Vista Group International Limited (VGL) Earnings Call Transcript & Summary

Good morning. Welcome to the Vista Group results announcement for the 12 months to 31 December 2024. My name is Matt Cawte, and I am the outgoing CFO at Vista Group. With me today is Stu Dickinson, our Chief Executive, and I'm very happy to welcome Matt Thompson, the incoming CFO, to the call. Before I hand over to Stu to get us underway, I'd like to let you know we're very happy to take questions at the end of the presentation. [Operator Instructions] Over to you, Stu.

Thank you, Matt. And I just wanted to acknowledge your service and your support and your decision. So thank you for that and looking forward to welcoming Matt Thompson as our CFO as we hand over to him over the next little while as well. As we get underway this morning, 2024 was a massive year for Vista Group, across every metric. It was a real team effort as we transformed and fully implemented and operated the business and our new structure all aligned behind our ambition. Everyone on the team has had a really big year, and I wanted to start with a massive thank you to all of them. Everything they do, and we do as an organization is designed to support our vision around connecting the film industry and enabling the moviegoer experience. Regardless of whether or not it's Vista Group film or cinema, all of our teams and all of our thinking is aligned around this ambition. 2024 was, without doubt, a standout financial performance for Vista Group. I'm thrilled to be able to present our results and how everything has come together. During the year, we've been able to drive performance improvement across every financial metric. We've delivered all-time record revenue for Vista Group. We were cash flow positive for the entire second half. And it was very pleasing to be able to return the business to overall profitability before tax. As I said, in my words, a standout financial performance for the year. But it was not just about delivering financial performance. During the year, we expanded and extended our operating leverage delivering an improved EBITDA margin for the period up to 15.5%, excluding foreign exchange losses. As I said before, we also continued to deliver on our ambition by becoming free cash flow positive for the entire second half. During the year, we continued our Vista Cloud momentum build with 17 new clients signed during the period and almost 700 sites now live using Vista Cloud Solutions. We also continue to drive our solution innovation, delivering 45 new features across Vista Cloud, all designed to support our clients to get closer to moviegoers, deliver great digital experiences and support operational improvements. The box office came strong -- came home stronger over the second half of 2024. With a soft first half, it really reignited as we went into the second. We delivered several new records across box office for titles like Moana 2, Deadpool & Wolverine and Inside Out 2. Many of these moments gave us an opportunity to demonstrate the power of Vista Group solutions as we scaled our technology to support blockbuster moments, while supporting our clients to take every opportunity to drive increased top line revenue, build admits, and then ultimately drive, spend per admission as well. We also helped our clients deliver next-generation cinema experiences during the period with new openings at places such as Pathé Palace, or most recently Vue Swindon, which both use Vista Group solutions behind self-checkout and concessions and automated entry solutions. These enable our clients to deliver more operational efficiency and lower operation -- lower operating costs. The journey to Vista Cloud is designed to help our clients improve their cinema businesses. It's exciting now as we continue to onboard clients and build momentum that we are seeing the benefits from these solutions. Through independent channel checks, the feedback continues to be encouraging and also aligns with what we are seeing on the ground. The complexity of moving an enterprise solution from on-premise to cloud should not be underestimated. So it is really encouraging to see this type of feedback coming in aligned with our core focus around helping our clients drive revenue, improve spend opportunities and effectiveness. During 2024, we also continued to accelerate Vista Cloud adoption onboardings and signings. We delivered almost 400 Vista Cloud operational excellence sites and just under 700 digital sites live on Vista Cloud digital solutions. Client-driven performance -- box office performance delays mean we were slightly below our overall aspirations, but with strong onboarding and a secured backlog, we're very excited about our December 2025 aspirations of 700 Vista Cloud operational excellence and 1,600 Vista Cloud digital sites. Beyond delivering a better client experience and a set of solutions, Vista Cloud is also designed to enable broader opportunities for us to service the film and cinema industry. Understanding and seeing growth transaction value going through our Vista Cloud software enables us to unlock opportunities and revenue streams for Vista Cloud as we support our clients to grow. With an annualized GTV or gross transaction value of USD 2.8 billion through Vista Cloud during the 2024 -- December 2024 period, we get a glimpse of the future. It's a data-rich environment that enables us to deliver actionable solutions now around areas such as payments, advanced yield management and production. All of these are valuable to both Vista Group and our clients as we continue to build more volume through the platform in the future. You've heard me multiple times over the last period talking about the steps in the journey. In 2023, we focused on delivering market fit and client outcome. 2024 was about delivering at scale, and we proved this as we onboarded complex scale circuits, such as Major Cineplex and geographically diverse and scale-based circuits such as Pathé. We've continued to learn and improve our processes through these experiences. 2025 then is about ongoing acceleration in the business across our onboarding ambitions, supporting our clients to get the benefit of Vista Cloud solutions. All of this, as we continue to work towards our aspiration of delivering an ARR run rate of greater than $175 million by the end of 2025. In terms of site -- in site terms, we are targeting approximately 35% of our enterprise sites to be on Vista Cloud digital solutions by the end of December 2025. This acceleration is focusing the entire Vista Group team as we continue to improve the speed of onboarding, our engineering efficiency and build on the learnings from 2024 through deeper and earlier cloud prediscovery. Our solution development teams will also have a busy year as we continue to adapt and enhance Vista Cloud for changing client needs with an increasing focus on driving spend per admission, we're supporting our clients to deliver more sophisticated food and beverage offerings, improvement in moviegoer understanding and targeting and using the benefits of AI-driven tools. Recently, we launched our first foray into this around first draft, which helps movie marketers communicate effectively highly targeted communications to potential moviegoers. Our investment in the cloud platform modernization will also continue in 2025 as we continue to improve cloud resilience as we onboard at scale. Clients also appreciate and value our cyber and SOC 2 compliance. Our ambition to be fully SOC 2 type 2 certified for Vista Cloud continues in 2025. Over the last 6 months, you've heard us talk more about the momentum we're building and the opportunities beyond. Our core focus remains on delivering on our Vista Cloud ambitions and growing our film business. The ecosystem opportunity, though, is coming more into focus as we see the volume through the Vista Cloud platform. Over the next 12 months, we'll continue to develop these opportunities, as we look to leverage the platform into broader-based areas such as payments. We'll also continue to support our clients as they broaden their operations into more sophisticated offerings such as family entertainment and out-of-home. I look forward to coming back at the end of the call to talk through our outlook. But now I'll hand over to Matt, who will take you through our detailed financial results for 2024. Thanks. Matt?

