SKY Network Television Limited (SKT) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the SKY Network Television Full Year Results 2024 Conference Call and Webcast. [Operator Instructions] I would now like to hand the conference over to Ms. Sophie Moloney, Chief Executive Officer. Please go ahead.

[Foreign Language] Hello, everyone, and welcome to SKY's 2024 Annual Results Briefing. Thank you for taking the time to join today's call. I'm Sophie Moloney, your Chief Executive here at SKY, and I'm pleased to be joined today by Ciara McGuigan, Sky's Chief Financial Officer. I'll start today's presentation with an overview of what we've achieved in FY '24 followed by a look at our performance and key parts of the business. Ciara will then take you through the numbers in more detail, before I take you through our capital management program and the outlook for FY '25. We'll then hand back to the operator and open the lines for your questions. So turning to the year-end highlights, it's a solid result for SKY with all metrics delivered within guidance, albeit with revenue at the lower end. In the context of the economic environment and the media sector as a whole, the business has performed well. It will come as no surprise that household spending has been under immense pressure during the second half of FY '24, which has meant that full year revenue growth is not where we wanted it to be. Despite the economic pressures, I'm very proud of the way my team has responded to deliver a third year of revenue growth with increased diversity, a disciplined approach to cost that's expanded margin, NPAT that's close to the midpoint of guidance, and perhaps most importantly for our investors on this call, we have delivered strong free cash flows to fund significant dividend growth, well above the increase signaled at the half year. As you can see on Slide 4, we've delivered on all 3 key priorities identified at the start of the financial year: lifting employee engagement by 12 points; rolling out new Sky Boxes and pods to 21% of our base; and lifting advertising revenue, as we also added a new digital revenue stream in the second half. Like revenue, customer numbers were not where we had wanted them to be, particularly across Neon and Sky Box, due to factors we'll cover off later in the presentation. Notwithstanding these factors, we've remained focused on delivering an improved customer experience, which saw a 6-point lift in overall NPS, a positive signal as we head into FY '25. Turning to Slide 5. The growth in revenue is the result of a strong performance across the key growth engines of the business, including another year of standout performance from Sky Sport Now, along with a continuation of Sky Broadband's growth trajectory. Adding to this momentum, in the first year of accelerating our ambition in advertising, we've delivered a considerable 13% uplift in revenue. That's more than offset the decline in Sky Box and uncharacteristic reduction in Neon revenues, to deliver an overall increase of NZD 12.4 million, a 1.6% increase year-on-year. Moving to our EBITDA bridge. Importantly, EBITDA growth of 2.9% surpassed revenue growth to deliver increased operating leverage. This included a disciplined approach to spending, as evidenced by the delivery plan on the NZD 6 million in annualized savings promised from transformation projects announced in FY '23. That meant our savings were able to more than offset the impact of investments on our capability, our content, and the inflationary pressures on certain cost lines. As a result, despite CPI running at 3.3% over the same period, cost increases were limited to 0.8%. And this also catered for the [ cost of fund ] growth in Broadband, Advertising and Sky Sport Now. At the end of the last financial year, we shared our 3-year targets to highlight our areas of focus as we deliver on our strategy. 1 year on, our results show we're on track to deliver, with the exception of 1 target, and that's revenue, given it was stated on a CAGR basis. The stronger-than-expected headwinds, particularly in H2, have meant that in year 1, we've fallen behind in chasing down this target. While my team and I have no shortage of ambition, the slower start means we need to call it early and reset this target to give clarity on our revised expectations. This now sees us delivering annual growth of 1% to 2% per annum through to FY '26. Importantly, all other targets remain unchanged, including our programming costs and CapEx targets, which are set as a percentage of revenue. A 5-point improvement in employee engagement is considered exceptional, so our 12-point uplift is a fantastic achievement in a single year. This reflects the importance we place on our people, including the investment we've made to boost leadership skills and build clarity around our purpose and our ambition. I'm also extremely pleased to see customer NPS increasing by 6 points. This demonstrates the effort we've made to deliver on our service promise and lift customer experience with more on this front to follow. Importantly, the significant lift in dividends is evidence that we're making good progress to our FY '26 target of NZD 0.30 per share. Turning to Slide 8. We've talked before about our strategic strengths as underpinned by our core competitive advantages. I want to touch briefly on 3 of these today: first, our multiplatform strategy, which has contributed to Sky's resilience in these tougher economic times; the choice we offer through diversified platform, package, and pricing options, along with free-to-air delivery, ensures Sky is accessible to all New Zealanders. You'll see that we've highlighted the extent of our existing digital relationships in this slide. These include our streaming and news Box and Pod products, along with thousands of connected satellite boxes and the ability for Sky Open customers to access their content via Sky Go. This leads nicely to the second competitive advantage, where increased use of these digital products provides rich and unmatched viewership data to inform much of our critical decision-making. Deep viewership insights now play a central role, not just to our vital content negotiations, but also in terms of our approaches to customer care, engagement, and retention. You'll no doubt have questions on our New Zealand Rugby renewal, with these rights held through to the end of calendar year 2025. Suffice to say, we have a clear view on value, with constructive discussions ongoing with this important partner. Turning to Slide 10 and our third competitive advantage, which is our unrivalled bundle of content. No one comes close to having as much must-watch sport as Sky, nor does any other entity in this country have access to the immense production expertise and experience of the Sky Sport production team. There's no better example than our recent coverage of the Olympics, with 130 crew on the ground in New Zealand, managing multiple feeds, including many live crosses from our extremely hardworking teams on site in France. FY '24 also included 4 World Cup tournaments, as well as many marquee events and regular week-in, week-out, season-long competitions, such as the NRL. For lovers of sport, and New Zealand has plenty of them, engaging with Sky Sport content, whether as a direct subscriber, via Sky Open, or through our commercial customer venues, is pretty much essential. But we're not just about sport. Our entertainment content bundle includes an amazing array of news, TV shows, movies, and more. We support this incredible breadth and depth with a significant number of studio partnerships, and on this note, we were thrilled to renew