VGL 2021 Annual Results Presentation

Morena. Good morning and welcome to the Vista Group 2021 full year results announcement. My name is Matt Cord and I am chief financial officer with Vista Group. Before I hand over to Kimble to get us underway, I'd like to let you know that we're recording this presentation to be used on our investor relations website. We will be happy to take questions at the end of the presentation. Today we're using Zoom webinar technology while our Oakland team are largely working from home. If you would like to ask a question, please select the raise hand icon at the bottom of the screen. You'll then go into a queue for question. When your turn comes, we will announce your name and open the line to you. A pop-up will appear on your screen asking you to unmute your line. You can then ask your question. Welcome everyone. Over to you, Kimell. Thank you, Matt. Uh good morning everybody and welcome to our presentation. We're delighted to be here and to have the opportunity to tell you about our results for 2021. We will also talk about our perspectives on the future, both the immediate outlook for this year and the longerterm future for our company. Last year, we said we were looking for a resurgence of the theatrical experience in May or June of 2021, which just happens to be the time we saw that resurgence start to happen. And since that time, despite the impacts of the omocrron variant, we've seen that resurgence continue and blossom fully with the advent of Spider-Man No Way Home in December of 21 and January of this year. This movie has delivered the third highest box office of all time domestically in the USA market. Fantastic. 2021 ended with a real bang. So, where are we now? We're super excited for the future of our industry and of our company. You know, we've always been believers in the resilience of the film industry and in particular cinema going and the theatrical experience. And despite what has probably been amongst the roughest two years since the advent of cinema, we can clearly see that we've answered the key question. Will people go to the movies when cinemas are open and content is released? That is a resounding yes. Yes, they will. And in big numbers, too. The theatrical experience has nailed down its pivotal role as the foundation of blockbuster and franchise content for studios and a key element of the economic model for movies. Yes, content can be consumed on streamers perhaps more than it was before the pandemic, but the cinema experience has proved to be resilient and we couldn't be more delighted. During our halfyear results announcement in August last year, we set ourselves some targets for the balance of the year. I'm very pleased and really proud of the whole team that we have ticked off each of those targets. We're reporting revenue for the year towards the top end of our predicted range with $98 million driven by a strong increase in high value recurring revenue as our shift away from a reliance on one-off perpetual license fees continues. We said we'd be cash flow positive for the second half of the year and we have been. Not massively, but a terrific step up from the cash burn we endured in 2020 in the first half of 2021. And I'm pleased to note that this year has started with strong cash collections. We said we'd be ebit positive for the second half of the year and I'm delighted that we've ticked this off as well. Again, no great overachievement, but a reflection of a disciplined operating performance as we sought to position ourselves strongly for 2022 and beyond. Now is a key moment for our company. Our transformation to a platform-driven future has been hampered somewhat by the impact of the pandemic, though we still made solid progress. But we believe we've seen off the worst of that impact in our major customer territories. And we've set ourselves up with a strong balance sheet to drive to a terrific future with our platforms. Vista Cloud and Movio's reimagined exhibition product, the forthcoming Movio EQ. 2022 will be a year where we are shoulder to the wheel, sustaining our relationships with our furiously busy customers and delivering the engineering which will enable us in 2023 and beyond to drive our platforms with our customers at scale and with efficiency. Before I hand over to Matt, I want to acknowledge the work of our team. We have people in 15 countries around the world, almost all of whom have been working from home for the majority of the last two years. In fact, most still are. And without their diligence, resilience, and determination, we would not be where we are today. I thank them all. Over to you, Matt. Thanks, Kimble. I'm very proud to bring you the results of the full year 2021. You will see they are the outcome of the continued hard work the Vista team across the globe put in over the last couple of years. I'd like to emphasize that while trading consitions have been challenging, we've been able to deliver a strong set of results across all measures to improve our competitive position and still bring innovation to market particularly with Vista Cloud, but also with the enduser tool space with Vista Digital and very importantly in data analytics and a much improved Muvio Cinema EQ. Now in alpha, we now have our fullyear accounts in a SAS friendly format with improved comparatives. This will make it easier for our stakeholders to track how our performance develops as we build on these successes. The financial highlights for the 2021 financial year and around millions. Our revenue is $98 million, up 12% on the full year 2020 and in the upper half of our guidance from August. growth in recurring revenue substantially improved and outperformed non-recurring revenue and was up 24% to 81 million and represents 83% of total revenue. I've included included a new slide