Thanks, Stuart. I'm pleased to be able to bring you those financial results for the 12 months to 31 December, 2024. As Stuart said, for the industry, the momentum is back after a slower start to the year and has been a great fourth quarter in particular. The results you see today represent the first full year of operating since our 2023 transformation away from the legal entity driven structure to 1 organization with aligned strategy and objectives. These results contain demonstrable evidence in site numbers, revenue, profit and cash as to why we believe that was a very successful process and what it means for Vista going forward. As we do with each results announcement, we've updated the financial data file on our website to help investors update their models and aid analysis. You'll find this in our Investor Center under the Reports section directly under the thumbnail of the latest financial results. I'll take you through the same 3 views of the P&L we've seen for a while now, so you can get slightly different perspectives on our performance over the last year, plus a couple of extra points to show our progress with cloud momentum and the full-year impact of the transformation on our cost structure and how that will play out over time. At the highest level, the group P&L view headline revenue was up 5% for the full year, recurring revenue was up 9%, and very pleasingly, SaaS revenue for the group was up 21%. Nonrecurring revenue was down 19% for the year, and ARR is now $145.6 million, up from $126.3 million at the end of 2023. This is helped by good second half year client transitions to Vista Cloud, improved client gross transaction value due to strong closing box office and quite late in the year, some assistance from a stronger U.S. dollar. With total cash costs of the group down year-on-year, EBITDA was up 62%, and EBITDA margin, excluding FX, was 15.5%. I'll talk in more detail to that in a moment, but a great second half year result in particular. The rest of the P&L is in line with our targets with a key item of depreciation and amortization in line with 2023. Continue to expect D&A to increase in the coming years as more capitalized development costs go live with our accelerating cloud delivery. It is especially pleasing to see the business return to a positive profit before tax. This slide shows the last 4 half year periods of the operating performance of the group. There are 2 key trends here: one, the continued improvement in recurring revenue growth underpinned by the transition to SaaS revenue; and two, continued solid cost management, driving EBITDA margins, especially when you take out FX through the P&L. It is good to see the huge onboarding efforts of the Vista team in 2024 appear in our numbers strongly in the SaaS growth numbers for the second half. This is the main contributor to revenue growth. It was aided by a good box office result in the second half. And as I said, a modest petri from the stronger U.S. dollar very late in the year. If the New Zealand dollar stays down at its current levels, it will have a positive effect on our results in the coming year. We continue to see modest variability in the nonrecurring revenue and expect to do so for the foreseeable future. And those services, hardware and perpetual licenses in the second half of 2024 were up on the first half and roughly in line with the second half of 2023. We still expect these to trend down over time. Turning to operating costs. We can now see the go-forward rates of our SaaS cost line in the 2 halves of 2024. Remembering that the 2023 numbers were pre-transformation. Stu will talk to the cost drivers of these key SaaS P&L categories in the outlook section as we discuss how these will play out over time, but the 2024 numbers here represent a good reference point for the business. Total cash costs, including capitalized development, leases and removing noncash P&L expenses were $77 million for the half, roughly in line with the $76 million per half that we gave at the -- in U.S. investor update in the second half of 2023. We continue to expect staff numbers to remain relatively stable for 2025 with -- but remain -- with some potential additions to the team and cost to serve and R&D during the year as our cloud adoption opportunities grow. The top line SaaS growth and strong cost management has resulted in us beating that EBITDA margin and now 15.5% for the full year. I thought it useful to explore that a little bit more on how that looks and lines up with our guidance. This graph shows the last 3 years reported EBITDA performance with the first half and second half stacked on top of each other. Clearly, it's great to see the solid 2024 performance, and this trend aligns well with our guidance of 16% to 18% for 2025. The lower end of that guidance is well within reach, given the second half 2024 exit rate, especially when you take out the FX. So for 2025, successful client transitions, which are likely to be weighted to the second half, a consistent box office, a small U.S. dollar tailwind and good cost management, while keeping our options open to invest to accelerate cloud adoption in future years, '26, '27, could push us to the top of that range. The variance between the first half and second half EBITDA is also clear. This is driven by the timing of client adoptions, as I said, weighted to the second half. And the movement in cost increases, mainly headcount related which are generally effective from the start of the year. We expect this first half, second half trend to continue in 2025. The reporting segment slide reflects the P&Ls of the 2 main business segments of the group. The Cinema and Film segments are managed to the contribution line to include cost to serve sales and marketing and R&D costs. These splits can be found in the data file on the Investor Center. And G&A is managed at the total group level. Both segments increased SaaS revenue significantly, Cinema up 25% and Film up 13% during 2023 -- against 2023, sorry. Cinema showed a strong rebound in nonrecurring revenue during the second half and both segments reported good improvements in contribution margin, both in dollars and percentage. One of the highlights for me is this year's result in delivering a positive free cash flow for the full second half of 2024, beating guidance of the fourth quarter of 2024. At $2.6 million, it's a great win for the business and a really good sign that the momentum is with us. The full year result is also net of working capital outflows of nearly $6 million. So there's more to come here. In the full cash flow, cash flow from operating activities was up 87% on 2024 -- on 2023, up to $16.8 million, helped by collections of 100% of revenue. This would have been up 26% once you adjust for the exceptionals, which largely relate to the 2023 numbers. Capitalized development was down 10% in cash terms for the year and lower than the planned run rate. This is partially due to the reduction in costs from the transformation and the focus on delivery and implementation of Vista Cloud. Overall, a great cash performance. Our balance sheet remains in good shape. Group cash of $21.8 million being $2.1 million net of bank debt was up from $19.1 million net of overdraft at the half. Our available cash facilities, being the combined cash balance and undrawn bank capacity, stand at $44.1 million. We have a strong relationship with our primary bank of the ASB and have extended our trading arrangements with them out until 2028. Lastly, on the balance sheet. The quality of our receivables book continues to improve and collections continues to be a key focus of the business. In short, a record result all around, and it's great to see all our efforts appear in the numbers. We're in a strong position to build from here. With that in mind, I'll hand back to Stu to update you on the outlook in the summer.