and expand our partnership with the BBC earlier this year. And of course, our own Sky Originals productions add an important local lens that connects with an increasingly diverse New Zealand audience. On this front, we've been pleased to have international studios, such as Lionsgate and BBC Scotland, wanting to partner with us. We're also very pleased with the support of New Zealand on Air funding to invest in local production. And in the year of elections, with the battle in the U.S. heating up, there's no better place to watch 24/7 coverage for our news services, whatever your political taste. As with sport, our entertainment bundle remains an essential element of the weekly viewing diet enjoyed by many of our customers. Moving then from a brief recap of some of our strategic strengths to the operational performance of the business in the first half. Starting then with the new Sky Experience, and I'm extremely happy to report after a couple of reporting cycles, let's face it, this was tougher going. We now have 100,000 households of 21% of the Sky Box base using this product with the actual takeout higher again at over 112,000 new devices in use. Having refreshed the go-to-market [ setting ] that included suspending the upfront device fee as well as making it easier for new and existing customers to enjoy the new Sky Experience, we've seen a significant momentum shift. Monthly orders are now hitting the levels we're targeting, with Q4 sales averaging over 11,000 boxes per month. The additional features and ease of use now see customer NPS scores for new products that are 12 points higher than the wider box base. This confirms that pausing the program was the right thing to do, and it's allowed us to reset, and we're seeing very positive momentum since. Turning to Slide 14, moving to the overall picture for Sky Box. As we've already covered, revenue was down year-on-year. Most of this impact came from a lower opening position and stronger headwinds early in H2 that saw an uptick in churn. Given the decision to suspend the upfront fees, income from device revenue was also paused. And sports penetration came back from the highs of H1, although it still remains above 70%. In contrast, the ARPU story is one of continued growth, up 2.5% year-on-year. The drivers included price rises in our sports and entertainment packs and average sports penetration of 71% throughout the year. This more than offsets some spin-down from nonsport packages and add-ons. The next slide demonstrates that we've performed well in a challenging market. Having resumed marketing activity early in the second half, activations were down by just over 1,000 year-on-year and disconnections were held to just 3,000 above the prior year. And throughout, we remained focused on margin, with a 34% reduction in foregone revenue from discounting. While churn was higher at 11.5%, this was skewed to the beginning of H2. And a greater focus on save activity has since seen this trending back down at year-end. Broadband attachment at acquisition climbed to 16% from 10% in FY '23. And the key metric is that we're now seeing evidence that bundling improves retention, with churn improved by 13% for bundled Sky Box customers. Turning now to our streaming business. Beginning with Sky Sport Now on Slide 16 in what has been a phenomenal year. The first half included an incredibly strong content lineup that boosted customer numbers and revenue to new highs. The 33% growth in revenue included strong transactional pass sales that pushed Sky Sport Now revenue above Neon for the first time. And staggered price increases across all pass types flowed through to an 11% jump in ARPU for recurring customers. Recently, we also tested a spot increase for weekly passes during a particularly high-value content period. And this delivered a very good result that has since been repeated. As expected, customer numbers came back from the post-Rugby World Cup highs that were evident in the H1 numbers. However, the new season of [ Winter Sport ] gave us the opportunity to rebuild and by year-end, customer numbers were up on last year. At the same time, the win-back pool is now significantly larger, demonstrating the size of the addressable market and providing access to a low-cost marketing opportunity. The new financial year has started well with a far better than forecast number of Olympic event passes sold and just over half of those being first-time Sky Sport Now customers. We've also had phenomenal viewership stats throughout the games. Looking now at Neon, which has come under pressure during the financial year. This is partly from the prolonged impact from industry strikes on the pipeline of acquisition-driving titles, as well as from the trend of some customers more closely managing their entertainment app spending. While we were pleased to see House of the Dragon bringing customer numbers back into growth in June, this was too late in the period to have a meaningful impact on revenues. What we have seen since the past year is a stable product mix with 86% subscribed for the standard tier and growth in average tenure to 27.8 months, suggesting that the core customer base is behaving more like a stickier Sky Box customer. Along with the January price rise, this helped to soften the revenue impacts. And our focus now is on making the most of the content runway ahead and the opportunity to win back customers. We were pleased to report another period of strong growth for Sky Broadband with impressive gains in customers and revenue, despite an increasingly competitive market. The increased scale delivered additional margin growth and our high-quality product and service performance continue to compare well. The popularity of our 1-gig product remains high at 49%. And we're pleased with the growth in the Fibre Starter product, which now accounts for 16% of customers. Turning now to Slide 19. And our commercial business is performing well, despite the economic conditions. Revenue growth is more modest as a result with some customer loss in the retail sector, but with generally good performance in the accommodation and hospitality segments. Sky offers commercial customers a chance to differentiate from their competitors. And the Sky business team are working hard to make sure their customers see their service as essential and adding value to their business. Turning then to Slide 20. The investment we've made to go after a bigger share of advertising has been incredibly effective. Through strength and capability and a renewed focus across the business, we have a better place to lean into the opportunities. This saw Sky's advertising revenue grow by 13% in a market that contracted by 14% year-on-year. This phenomenal effort included strong sales across Sky Box and Sky Open with the first period of digital revenue from our streaming products delivered as planned early in the second half with our Neon service. The first period of revenue growth has come from unlocking new inventory and integrations alongside other technology innovations. The groundwork to strengthen our engagement with advertising and agency partners and new technology deployments have got us off to a great start. The next phase will see us launch digital ad replacements offering a high-value targeted approach for advertisers. Sky Sport Now is set to launch in H1 and Sky Go is on the road map for H2. Delivering on our priority to grow advertising and create a new digital revenue platform has been a winning strategy in FY '24, and we see significant opportunity ahead. And with that, I'll hand you over to Ciara who will take you through the numbers in more detail.

