metro has been a fantastic new asset for us. I think you can see in our transit revenues, and that will continue that we are performing well ahead of the market. The demand is strong, and we'll continue to monetize those well, both in terms of yield and occupancy and also the new assets coming online.

Your next question comes from Brian Han from Morningstar.

How much [Indiscernible] investment is included in your cost guidance for this year?

Do you want to take that, Chris?

Yes, sure. So it's not a -- so there's 2 parts to that question, Brian. We predominantly got the leadership team and all of the BAU costs already embedded in our business. So now it's just going to be a question of basically a full 12-month run rate versus we had last year. So a modest step-up in OpEx in terms of fixed costs. Where there is additional cost that will come into the business is a function of specific client wins. So you can think of it as variable costs with basically revenue that attaches to that. So if the cost is increasing, it's because we've had more wins, which will be driving more revenue, which obviously pays for that cost. And all of that is embedded in the $150 million to the $155 million OpEx range that we've provided.

Okay. Cathy, what is your digital penetration in Street Furniture now? And where do you think it's headed to in 3 years' time?

Yes, very good question. It's in the single digits at the moment. We have a very large footprint. It's a mass-reach product. And the digitization is really driven by the contract renewals. So we've come off a heavy renewal cycle in Street Furniture, and we've added to that and the new contracts that we've added are strictly digital only. So you're going to see that tick up gradually over the years. But as a percentage of the overall portfolio in Street, it's still very low.

And do you have an idea of where it's headed to in the next 2 or 3 years?

Yes. We definitely think it's going to get into the teens. One of the difficult -- and it will in that time frame. It's hard to be precise around timing because what we've consistently seen, especially with Street Furniture is there are 2 aspects. You win the contract, but then you need often the DA at the individual site level. And so that sometimes certainly in recent history is taking longer for us to digitize than we would have liked.

My last one is when you guys say energizing your go-to-market, was the issue with your previous go-to-market more people-related or systems-related? And was that mostly in roads?

That's a very good question and quite intuitive of you there, Brian. So look, the reality is it's both. So I think the feedback we had from the market was we were slow to respond and that our sales forces weren't as quick to get to decisions as other operators in the space. So to be able to put more autonomy and more decision-making power and more responsiveness into your frontline teams, you need to give them the tools to do that. So we have developed things like pricing calculators that take the decisioning away from other tiers of management and put them in the hands of the frontline sales force. And we're building technology all the time that's going to just continue to help us optimize across our broad portfolio a lot more quickly. And that's really important with MOVE 2.0 coming because that's going to give us so much new data to be able to advocate for the scale and the campaign objectives that we can achieve really quickly. So it's people and probably systems constraints, one leads to the other, but we've also been very firm on driving an uptick in activity levels and market coverage. We've got a lot to advocate for in our network and our sales teams with the current momentum in the revenue line have responded to that really well, as you can see. I think the trend in revenue growth in the second half was 2% in Q3 to 5% in Q4, moving to 14% in Q1 year-to-date February and pacing. So you can see the acceleration of the momentum. And so we're going to keep that going with high accountability and high productivity.

Cathy, just to finish off, was that issue mostly in roads? Or was it across the board?

No, across the board, across the board. I mean we have 7 different Out of Home environments, and they'll all have their own competitive positions within the channel. So that's part of the simplification objective is just to really put simpler tools into the hands of the front line and to lead the market more in how to buy. So it's a combination of how we productize and also how we engage externally.

[Operator Instructions] Your next question comes from Fraser McLeish from MST Marquee.

Great to see some really strong metrics coming through. So yes, I've just got 3. My first one would be on the 14% you're pacing for Q1. Is there much in there at all from the $38 million of new contracts? That's my first one. Second one, Cathy, I think you talked about Sydney Metro being ahead of expectations. Does that mean you now expect more than $35 million you previously outlined from Metro and Woollahra, and the last one, at the half year, I think you were talking about $13 million to $33 million in potential new contracts? I didn't see that repeated in this preso. I might have just missed it, but can you just update us if that's still the case or if there are any others as well that have come up since then that you're bidding for?

So in answer to the first question, there's virtually no, none of the $38 million in that Q1 pacing number. So we are still yet to deliver on that, but the builds are progressing, as I mentioned in the preso. In terms of Metro being ahead of the case, a bit early on the street furniture front. We think Woollahra is probably slightly behind where we thought it would be at this point, and thus the importance of getting Waverley and Northern Beaches up and a lot of our new systems and processes in place, so we can leverage that Sydney premium footprint and sell a blend there as well. So there's probably some ups and downs within that number. So we're not looking to upgrade the $30 million.

And in terms of your third question, Fraser, no, there's nothing untoward from the fact that we haven't called out new projects up to win. As we said, as we are now moving into a benign period of defense. That is the opposite for the other major market participants in addition to Greenfield opportunities. We just haven't specifically called it out, but there are sizable opportunities out there in the next 3 years that we'll be competing for.

Your next question comes from Evan Karatzas from UBS.

Nice work on that for those market share gains in that 1Q number. That's really pleasing to see. I'll just ask one on the operating cash flow through the second half. Can you just sort of go through that working capital build? Has that been, I guess, unwound now? Or I guess, how should we think about that operating cash to EBITDA conversion in CY '25? And then just the final one, just on the lease cash payments, obviously took a decent step up in the second half. Is the annualized run rate of that a good proxy for calendar year '25 as well?

Sure. So as we said on the call, one of the key drivers for our cash flows other than the tax payments and just timing around receivables collection is in relation to contracts that were variable rent moving to fixed rent. And this is just a consequence of we had some arrangements as a result of COVID where 2 very big leaseholds in the transit area, so think airports and train operators. We have moved over to a variable rent arrangement and subject to certain tax thresholds being met in the performance of the overall industry, we reverted back to a fixed rent payment plan, which was what the case was before COVID hit us. And what that means is it's more just timing. The fixed rent arrangements for those leases, we pay in advance typically for the quarter, where previously in 2023, we had been paying in arrears. It doesn't necessarily indicate a significant step-up in the rent per se. As a general proxy, work on the basis that our fixed rent, excluding anything that's obviously new or something substantial like metro or something like that, we're probably stepping up at around 3% to 4%.

As there are no questions at this time, I'll now hand back to Ms. O'Connor for any closing remarks.

Thank you, everyone. I trust that you've got the information you need on the headline results for our calendar year '24 performance, and we look forward to those that we are meeting with to going into more detail in the days ahead. Thank you for your time.

That does conclude our conference for today. Thank you for participating. You may now disconnect.