Thanks, Matt. And as I turn to outlook, as I said at the beginning, it was pleasing to report the financial results and the momentum of where we're at as an organization. We've put a lot of thought into outlook. And so I just wanted to start with box office. And so domestic box office, so that's North America -- North American-based box office, we're expecting this to become and continues to become a key driver, particularly on our admit based revenue streams. And so this year, we're expecting this to continue to improve. Our view at the moment is that it's sitting -- will sit around the $9.7 billion mark, which is in line with what some of the other guidance and outlook is in the market. And so that's -- this number is underpinning a key part of our outlook thinking. The other thing we think about is also where we're at from an overall foreign currency and exchange perspective as well. And so having that guided is also important. As we continue to improve the operating leverage of the business, getting towards 100% platform and where we think our cost base will go over a period of time is what's enabling us to build more and more confidence around our longer EBITDA margin performance and aspirations. And so you can see here, we expect that as we get to 100% platform, our OpEx will continue to fall as a percentage of revenue. Our cost to serve will fall slightly. And those 2 things open up our overall EBITDA performance. This is what's giving us the confidence, as I said before, to look at those long-term EBITDA margin aspirations. We have continued to focus around client acceleration for 2025 and into '26. And so we have wanted to make sure that we leave some investment opportunity for that in terms of our EBITDA margin guidance into those periods as well. So when we put that together, we are talking about a guidance of $167 million to $173 million from a revenue perspective, which translates into $152 to $158 million from a recurring revenue perspective, and that nonrecurring, as Matt said, falling slightly to $15 million. You'll note that we've opened the aperture slightly on the revenue guidance, Windows slightly bigger than previously. The predominant thinking there is very much around just foreign exchange and making sure that we are aware of how that might move over time. We've left -- the 2025 EBITDA aspiration that was there has now become guidance for this year. So we're expecting that to be between 16% to 18%. As Matt talked about on the financial results, our view is that we should be able to trend to the higher end of that through the process or through the year. We've also updated a medium-term aspiration. So this is around when we get the business to 100% platform. We had a previous EBITDA margin aspiration out there of 25% to 30% plus. We're now comfortable to upgrade that to 33% to 37%. So bringing those things all together, you can see that the guidance for 2025, $167 million to $173 million on the revenue line, EBITDA margin of 16% to 18%. And then 2 aspirations for 2025 one around the number of sites on the cloud journey. So we're looking for 1,600 plus or 35%, and the ARR ambition of $175-plus, we're still chasing as well. And then finally, at 100% platform, you can see we have updated our EBITDA margin aspiration there to 33% to 37%. So that's when we get all of our client sites and growth onto the platform. So that's how we put the guidance to give us for the year. And now what I'm going to do is hand back to Matt, and we're going to open the lines up for questions.