Thanks, Sophie, and good morning, everyone. It's great to be presenting to you for the first time as your CFO. So let's look at our overall performance. We are pleased with the outturn for the year. We are continuing to deliver growth. All metrics are within the guidance provided a year ago in what was a very different market context. That said, I share Sophie's ambitious outlook. In the time that I've been with Sky, I am encouraged to see the level of energy and determination to drive performance. This will continue to be key as we head into FY '25. At the top line, revenue continues to grow faster than cost. In a high-inflation environment, we were pleased to hold cost growth at 0.8% year-on-year. This has lifted our EBITDA margin to 20% and delivered EBITDA of NZD 153 million, which is growth of 2.9% year-on-year. Looking to the NPAT line, you will see that the expected rise in depreciation offset the EBITDA growth, with full year NPAT of NZD 49.2 million coming in just below the midpoint of guidance. Capex spend of NZD 83 million was higher year-on-year, as signaled. And despite this important lift in investment, there has been strong growth in free cash flow of over 43% year-on-year to fund the step-up in shareholder dividends. Looking at the build-up in more detail, let's firstly turn to revenue. On Slide 24, you can see the growth path that has become a consistent feature of the last 3 years, albeit the momentum slowed in FY '24. Sky Sport Now, Broadband, and Advertising delivered strong growth of NZD 29 million year-on-year, as Sophie already pointed out. This growth more than offset softness in the Sky Box and Neon, and clearly demonstrates the resilience that has been built up through diversification. Turning to Slide 25. The expenses' story is one of disciplined spending. You can see in the programming cost line where the overall increase was contained to NZD 7.7 million year-on-year, which is just 2%. This in spite of a big sporting year, with World Cup events, plus the full year impact from World Rugby, the NRL, and Formula 1. The most significant area of savings within subscriber-related costs, which were reduced year-on-year by NZD 12.6 million, or 14%, to NZD 81 million. This included efficiencies from partially outsourced call center operations and fully outsourced warehousing and logistics, along with reduced marketing spend. Now fully operationalized, new logistics settings led to a 22% reduction in service call-outs in FY '24. That has delivered considerable savings whilst also improving customer service, a 9%, or NZD 7.5 million, increase in broadcasting and infrastructure costs largely related to variable costs driven by the growth in broadband and the growth in streaming. Lastly, a 5% or NZD 2.4 million, increase in other costs mainly relates to investments in advertising capability and some inflationary impact from people investments. Limiting cost growth to 0.8% year-on-year in a period of inflationary pressure is a significant achievement, particularly as this includes the cost of revenue growth. It is by far the best performance in some years, noting, of course, that FY '21 included significant COVID-related programming rebates. On to Slide 26. CapEx increased, as expected, largely due to accelerated investment to roll out new products, feature development, and investment in advertising tech. At the same time, the mix of this year's spend saw some movement from software development to hardware, as we progressed the rollout phase. Total CapEx spend also included NZD 4.5 million for satellite migration activities in FY '24. This was lower than initially expected due to phasing and will run through to FY '25. In total, CapEx as a percentage of revenue rose to 10.8% with a strong weighting towards growth. Even including migration spending, actual CapEx was at the midpoint of guidance due to optimization savings. These savings included higher-than-expected self-installation rates of 96%. That meant these costs were slightly down in a year when they were expected to increase. As a result, in FY '25, excluding satellite migration, we are guiding to a faster reduction in CapEx, which is earlier than originally expected. This means the higher period of CapEx intensity has come to an end. Moving to cash flow where we delivered NZD 139 million net cash from operating activities. This is 19% growth year-on-year. This has enabled increased investment whilst at the same time delivering shareholder returns. CapEx investment was NZD 17 million higher than the previous year in cash terms due to the increased investment and also including a payment for hardware delivery of NZD 5 million that was actually delivered in FY '23. Lease costs were close to NZD 2 million lower year-on-year as a result of the Optus variation announced in August 2023. NZD 42 million of distributions represented a NZD 14 million increase in the amount returned to shareholders through dividends and share buybacks. We closed out the period with a cash balance of NZD 37.8 million. Lastly, I am pleased to let you know that we successfully renegotiated our banking facility, continuing with the existing 3-bank syndicate after a competitive process. At the same time, we have taken the opportunity to reduce the limit to NZD 100 million given the ongoing positive outlook for our cash flow generation. This is a significant milestone achieved on more favorable and flexible terms, which is a reflection of a significantly transformed business. With that, I'll hand now back to you, Sophie.