on the in the results presentation which shows how our transition to subscription revenue starting in 2019 has progressed through the pandemic. I'll talk to that in a minute. SAS revenue, a key component of recurring revenue, is up 16% to $28 million. The EBIT DAR profit of $7 million was a turnaround of $18 million from the $11 million EBITDA loss of 2020. I break down the details of this in the next couple of slides, but I'm delighted that the second half EBIT was on guidance at $1.3 million when you exclude movements and expected credit loss from exchange. Operating cash flow of $11 million for the year was nearly triple that of 2020 and up from $1 million in the interim results for the half. And though not on this slide, the third piece of guidance that we gave at the half year was that we would be cash flow positive in the second half of 2021. The group ended with 60.4 million in cash, up $2.3 million from 30 June 2021 and with no additional draw downs from our debt facilities. I've included four P&L related views so we I can show you slightly different perspectives on the current performance as we've progressed through the pandemic. Firstly, the trading performance and I shan spend too long on the traditional P&L, but it highlights the good rebound in revenue, good cost management across the profit and loss statement and significant improvement in our net loss position. Our depreciation and amotization is due down due to reduced lease costs as we see the benefits of decisions taken in 2020 around office space flow to the bottom line. There is also no further non-cash impairment or valuation charges like there were in the 2020 results last year. The loss before tax for the full year was $12 million. This slide shows how the last four halfyear periods compared by revenue type, overall costs and EBIT. The slide starts with the first half of 2020 on the left and progresses through to the second half of 2021 on the right. I'd like to remind you that though the results of the full year are audited, the splits between the two the halves are not. You can see that revenue has been relatively stable across the first three periods and is now accelerating in the last six months. Importantly, the strengths of our recurring revenue has been the key to this recovery and we expect this trend to continue. I will outline that in more detail on the next slide, but is one of the key promises we made early on in the pandemic to protect our high value recurring revenue opportunities. At year end, our gross annual recurring revenue was higher than the exit rate of 2019, even without a full market recovery. Under expenses area, I've split out the impact of non-cash expected credit loss provisions as this is one of the key one-offs during the pandemic that can move from cost to benefit as the health of our receivables changes over time. Clearly, there are many other pandemic related adjustments we can make, but the cost line in the second half of 2021 is roughly three of these and much closer to our likely ongoing cost space. We do expect to see people costs and customer and market related costs such as marketing and travel continue to increase in 2022 as we get back to the new normal of customer interactions. I've included a changes in revenue slide to show how revenue mix has progressed over time. When we originally announced the transition to the subscription model back in 2019, we predicted a relatively orderly swap out of license revenue as circuits continue their consolidation and geographical expansion trends that Vista had enabled. Clearly, the pandemic had other ideas and the transition to subscription at the same time as the pandemic has accentuated the decline in nonrecurring revenue as customers reduce their investment in technology. Now that we are getting through this though, we see this as a benefit. Kimble will talk to our guidance for 2022 in a few minutes and apologies for the spoiler. However, we expect the majority of our 2022 revenue will be higher quality recurring revenue and that this will be more than 20% higher than 2019. Going forward, we expect non-recurring revenue to be between 15 and 20 million a year, slowly reducing over time as license revenue uh phases out for existing customers and development and implementation revenues reduce Vista cloud. The operating segment slide reflects the P&Ls across the key business segments in the group. These results are expanded in the new much more detailed breakdown segment performance in section 2.2 of the fullear accounts. The new level of detail in that report will help people follow the transition of the cinema business in particular as Fister Cloud grows in the coming years. With revenue of $66.5 million, the cinema segment was up 14% on the prior year with particularly strong recovery and recurring new revenue up 31%. As expected, Muvio's recovery was a bit later in the year as it was more closely tied to the number of releases rather than the total box office. Though the full year was only up 2%, Muio's second half of 2021 revenue was $8.6 million, up by nearly a third on the first half. Additional group companies results were good across the board with all businesses contributing to a strong second half recovery where revenues were up 39% on the first half. In terms of EBIT DAR, even when adjusting for the expected credit loss movements, all segments performed well. I'm particularly pleased with how the balance sheet looks exiting the year. Most importantly, group cash of $60.4 $4 million is higher than projected and cash positive for the second half. And even though the headline numbers haven't moved much, receivables is in much better shape than it's been for a while, helped significantly by the strength of the box office later in the second half of the year flowing through to our