Thanks, Stu. [Operator Instructions] So with that in mind, the first question will be from James Lindsay at Forsyth Barr.

Thank you very much, and congratulations, gents, on good results and outlook statements as well. Just one thing just on the OpEx side of things. You talked about room for OpEx investment and client transition. Just interested in the sort of conversation around pushing harder for implementation just as demand comes through.

Yes. I think the thing that is exciting in these results is the momentum of cloud adoption is clearly with us. We've got some pretty significant banners names of circuits in the to be signed up list as well. We know that they will take a lot of work over the next few years, and we're just keen to leave ourselves a little bit more room to spend money this year if it helps us accelerate that adoption in 20 -- maybe '25 but thinking more about '26 and '27. It's not a huge change in OpEx, but I just think we want to make sure we don't miss any sort of cost objectives of the business. Obviously, we've planned -- one of the very pleasing things coming out of the transformation of 2023 as the business is shaped well for delivery. And we've got some good delivery targets this year. I think what is interesting from the client side, and we had some good examples even this week with one of our key clients being in town in Auckland is how they -- our clients -- our biggest clients are thinking about their future now and how we fit into that plan and leaving ourselves room to spend more now to accelerate that, I think, is wise.

Yes. So I think just to push on that a little bit. We're very comfortable that the site aspiration we have for this year is in line with the EBITDA margin guidance that we've given. As Matt said, there's some pretty exciting conversations going on around how we might accelerate some of those longer-term opportunities, and that's what we're just trying to cater for.

And maybe just a follow-up on that, just with regards to -- obviously, the industry demand looking very solid and you have obviously provided that forecast as well, which is great. But it's just interesting in sort of implications then, that you've moved that 700 to 1,000 clients on cloud to 700. And just interested sort of what's driven that move?

Yes. I think it's just firming up how that flows into the financial results rather than any lower expectation. The economics still play out, the more clients we can get completing the journey, obviously, the bigger impact that is on the revenue line for us. So it's just balancing that mix of being on the journey and having completed the journey.

And then sort of, again, sort of a follow-up on that, just with regard to the strong GTV outlook as well. And this I've missed it, don't seem be disclosing that percentage of revenues linked to GTV or a target for that. Is there anything in there about your sort of changes your medium-term view about what that will get to, et cetera?

No, that's a great question, James, actually. Obviously, I'm going to hand that one to the future, but if I can say we are on the right track. It's still too early to talk about what our take rate is. But I think we will be doing that more and more in the future, particularly if it's not commercially sensitive, but those -- but you can see that we're getting a significant portion of our portfolio visible to us through Vista Cloud, and that $2.8 billion probably represents about 15%. I mean that $2.8 billion gross up, if it was consistent with the rest of the market would be about $18 billion of GTV through the whole platform, U.S. dollars and is what still a reduced slightly suppressed admits market. So I think it validates that the size of the prize is pretty compelling, and our ability to take advantage of all the things you talked about on that slide around when we've data -- when we've got a lot of data and the data-rich aspects opens up more business opportunities.

Yes. I think that the first step in this journey for us was to get a good percentage of clients transacting through Vista Cloud so that we could then start to see what was going on. Up until now, we've had a view based on market share and an overall expectation. Now we can actually start to see it. And so once we can start to see it, we can help our clients do more and that flows into opportunities for Vista Group as well. And so this is just the first step on the journey, but you can expect us to talk more and more about this over time.

Great. And just last one for me, if I may. Just with regard to the number of sites live. Just a little bit of a miss there in conversations that we've had with some of your customers, they're saying, taking a bit of time for implementation. Just interested if the learnings of those slow implementations on the first guys have helped out in speeding up implementation for the future?

