Vista Group, the Auckland company whose software runs the ticket counters and screening schedules of most of the world’s large cinema chains, has lifted its revenue forecast for the year after a first half in which cloud subscriptions passed half of everything the company earns for the first time.
The company reported results for the six months to 30 June on Monday. Revenue from continuing operations was $86.3 million, up 12 percent on the same period a year earlier. Recurring revenue, the money that arrives whether or not Vista signs anyone new, rose 14 percent to $80.1 million.
The number the market was watching was software as a service revenue, which climbed 38 percent to $43.5 million. That is now more than half of everything Vista sells, a threshold the company has been walking towards for years as it shifts customers off software installed in cinema back offices and onto systems it hosts itself. Annualised recurring revenue, a measure of what the current customer book would pay over a full year, reached $170.1 million, up 17 percent. Earnings before interest, tax, depreciation and amortisation grew 24 percent to $12.4 million, lifting the margin on that measure from 11.9 percent to 13.8 percent.
Underneath the growth the company still made a loss. Vista recorded a net loss from continuing operations of $1.5 million for the half, about 25 percent worse than the same period last year, and declared no interim dividend. That gap between rising earnings and a bottom line still in the red is the ordinary arithmetic of a software company partway through a rebuild, where the costs of running two versions of a product sit on the books at once and depreciation on the new platform lands before the subscriptions fully catch up.
On the strength of the half, Vista raised its full year revenue guidance to between $179 million and $184 million, up from a range of $176 million to $182 million. Management put the lift down to the first half result, continued progress moving customers to the cloud and a favourable currency position. The company held its target for a full year margin of 18 to 20 percent on the earnings measure, which implies a considerably stronger second half than the 13.8 percent it just delivered.
The commercial story behind the numbers is market share. Vista said its contracted share of the enterprise cinema market rose from 46 percent to 48 percent over the half, helped by a run of large customers signing up to the cloud platform. Cinépolis in Mexico committed 504 sites, Cineworld in the United Kingdom 88 sites and Cineplexx in Europe 59. The most pointed of the wins was Cinemex, a chain that had previously left Vista and has now come back with more than 300 net new sites. In a market where a handful of global chains account for most of the screens, one returning customer can move the share figure on its own.
The migration itself is grinding but measurable. Vista said 44 percent of customer sites are now contracted to its cloud platform, with 750 sites live on its core operational product and 1,808 contracted, or 37 percent of client sites. The company is aiming for 2,000 live cloud sites by the end of the year, and chief executive Stuart Dickinson told analysts it remained on track to hit that. He also said the constraint was not demand but the company’s own capacity to install the thing, which is a better problem than the alternative but still a limit on how fast the revenue arrives.
The other side of that ledger is the old business winding down. Maintenance revenue, what customers pay to keep legacy on premise software running, fell 12 percent over the half. Vista is effectively racing to add subscription income faster than the maintenance line drains away, and on these numbers it is winning that race comfortably.
A newer line is payments. Vista launched an embedded payments product early this year, taking a cut of ticket and concession transactions that already run through its systems. By the end of June it had 11 clients live and transacting and more than $2 million of contracted annualised recurring revenue. “We’ve also now had our embedded payments solution, Vista Payments, live for long enough to see clear benefits for both the company and our clients, reinforcing the value of our platform strategy,” Dickinson said.
Vista’s fortunes are tied to how many people go to the pictures, and that backdrop has been improving. The second quarter of this year was the strongest quarter for global box office since 2019, and takings outside China for the first half ran about 17 percent ahead of the same period last year. The French market alone was up close to 20 percent. On the results call, chief financial officer Matt Thompson put a figure on the sensitivity, saying every US$100 million of domestic box office translates to roughly $200,000 to $300,000 of revenue for Vista. That is a real but modest link, and it is the point of the subscription model. Vista would rather be paid for the software than for the crowd.
Investors liked it. Vista shares rose about 2 percent on Monday to sit among the day’s better performers on a market that gained 0.3 percent, according to interest.co.nz. The stock has climbed roughly 41 percent over six months, though it remains well down over a full year, which is a fair summary of how patient shareholders have had to be. Vista was founded in Auckland in 1996 and listed on the New Zealand and Australian exchanges in 2014, and it is one of the few New Zealand technology companies of any size selling a global product from a home base rather than moving offshore to find one.
The longer target Dickinson has set is a margin of 33 to 37 percent on the earnings measure by 2030, which would be a different sort of company from the one reporting a $1.5 million loss today. Getting there depends on finishing the migration, holding the customers it has just won and turning payments and the artificial intelligence tools it is building into the platform into something customers pay extra for. The half just gone was a good one. The next few will show whether the pace holds.
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This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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