customers. And though customers are not yet back to paying fully, the aging is looking better than it's ever done through the pandemic. And the stubborn old debts are being actively worked on. Overall provisioning for receivables, including both expected credit loss and revenue provisions, is now 34%, down from 36% at the end of 2020, and off a much reduced gross number. And though actual debts written off were only $700,000, all of which were in the first half of 2021, we continue to take a conservative view of our receivables and expect to do so for a while. The restatement note in the account covers the group's exposure to US sales tax that was noted at the half year. This is now being worked through the full set of accounts and is not expected to have a material impact on the P&L going forward. As mentioned, group cash closed at $60.4 million up from $58.1 million in the first half and cash net of borrowings was $43.6 million and we have $37.8 8 million undrawn bank facilities still available to us. Pleasingly, operating cash flow was $1.3 million, significantly significantly up on 2020 and $10 million of which came from the second half as we began to make inroads into our customers age debt. The investing and financing cash flow items have also now returned to normal levels. I feel it is a great achievement to have gone through all that has happened in 2021 for our industry and to only burn through less than $7 million of cash. We believe that we've positioned Vista Group well as the industry recovers and with Vista Cloud now in market and more on the way we are in great shape to take advantage of it. I'll now hand back to Kim. Thank you Matt. I'm now going to talk through the operational highlights for each part of the business. For Vista Cinema, our Vista Cinema customers in common with all our customers are back and busy. It's terrific to see. We're ramping up the numbers in our customerf facing teams to ensure we keep pace with customer demand and that we are able to deliver the kinds of innovation which the more forward-looking exhibitors are keen to see. postbalance date. We are delighted to have completed the acquisition of the business of Retriever Solutions in the USA. Retriever has been a long-term competitor of Vista Cinema with a very loyal customer base. Their customers are mostly in the small to medium end of the market, generally crossing over with VZY, but also with a small number of medium-sized circuits. The Retriever team have joined Vista Group with the exception of the founder and owner who is retiring and it is our intention to continue to support the Retriever products for the existing customers with that team. As we noted at the half year, the ability to recruit engineering talent in New Zealand has been hampered by the closure of New Zealand's borders and accordingly we have established a development hub in our Mexico City location. pleasing to see that we now have two squads up and running on core development for Mr. Cinema. I'd reiterate that this isn't about cost, but about access to talent. Also pleasing to see the second Odian Cinemas Group territory signed up in the first pilot site in Spain up and running just before Christmas. This first site is in the Oasis Shopping Complex in Madrid. And the cinema is a stunning example of the type of experience the modern cinema can deliver. If you get the chance to drop in, go and have a look. VZ had a very strong finish to the year with December 21 ahead of any previous December. Two factors came into play here. The shift in purchasing behavior by movie goers to online purchasing which benefits both VZ and the exhibitor and the impact of the very strong box office in December. VZY is one of our businesses which most closely tracks the scale of box office. In terms of market share, Vista Cinema has maintained market share in the enterprise segment excluding China at 51%. Relatively low rates of activity in the enterprise space since the half year as cinema customers focused on their reopening plans but encouraging to see VC gaining new customers mostly in North America and in Africa. I want to reflect on two aspects of our critical Vista cloud initiative. Firstly, the achievements over 2021 and our focus for this year and then a look back at where we're tracking against the objectives we outlined in 2019, our original prepandemic objectives. Firstly, looking at 2021 and 2022. Announcing the availability of our first iteration in August was a massive milestone for the team as was being production ready for our initial customer in November. As we discussed at our halfyear results, we wanted to get our first iteration of Vista Cloud in the hands of a live customer as soon as was practicable. And in mid January, we achieved that with an excellent roll out for Wallace Cinemas in South Australia. With our first live customer underway and operating smoothly, we are turning our attention to the work needed to generate the operating efficiency that we know will be the northstar of our Vista cloud journey. That is the key objective for Vista Cinema in 2022. We have a SAS product now which delivers the kind of customer benefits we promised. access to all functions from a single point, no servers in the cinema or head office, increased cyber security, and much faster ability to take advantage of the innovation we deliver. There are still considerable enrichments we will keep making for our customers, but the major focus for our work in 22 will be the engineering, which moves the needle on the benefits for Vista Cinema, operating efficiency, speed and ease of customer adoption and management, and speed of innovation delivery. One item which may have escaped the attention of some of our investors is the addition of the Vista digital platform to the task list for the Vista cloud