Short answer to that is yes. And so just specifically on the number of sites that we expected to have on or we were anticipating at the end of 2024 versus the actual outcome, that was predominantly driven by client decisions to take advantage of a very strong box office into the year and not want to disrupt over a cutover period. And so we were ready to go across those. So there is a little bit of that, that will always be in these numbers, and we've tried to talk pretty consistently around that. In terms of the learnings, yes, there have been a heap of learnings. And when I talked on one of my slides, I talked a little bit about prediscovery and some of the further investment we've made there. And so one thing that we know and continue to know more is that for many of our clients, they've spent a long time with our platform or our on-premises software. They've used that extensively. They've often integrated that extensively as well. And so really understanding what they've done with that and how we can make sure that we optimize that for cloud and the cloud transition project has been a good learning as well. We've put some more resourcing around that process, and we're going to continue to focus on that this year. The other thing I'd say is we do expect that over time, we continue to accelerate this as we get further through the client base, the number of things like payment connectors and integrations that we have to build or that we have to integrate as clients move to cloud will reduce because our portfolio of cloud-based ones will continue to increase. So yes, this year is about taking the learnings out of '24 and going even faster.

Thanks, James. Next question is from Guy Hooper at Jarden.

Yes. I mean obviously, you've got a few large operators out there or clients. They aren't on the cloud yet. Can you give a sense of the timing for some of the larger transitions and what those conversations might be like? I just noticed, I think from memory, the 100% platform aspiration was sort of around FY 2030. Is that still a fair time line? Or has that slipped a little?

No. I think that is a fair time line. What we think a lot about, which was on Slide 9, is adoption of our Horizon and Oneview Solution. And so we're well on track to over half of our clients using that platform. That's a very strong indicator for us that the client is moving towards cloud. We then move on from there, obviously, into digital and full Vista Cloud. There is across our client base, every one of our clients is having a conversation with us around cloud. At the moment, we've obviously got some committed. We've got a number of our largest circuits that are on pilots and that's a model that was used often originally to roll out Vista on-premises software where you put it into one territory or one site first and then go from there. So we're comfortable with the sort of thinking that was in the dates originally around 2030. We're obviously looking to make that faster. And I think what we'll see this year is as more clients go live, more clients commit, and we expect the snowball to continue to roll.

Great. You mentioned there was, I guess, a customer in town, you're having discussions around how Vista might fit into its future and potentially that requires some additional spend to accelerate transactions. Can you talk a little bit around what you mean by fitting into client future and what that spend might be on? Is it like additional functionality or types of products?

No. So what we do and what we've looked at this year is what is our expectation in terms of client onboarding and then what we've resourced against that to support that. What we're starting to see now is some of our clients say, okay, how can you help us go faster here, Vista Group? How can you roll out across multiple territories all at the same time, et cetera? And so this is really just about people are starting to see the benefits. It's like how do we get that, how do we take that faster. As I talked about in my presentation, we're continuing to innovate the platform as well. And so that's improving client keenness around adoption as well. A number of the solutions we're building now are digital-only, cloud only, et cetera. And so the clients are looking at those going, well, how can we adopt those faster.

Good. And just I guess one last one for me. I know you're not at a point where you can talk to say take rate, but maybe if we just think about it in the old terms, like 3 to 5x. The deals that you've been signing, can you give us an indication of where they might sit within those types of ranges?

Yes. So look, we are comfortable and we've talked to the market previously about 3 to 5x the transactions and the deals that we're doing are in that range. And so I'm very comfortable that we're signing opportunities that are in model.

Great. Congratulations on a good results.

The next question is from Jules Cooper at Shaw & Partners.

Fantastic. Guys, that slide on Page 24 is super helpful. One question though, when I look at it, the cost to serve only, I suppose, at a 100% platform only reduces by 5%. And I just wondered if you could maybe talk about what you're seeing with some of your existing customers that have moved to Vista Cloud and are sort of seeing that operational excellence playing out, like what the gross margin or the cost to serve might look like there? And how do we think about potential upside because that's still relatively -- and I know you've got some other costs in that space, but I thought a lot of those costs were kind of tied to the migration so that when you get to 100% platform, is there not a piece of that cost to serve that sort of potentially comes out? Because it just feels like there could be quite a bit of upside there on that still?

Yes. Good question, Jules. I think we've given the broad range of the 33% to 37%, and the graph obviously is 35% is the midpoint. I think there potentially is some cost to serve upside in that. We've got a little bit of a way to travel yet before we fully grasp how the post -- how the 100% platform cost structure will look. But you are right. Some of it is transitional. Some of it should come out. I think there could be more opportunity. But until it really we've got a little bit more. We're very comfortable to bring up the aspiration at the moment from the previous range, and there could be more. One thing I would hope people keep in mind, this is -- when we use cost to serve, we fully load cost to serve with all our services teams. This is a B2B business, not B2C. So it's a high service environment. These are billion-dollar businesses running their mission-critical systems in the cloud. So it's always going to have a relatively chunky resource requirement, not just hosting and tech, which is probably the more fixed element of that. But I also think -- so I think at the moment, that only coming down to 35% is good, there could be more opportunity. I think -- if you -- that is also the kind of as-is business case. As you go forward, we haven't really factored in what the data-rich environment will do, what AI potentially could do from a cost base but also more importantly, from a value to our clients' perspective. And that might not reduce our cost, but it certainly might grow the top line as we get more data scientists, more AI specialists and those kind of things.