Thanks, Ciara. Great job. SKY's management and Board is highly focused on delivering returns for shareholders, as clearly evidenced by its action over the last few years. This year, it has led to a 26.7% increase in fully imputed dividends, which is above the improved guidance provided at the half year. Our Board has consistently stated that Sky shares remain undervalued and demonstrated this again through approving a second buyback program for up to NZD 15 million. This was initiated on 1 April 2024 as an immediate follow-up to the conclusion of the first program. And to date, Sky has bought back 5.4% of issued shares across both programs, with approximately NZD 7.8 million still available to deploy during FY '25. So to our outlook and guidance for the full year. We are expecting economic conditions in FY '25 to be largely unchanged, and this is reflected in the revenue guidance we've provided. Given this context, we've already identified further opportunities to reduce costs that we've already begun to action. And any one-off costs from any such transformation activity have not been factored into EBITDA or NPAT guidance. Our CapEx guidance excludes satellite migration spending and is trending lower, as Ciara mentioned, which means that we expect to achieve the 7% to 9% of revenue target a year earlier than previously set out. Last, but not least, we're expecting to continue lifting the dividends, this time to at least NZD 0.21 per share in FY '25. The work completed in each of our FY '24 priority areas achieved great results for the longer term and our FY '25 priority build on last year's momentum, along with adding a fourth area of focus to deepen our content engagement. So as we move through the halfway point of our 3-year targets, with the revenue target duly reset, it perhaps goes without saying that my team and I remain focused on delivering against our strategy and building on the execution momentum for the benefit of our crew, our customers, our partners, and our investors. And with that, I'll now ask the operator to open the line for your questions.