teams. The Vista digital platform is intended to provide one access point to Vista Cloud for online sales channels such as web, mobile and kiosk. A key feature being able to elastically scale as demand peaks occur. The platform provides a coherent consistent access regardless of whether the endpoint of the online sales channel is delivered by Vista Cinema or by another party. Additionally, the Vista digital platform can be implemented by customers whose implementation of Vista Cinema is the on premises version. It's tremendously satisfying to see that we've made such strong progress with Vista Cloud despite the impacts of the pandemic on our teams and on our customers. And in that vein, I want to review the outcomes we predicted in 2019 and update you on how we're tracking. The standout obviously is the proportion of our revenue coming from recurring revenue. Clearly, the pandemic had a part to play here, but this has been an area of real focus for us over the last two years, and the results speak for themselves. We've seen the impact of the pandemic in an unhelpful way in a couple of our predicted outcomes. We've recently gone live with our first Vista Cloud customer, but some months later than we originally planned, and we don't anticipate being able to generate significant operating efficiency gains until 2023. Again, some months later than we originally expected, but we feel very much that we're still on track for our 2025 targets for Ebida percent and percentage of customers transition. We indicated in 2019 that moving to the platform would drive an increase in our addressable market based on a multiple of our average maintenance revenue. At the time, we estimated that increase as likely between one and a half and two and a half times our average maintenance revenue. The initial indications are that we may have been a little conservative in this prediction. It's too early to be specific, but we're feeling confident of overachieving on this metric. On to Movio. Solid year for Movio with a definite uptick in activity as we moved into the latter part of the year. Movio cinema customers were very active throughout the year communicating with their movie goers and strong customer relationships were sustained across all geographies. Movio EQ the eventual replacement for Movio Cinema is coming to the end of initial testing and we expect to begin transitioning customers later in the third quarter of this year. Move our research 2.0 know has been wellreceived by all customers and with the con consistent stream of content across the second half, all research customers are now active again after a quieter first half. Movio's exclusive analysis on returning audiences has proved invaluable with our unique insights helping studios to improve the effectiveness of their movie marketing. And it's really good to see activity with Movie Media picking up as content flowed. A total of 22 campaigns were executed using Movia Media as studios sought to target specific audiences for their content. Manx continues to generate strong interest. However, this has not yet materialized into significant commercial engagements. We see a stronger upcoming year for this product. Almost a game of two halves for our additional grid companies as the increase in content and movie going drove a much improved second half outcome. The Max and Numero companies continued their resilient performance and the Micro product has continued to gain market share in the smaller end of the distribution sector. Numero is increasingly the number one choice for flash gross reporting for the majority of major studios. Ease of use, timeliness of reporting and a partnering mentality being key highlights mentioned. Reporting is now active in 35 territories. The launch of Flicks in the UK is ahead of our expectations with unique user numbers approaching the New Zealand count after only three months of promotion. After a tough first half, Pala had an excellent second half with monthly Showtimes counts approaching 2019 levels and a good and more profitable performance in the creative segment highlighted by engagements with Netflix and Twitch. Turning to our associate Mr. China. The team turned in a solid performance in a very difficult and competitive market. Revenue growth over 2020 was good, but the structure of the market is making it challenging to generate significant margin at current trading levels. Versa China is sustaining itself in cash flow terms despite the difficult market. A market notable for the drop off of Hollywood content, dropping from 30% of the box office in 2019 to 12% in 2021. Pandemic related lockdowns and trading restrictions such as no concession sales are hampering the cinematic recovery in China. I want to now talk about our thoughts on the future. Vista Group is at the beginning of a new era. We set out in 2019 to chart a course for the company focused on delivering an outstanding platform for the worldwide cinema industry and transitioning our global market share to that platform over time. We've encountered a few bumps along the way or or more precisely one big bump, the pandemic. But we're still focused on our original objective to build that outstanding platform and transition our customers to a platform-based future. And now, probably for the first time in two years, we feel liberated to put all our energies behind that objective. The planks of our strategy are simple. Our first priority is to help our customers rebuild their businesses through the delivery of world-class support and innovation. In parallel with that, we're continuing to expand the platform to which we will transition them. A key feature of our vision for the platform is our focus on supporting cinemas to be more successful and creating a model where we can benefit from that increased success. The