And maybe then just one other, just so we can square away the whole -- the cash flow statement as well. Matt, could you maybe talk around what you're assuming there in terms of R&D and the proportion that would be capitalized?

We're going to -- good question, sorry. We probably undershot a little bit. It's only $17 and a bit million through the P&L, I think, net of our tax credits. It was capitalized this year. It probably go up a little bit in 2025. I think our medium-term guidance is $20 million per year. It might be slightly shy of that. It might be sort of $19 million, but it will remain in that kind of $18 million to $20 million range for the next few years.

Got it. Sorry. And the question was really directed around when you think about that 100% platform, what is the assumption you're making around sort of that proportion that is capitalized, maybe as a percentage of revenue? But certainly '25 insights were appreciated as well.

Sorry. Yes. Good question. So in the long run, post, we'll be able to roll off the majority of our investment in the sort of 20 -- maybe starting in 2027, definitely in '28 when the majority of clients have moved to the platform. And we'll be back to a sort of run rate of $6 million or $7 million per year is the current expectation.

Can't wait to see how the movie ends.

Next question is from Stephen Ridgewell at Craigs.

Just to echo the comments on a great result and outlook and really good color on how you see things playing out. Just first question for me. Just wanted to follow up on to James' question, just on the pushing to the right a little bit of the 400 live site target by the end of last year and you sort of calling out some client decisions to defer, which kind of makes sense. I just wanted to get some clarity on whether you're now kind of at that 400 site target today? Or you've got pretty good visibility on it being hit shortly. So it is to say the clients kind of going live that it had made that had made decision late last year? Are they going live around about now?

We're not quite there, Stephen, but we are pretty close. So we've got absolute visibility on all of it. We've probably just got another few weeks to go.

Okay. Helpful. And then just in terms of the number of customers either on or contracted to the full Vista Cloud suite. We're up at what, 940 from 640 6 months ago. So again, great progress there. Just interested in terms of the contracted customers, we've seen good momentum with European customers, in particular, and maybe North America has been a bit slower and I think they've gone into some of the Horizon products as such. But just interested a few if we're now starting to see some of the American customers either contracting that might be hitting in the not-too-distant future, particularly given your comments that you're looking to get some implementation resources. So it seems like to me like it could be a bit more momentum coming through the year, any comments there would be useful.

Yes. So I think my first comment was from a geographical perspective, you're right, EMEA or European has certainly gone out hard, obviously, Pathé big success story there, and I think has been really good. If you go back in time, so Cineplex and Canada and North America was really our first big cloud client signed. They completed their digital migration during '24 and are now on the way to full operational excellence. We've got good line of sight in North America. I haven't got anything to talk about today in terms of additional signings. But across each of the regions, we're pretty well balanced at the moment, which is great. So we've got -- we can see some good things happening in APAC. Major Cineplex was a great success story going to full cloud last year and in EMEA continuing and North America as well. So yes, I'm pretty comfortable around each of them. And we'll be looking to talk a little bit more about some more signings over the next sort of period.

That's great. And then just maybe one for Matt and the $175 million ARR target. I guess obviously you sort probably anchoring to the low end of the prior range, which you will, 700 sites live on the full Vista Cloud suite versus 700 to 1,000 previously. So still a good progress, but maybe at the low end. Just can you just take us through how you're still comfortable with the $175 million ARR target by year-end just given sort of $150 million on Vista Cloud downgrade at the midpoint?

Yes. Really good question, Stephen, and I'll get to that one and I'll get to the 2025 in a second, but I just want to comment a little bit more on 2024, just a little bit more color. I appreciate that we were slightly under those sites targets. And what I do want to make sure is people don't get too much -- put too much emphasis on that because that goes live, doesn't go live number. And if it's certainly the fact that we are slightly below those numbers, but we still hit our revenue and we beat our EBITDA targets. If they had gone lines, they probably would have made a very modest impact on our results. The key thing, and that's that what Slide 9 is all about, it's about the momentum that we're carrying both of sites live, sites that are in progress. We have 20 projects on the go right now. That's how we know. That's how we get confidence on the run rate. We know how much capacity we've got across our team, particularly in the second half. So we know when signings come, particularly if they're big signings, how we can fit them in. And that all plays into that momentum slide. And so the 700 , for example, is a target for the end of 2025, having completed the journey we have 942 in our pipeline today, right? So some of that -- so that 700 target might be a little -- we might be slightly higher, might be a little bit lower. But we know that at the end of this year, we'll have roughly 940 either live or contracted to have gone live on the full cloud. And so the more -- I think these are leading indicators about the momentum rather than the revenue number, the halves tied between that achievement and the revenue number. I think -- so in order -- sorry, it's a long way to get to your $175 million question. So $175 million is still well within our grasp. The more we can get to complete the journey to Vista Cloud to operational excellence, the better. And so it's just going to come down to that mix between actual go-lives. And you know how we do ARR, of course, being the 3 months -- last 3 months, times 4. So we really need in order to the $175 million, everything to be live by the 1st of October. So there's going to be a little bit of variability in that number. I don't think we want to be marked down for that. I think we want to be marked positively for is that momentum is our signings and then our absolute SaaS revenue number. So rather than give you a broad range to the ARR again, I think we just want a kind of target.