[Operator Instructions] Your first question comes from Arie Dekker from Jarden.

First question, just on the Sky Box. Have you got targets internally for where you want that penetration to lift by the end of this year? And also, just on the satellite subscribers, so those subscribers on satellite, is the intention to push the Box to those customers harder in FY '25, or are you actually happy to let the customers dictate the pace with which they migrate to the new Box?

Very excited about our new Sky Box numbers. And yes, we are currently -- of course, we do have targets. So for FY '25, moving from the 21% that we're at now to 35% by the end of the year. And we've had 11,000 a month in Q4, as we mentioned, in our announcement, I think. And we're definitely keen to ensure as many of those customers enjoy the experience. I think the Olympics was an incredible showcase of the live and on-demand content coming in overnight, which I know a number of customers have referenced. But ultimately, Arie, that's customer choice. So we're making it much easier for them to upgrade now. And obviously, for new customers joining us, they have the choice of the Pod or the new Sky Box.

Yes. And just on the Pod quickly, are there any initiatives planned for FY '25 to get that into more homes, albeit without any requirement to take [ Sky Starter ]?

No. Well, so first of all, yes, the plan is to get the Pod out into more New Zealand homes. And we're looking at a really interesting bundle with Broadband for later this calendar year that we think is going to give great value. But the products and packaging remain consistent as they are now. That said, there will be some really interesting bundling options later this year that we'll communicate that we think will celebrate Sky Made for Entertainment in terms of our Broadband product, obviously with the Pod, which is IP delivered.

And just on the cost reduction opportunities you called out in the guidance. Can you just confirm, yes, so the reference there to cost reduction opportunities, the plans there, they are included within the guidance range?

Any one-off costs of transformation are excluded from EBITDA and NPAT, but we've obviously got numbers in our budget that we're forecasting. Is that what you're referencing, any one-off costs?

