Thursday 29th August 2019
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Vista Group International downgraded expected annual revenue growth from its core Vista Cinema and Movio businesses to 14-18 percent from previous guidance of 20 percent as revenue from several large projects slips into the next financial year.
Overall group revenue growth is expected to be 10-12 percent for calendar 2019, the company says.
The downgrade follows five consecutive years of 20 percent-plus revenue growth and the 23 percent growth achieved in 2018.
The cinema and movies software company’s share price reaction was swift, dropping as much as $1.31, or 24 percent, to $4.11. It recently traded at $4.15.
“The timing of revenue, particularly on large cinema projects, doesn’t always fall when we would like,” chief executive Kimbal Riley told analysts on a conference call.
“It’s looking slightly more likely some will slip into 2020” – these are contracts which are signed but the timing of implementation is in the hands of the customers," Riley said.
“Two or three” reasonably large projects, two in Europe and one in the United States, will now probably fall into 2020, he said.
He refused to comment on the share price reaction. “One of the first things Murray said to me 18 months ago was don’t comment on the share price, so I will continue that,” Riley said.
He took over the helm from founder Murray Holdaway, who remains on the executive team, in April last year.
Group revenue in the first half came in at $67.5 million, up 12.3 percent on the previous first half, while revenue from Vista Cinema and Movio was up 18.8 percent at $57.4 million.
The company says its market share globally among cinema complexes with 20 or more screens rose to 49.9 percent excluding China, up from 48 percent at the end of last year, and to 39.4 percent including China.
Vista currently operates in China through a joint venture and the company says it is “in advanced negotiations” to take a controlling stake in the venture.
It added 481 new multiplex sites, taking the total to 7,683 sites, including 89 new sites in China.
Its Veezi offering for small cinemas added 83 sites, taking the total to 984.
The core cinema segment lifted earnings before interest, tax, depreciation and amortisation by 13 percent to $15.7 million on revenue growth of 15 percent which the company says demonstrates “sustained growth.” Margins eased to 34 percent from 35 percent.
Movio chief executive William Palmer said the research part of the business and Movio Cinema is tracking ahead of schedule but the Movio Media digital advertising operations are slower than he would like, even though it’s still growing at more than 70 percent.
However, the opportunity for Movio Media is getting larger, Palmer said.
There has been some slippage on some contracts but nothing material.
The Movio data analytics business lifted ebitda 42 percent to $2.3 million and margin rose slightly to 20 percent from 19 percent.
The company says Movio revenue per active moviegoer grew 27 percent compared with the first-half last year.
Movio added its first Japanese cinema exhibitor, Aeon, as a customer during the six months and increased its footprint to 55 countries.
“Movio Media revenue was strong due to an increase in research revenue and renewed contracts with Amazon, Warner Bros and Viacom,” the company says.
Other companies within the group contributed ebitda of $0.6 million, down from $0.8 million, while early stage investments lost $1 million compared with $0.5 million profit the previous year.
Riley said he expects the core businesses will continue to grow strongly but “the timing of projects doesn’t always meet with our wishes in terms of when customers want to do things. And as the company scales, driving the same percentages becomes more difficult because the numbers get so much bigger.”
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