Yes. I think the other thing I'd say there as well is -- it's why in the outlook 2 slides I talked to both box office and the improvement in box office that we're seeing this year and forecast and obviously, that has an effect on ARR across our admit-based revenue streams as well and currency plays a little bit into it too. So momentum, box office are all part of the picture. So yes, we're comfortable.

Okay. And then just on the OpEx, I mean, I guess you're signaling a bit more spend there and implementation. I guess I'm interested, is that decision reflecting perhaps feedback from early adopters on service levels or feedback from them? Or is it something that you see the pipeline growing and you want to invest ahead of that pipeline?

Yes. So look, I just want to be really, really crisp on the answer. Any additional spend that we might think about would only be there because we saw clients driving additional acceleration. We are -- that may or may not happen. We're really encouraged with some of the client conversations that we're having. But I'm also very comfortable with the level of spend that we're seeing for the commitments we've got in the market.

Great. And then maybe just one last one for me. I mean I think it's probably the first time you've really kind of highlighted ecosystem and is a potentially significant adjacent opportunity, and that's beyond the $300 million target. I guess when you look at the opportunities, and I appreciate it's kind of early days, but what would be the most material monetization opportunity in those ecosystem expansion or adjacencies that you've called out from where you sit at the moment?

Yes. I think if you look at some of our peer group companies who deliver similar sort of transactional based solutions, then payments is the logical large opportunity that's sitting there. We have traditionally driven a small amount of revenue through payment referral and other bits and pieces. But certainly, there's a -- we think there's some good opportunity to explore there when we look more broadly at some of our sort of peers in the market.

Next question is from Prerna Kanji or Phil Campbell at UBS.

Great. Yes, just a couple of questions from me. I suppose the first one was, obviously, in terms of the cloud migration, we're focusing on the existing customer base. I'd just be interested if you've had any kind of inbound with customers that are not part of your base. Obviously, there's some big ones in North America? Or is the plan trying to target those at some point? Or is it main focus on the existing customer base?

No, so we've definitely had inbound. We announced last year a number of new inbound clients. One of the bigger ones was Cine Colombia, who are a net new client to Vista Group. This is definitely a key target area. I think our focus obviously has been on supporting our existing clients to transform with us to the cloud. But we also announced Cinema West, which is a North American-based net new client last year. And so we're going to continue to focus on that as well. And that's one of the ways that we get additional market share over time.

Yes. Awesome. And I think you kind of touched on it Stu a little bit just in terms of obviously, when you start getting up and running on these migrations, I'm assuming you become more efficient at them. So I'm just wondering if you can give us a few metrics from around that. And I suppose also fitting into that, obviously, with the advent of AI, particularly for some of the developers, just how much more efficient is Vista becoming in terms of doing some of the migrations? Or is it still pretty customer by customer, so just to end up with certain problems you've got to solve on a customer-by-customer basis?

The answer is probably all of the above. So we are absolutely becoming more efficient, both from the tooling we've built and continuing to then implement that across new implementations as we do them. There are some things that we are having to transform for each client at the moment as we do it. And so as we've gone around the world, things like payment connectors, et cetera, we're now starting to get some benefits through efficiency there as we build more and more market penetration. The other big thing is just understanding what the client is using what they've developed themselves and how that's integrated. And so again, I'll point back to the getting the client on Horizon/Oneview gives us really good insights into that environment and what's going through their system, how it's been integrated, et cetera. And so I don't have specific metrics around our sort of engineering improvements or delivery efficiency that I can share. But what I would say is that certainly, we're getting faster, we're getting more comfortable with repeatability across the process, and that's what we'll continue to accelerate.

And if I can add to that one, too, as well, Phil, with that Horizon number fast approaching 50% of our clients, either who are already on the journey or still on-premise. Any innovation that the team do in the product space around Oneview immediately becomes available to everyone. I know this is just exactly what every other SaaS company does for us, but this is why the transition is so important. And the more we see the uptake of the digital solutions, the more immediate our clients who are already on this journey that gets those benefits. So it's great to be able to see that delivered into their hands immediately versus the on-premise world. So yes, it's exciting.

Right. And just, I suppose, in terms of migration, just to be interested in your views on some of the customers why are they migrating? Like is it a server upgrade? Obviously, you talked a bit about in the fourth quarter, the box office was delaying some of the migrations. I suppose I'd be interested in your views in terms of like the total wallet like if the wallet is going up by like more than 10%, are they a bit averse to that? Or if it's less than a 10% increase in total kind of IT spend, they're okay and with us getting a bigger share.