Yes. So that was the second part of the question, yes, because I know you've moved away from reporting adjusted EBITDA this year versus other years, but then you're indicating that the EBITDA guidance excludes one-off costs, so just a bit mixed there. So I guess I was looking to just confirm that the cost out is included in the earnings guidance and there's a bit of a guide to what you expect the one-off transformation costs to be in FY '25.

Yes. So basically, yes, you're right, we manage our budget and our cost lines, and they're included within guidance. We're just talking about if there are any just more significant one-off costs in year, those are excluded, and obviously we'll give more clarity when we can, but we're excluding them at this stage because we need to see exactly where they land during the year.

Just on price increases. Obviously, a reasonable amount of cadence on them across the various products over the last couple of years. Have you got any intention to put price increases through on any of the platforms in your FY '25 budget?

So I'm interested to look at the start of next year and see where the economy is, see where household spending has got to. We've still got full [ freight ] of the rugby deal right through this term. And so I'm not looking at entertainment pricing at this stage. It's more on the sports side. So it would be around -- as we go there, it will be in respect to the sports pack and Sky Sport Now because that bundle of content that we have throughout calendar year '25 is pretty impressive. And so we're looking at that, and we'll also discern where, yes, where consumer spending and confidence has got to at the start of next calendar year.

That makes sense. And then last question from me, just any comment on the status of negotiations with the rugby contract, just where that's at in that process?

Well, as per prior cycles, we're in good conversation. You can normally anticipate that we would agree terms -- any renewal terms by the end of the calendar year because for rugby and for Sky, we all need to know as we get into plans for calendar year '26 when the new deal would kick in. So we're in constructive conversations, but obviously we'll make an announcement as and when appropriate, hopefully later this calendar year, but we'd just have to see how negotiations go.

And are you in exclusive negotiations still?

That's not something I'm commenting on, Arie, because it's part of a confidential deal.

Your next question comes from Phil Campbell from UBS.

Just following on from a couple of Arie's questions. Are you able to tell us, in terms of the new Sky Box and the Pod, how many new customers are signing up for that? And then just to follow on in terms of obviously we're in a pretty tough economic cycle at the moment, just what you alluded to, the Pod plus the Broadband bundle, which would be good. But obviously potentially 4K being launched later this year. Just interested to see what other promotions there would be to try and attract more new customers to the Sky platform.

Yes. Look, we're super mindful of the environment that we're in. And that's why I've been really pushing the team to look at how we can actually give some very good value to customers through bundling with Broadband. We know bundling makes sense. And so we also want to do the same thing and continue to offer the same on our Sky Box as well. That said, as you know, we do have a standalone app in Sky Sport Now, which works for a number of customers and certainly has this past year. Neon, we think, is competitively priced for the depth and breadth of content that is delivered by that server. And equally, I think this is why it's really important that we are also looking to maximize customers' access via Sky Open to the content array that we have with the support of advertising partners, in particular, as the household wallets are under pressure, and it's an opportunity to enjoy some of our content. And hopefully when household wallets are feeling a bit better and rate rises have changed, they'll be able to come back to us. We haven't broken out in terms of new customers, in terms of the new products. We do break out broadband attachments. But that's something we can probably look to in the next financial year.

And is it possible just to give us a bit more detail? I know you did an announcement a couple of days ago just on what's going on with the Optus satellite and the potential impact on the business as a result of that.

Yes. So, look, we had always planned for the satellite migration. It's just we're needing to accelerate our plans. We've got a highly experienced team, a number of whom were here when we did this last in 2006. So, we've got the team to deliver on it. We've given a reference in the announcement that the cost may be the NZD 10 million to NZD 15 million, but obviously we have a broad offset already in place with Optus. We don't see it as being a significant cash impact at all. It's just that we're going to need to -- given the new timeframes that Optus only shared with us late last week, we just now need to reprioritize and replan our resources. But I'm highly confident in the team that we have that we're going to make sure that we ensure all of those New Zealanders who still enjoy and rely upon satellite delivery can continue to consume their content in that way. But equally, as we've referenced in the announcement we made, IP delivery is an important part of how we already deliver. And we've referenced in our announcement today the 700,000 connected customer relationships. That means that those are customers that we have access to via our IP. So I think, unlike when Sky did this back in 2006, we're in a hugely different position. And so, overall, it's going to be undoubtedly a lot of work for the team. But we know what we need to do, and it's a big priority for this financial year.

And would you be start doing some testing on that pretty soon, would you? Because I think is it May 2025 is the switch off?

Yes. The testing is going to be starting in a few weeks to make sure we can -- it's all about ensuring that the dishes attached to people's homes can point to the relevant satellite crafts in space, which are in space. And so, that's a key piece. It's all about what we need to do on the ground to give effect to that new signal coverage. It's probably the simplest way to articulate it.

Your next question comes from Rob Morrison from Craigs.

Hey, morning, guys. Can you hear me okay?

Yes. Hey, Rob. How are you doing?

Oh, yes. Good. Thanks. Good job delivering around the middle of the NPAT guidance range in what's been, I think we looked it up, it's one of the worst, you know what I mean, per capita consumer recessions ever. The questions, so you've downgraded FY '26 revenue growth or the revenue growth to FY '26, but you kept the dividend the same. So it seems to me either you're being pretty conservative before or there's been some new reduction in OpEx or CapEx. Is that the right way to look at that? Could you talk to that, please?

I think the first thing I'd say is these are targets, and they're pretty ambitious. So I think downgrading feels a bit harsh. We've just reflected that as we went on a compound annual growth rate, we needed to adjust it as per year one. So, of course, as my team know, I always want to try and outperform, but we did need to reset it. But at the time we were doing it, we did go through a process with the Board and just made sure that absolutely we had the capability of being able to say that we were going to be able to double that dividend. And that wasn't just contingent on where that revenue sat. So it's looking across our business. And I really do hope that notwithstanding that revenue piece, if you look at this year how we've managed the cost line and we look at that free cash flow generation, as Ciara shared in the presentation just now, 19% growth year-on-year to then drive a 26.7% uplift in dividend. I'm hoping, Rob, that that gives you a sense that we really do understand our business. And that's why we still have confidence in delivering on all of those targets, even those that are toggled to as a percentage of revenue, which includes programming and CapEx.

Yes. That makes sense. So then on that lowering of the growth from, so I think it was from 3% to 4% to 1% to 2%. So what was the driver? Was it you want to mean low in revenue, lower revenue for the box or for streaming or 50:50?

It's just looking across the piece that where our numbers were. We've talked about, and I was upfront that it was disappointing to see our customer numbers this financial year. The world we're now in, just being in a streaming business as well, if I could have moved the balance date to 31 July, it would have been a much more positive story. We would have been back up over 1 million customers at that time. So just to make that point. So it's not looking at any specific or one line and saying, right, we need to pare it back. It's looking at it in the round. And that is the joy of our business. We're a portfolio business, we have a bundle of content, we have a range of products that we can price, we can bundle, and as well as now working with advertising clients and seeing a 13% growth in that line. So lots of lines that go into the mix. And that's why, again, we did need to pare it back just because we had it as a CAGR. And so, that's the reason we've done it. And we're just owning that story. But I think what's critical is that we've still got the confidence on delivering on all of those other targets. And, as you mentioned, the all-important doubling of the dividend to at least NZD 0.30 per share in FY '26.

[Operator Instructions] There are no further questions at this time. I'll now hand back to Sophie Moloney for closing remarks.

Look, thank you. Thank you to everyone who's listened-in today. As we're preparing for the [indiscernible], I just want to say I'm hugely proud and grateful to my team. It's been a phenomenal delivery in a tough economic climate. And we're already excited about FY '25. And it's all about the teamwork across the company that's going to ensure that we can deliver on the guidance that we've given to the market today. We really look forward to engaging with our investors and, of course, the analysts in the next few days and look forward to being in touch soon. Thank you, everyone.

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