Yes. So we are working with -- each of our clients has a slightly different IT spend profile. We work with each of them. A lot of the core proposition is around share of wallet transfer, but it's also around improved cyber posture, improved effectiveness, the ability and you saw it in some of the quotes for the client to free up their resources to focus on things that add value as opposed to supporting IT infrastructure. So particularly in the operational excellence area, server replacement is a key part as well as server states, a lot of them are currently deployed to every single cinema site. When we move to full operational excellence, we can remove that requirement. So that drives some of the decision-making as well. So each client is unique, and we work through our client engagement process with each client around what the business case look like to move to cloud.

Great. Awesome. I mean just the last one was, obviously, you got Potentia sitting there just under 20%. They don't have Board representation. But I'm just interested in kind of with them sitting there, like how is that kind of influencing the Board and management in terms of how you're running the company?

I think that certainly the -- so we obviously went through a process with Potentia last year, we've been working in a much more constructive way since the ESM was called off by them, which has been great. They are deeply committed and excited about the potential of our organization. They're very keen to help us grow that and support the business. And so yes, there's been much better engagement with them. Since then I'm really enjoying working with some of the team now that we've got to know them a bit more. And we'll keep -- they are our major -- one of our major shareholders. So we want to continue with that.

We've got time for one last question. Stephen Hudson from Macquarie.

Just a couple of quick ones from me. Just following on from that last comment on your majority shareholder. Can you talk about any acquisition strategy that you have within the business and what that might look like in the next couple of years?

So from a Vista Group perspective, our focus is around the core of our business, which is cinema and film and accelerating that. I've talked a little bit today about what we think some of the adjacent platform opportunities could be and how we might accelerate that. We need to keep doing what we've done well and continue to build momentum around that. Obviously, as we demonstrate progress then M&A becomes something that we'll look at and think about, if it's in the right areas. But again, it's all about how do we continue to build the core Vista Cloud platform, demonstrate value there. And yes, as I said, if M&A can help that go faster when we are ready to do that, we'll explore that and make sure that it's value accretive for all of our shareholders and our business and delivers more for our clients. And so that would be our approach.

It's useful. I know the whole migration progress question has been done to death, but you've obviously got 2 quite large clients, I think representing about 25% of your sites. You've got about a 20 percentage point uplift in penetration over the next 12 months. Can you give us some clues on whether or not any of those or either of those clients have got pilots within those additional sites that you're expecting in the next 12 months?

The short answer is yes, part of, I think, would be the best way of describing it.

If I could just say that we're talking to almost all our clients about their journey and our large clients are no exception. They've got long-term technology transition plans of their own, of which we are a part of an important part of, but we're not the whole story. Yes, safe to say that we're talking to everyone.

I think one follow-up to that would be we announced last year that Cinépolis Spain would go live on digital solutions. That completed successfully, and we're now working on the next step of the journey with them. That's a really key pilot for us. I think everybody understands the scale of that business globally and what the opportunity is there. And so the Spain business is live and performing on our digital solutions and we'll keep going with that. So that's pretty exciting from my perspective.

Just one final one. Sorry, it's a direct question, I suppose to Matt. Firstly, thanks for all your help over the last -- at least for me, a year or 2. And congratulations on your successes over the past 6 years. Can you give us a little bit of background as to the decision to leave? And succession there, I suppose, maybe a question for Stu.

Yes. Look, I'm really pleased with what I've been able to achieve. And I've been planning or thinking about what I want to do for a little while now, and I'm going to take a little bit of -- well, I'm not going to take some time to decide. My decision is to have a little bit of a career break. I am in an enviable position that my children have left home and I'm free again, shall we say. So I get to do things that I want to. I'm delighted to be -- I'm going to say heavily invested in Vista in the role, particularly going through the downside over the last few years of the pandemic. I'm delighted to be able to leave as we -- as you can see -- as you begin to see in the numbers, the potential of what we've been talking about for quite some time. And I know we've been talking about it for quite some time, but it always -- the financial numbers are a lagging indicator of how we're doing, and it's good to be able to show them. So it's a good time to leave. And I've worked with Matt for 5.5 years. And I'm really delighted to be able to hand the reins to him. So he's -- you would have seen him appear more and more over the last few months. This isn't perhaps a total surprise but I leave the business in good hands. So thanks for the question, Stephen.

Okay. Thanks, everyone, for your time today. I'll just hand over to Stu to close.

Yes. So thank you all for your interest in Vista Group. I'll finish where I started. It's been a massive 2024, a big team effort, and we're really proud of the results that we've put on the board and the momentum that we have in the business. We're looking forward to '25. I think as the industry, we support is feeling good, and we're feeling good about what we're going to do as well this year. So thanks all, and have a good rest of day.