third plink of our strategy is to continue delivering value from our additional group capabilities through growing our other group companies and through remaining constantly on the alert for opportunities adjacent to our core skill sets. Looking at the industry, we're in a different place to where we were a year ago. A much better place. As the northern hemisphere emerges from winter, we see the film slate for 2022 remaining stable, anchored around a strong set of tent pole releases such as Batman, Top Gun 2, and Avatar 2. Cinemas are open and able to operate without significant restrictions, and the movie going public are voting with their feet and their wallets. We aren't yet back to 2019 levels of box office, but predictions for 2022 global box office are in the region of $33 billion, well up on the comparison to the 2021 result of just over 21 billion. So, we're looking forward industry-wise to a strong year with growing levels of movie going and a return to a robust, active, and resilient industry with cinema going in very good heart. The average period of theatrical exclus ex exclusivity known as the window seems to be settling down between 40 and 45 days which is a change from pre- pandemic. But some things haven't changed. Day and date seem likely to be consigned to the dustpin of history as the major studios recognize the value of the exclusive theatrical window as part of the overall success of a movie. All of which underlines the strength of the cinema going experience and our belief it will bounce back strongly in 2022 and beyond. For us, I believe we are beautifully poised as a company to drive towards our north star, a platform-based future which supports our purpose, which is to bring more people together to experience the magic of movies and cinema. I don't underestimate the amount of work we have to do to achieve that goal. But with a resurgent industry fueling our ambition, I absolutely believe we will deliver. We're projecting solid revenue growth in 2022 between 118 and 123 million as we put behind us the subdued performance in the first half of last year. The important factor underpinning this is that the growth will be driven by high quality recurring revenue as we leave behind our reliance on one-off perpetual license fees. We're predicting good operating cash flow for the year. albeit with the expectation of continuing cost pressure in terms of people. For our key Vista Cloud initiative, 2022 will be a year where we're heavily focused on engineering to ensure faster scaling and better manageability as we seek to accelerate the adoption curve in succeeding years. There's still plenty of work to do, but I believe we're positioned extremely well. We have a focused and hardworking team. We have an excellent balance sheet, a resurgent customer base, and an industry coming back in strength. We're excited to see the worst of the pandemic impact behind us, and we're looking forward greatly to what we can deliver in 2022 and beyond. Thank you. We'll now take a brief moment while we prepare for questions. Hey, uh before I open uh the line to the first question, which will be from uh Tom Deacon from McQuary, please uh let me remind you of the question process, if you'd like to ask a question, please use the raise hand icon at the bottom of the screen. You'll then go into the queue for questions. When your turn comes, we will announce your name and open the line to you. A popup will appear on your screen asking you to unmute your line. Uh you can then ask your question. Please go ahead Tom. Hi Matt. Hi Kimble. Thanks for taking the questions and congrats on a good result today. Um firstly just on the Ukraine situation you know what does that mean for Vista's plans in Europe and um operating performance uh currently? Uh well uh Thomas Kimmel um so I'm I'm hopeful that it um won't won't spread across um outside of Ukraine obviously. Um we have two customers uh in the Ukraine about 30 cinema sites all together. Um the people I mean the cinemas are obviously shut. Um the the people are safe uh and and um you know we we we stay in touch with them. We have one employee in the Ukraine uh she seems safe and well. she is in a in Donetsk. Um so we're keeping an eye on that situation. Uh clearly we also have a customer in Russia. They're going to find it difficult to pay us. Um as a result of the sanctions, but the but the overall kind of commercial impact if you like for us is relatively modest. It's like less than 1% or something. Um I think it's like half a million dollars Kiwi or something of that nature. Thanks Kimble. That's helpful and glad everyone safe. Um uh maybe one for you now Matt just on the medium-term recurring revenue of 8 to 10 million and a half um that you guys are expecting. Could you just give us a little bit more detail in terms of how that's split across Cinema Movio and the additional group companies? Uh yes. Yeah. Yeah. Look um uh I think there's going to be some pretty solid non-recurring revenue uh from uh Muvio based around their sort of campaign basis and from the additional group companies. um we'll have a a sort of base load of non-recurring revenue. Um but we'll see that cinema number um uh decline as we we've already stopped selling new uh perpetual licenses to customers uh new customers, but there will be some uh existing customers who will continue to uh keep their licensing model um consistent with the history. So we're still still selling a modest amount of uh perpetual licenses. Um we do think there'll be a continued volume of uh kind of paid development and implementation work as well. So that's why we give that sort of 8 to 10 per half uh number for non-recurring. Understood Matt. Thanks for that color. Um last one for me if I could slip in a third. the operating expense profile. You touched on this a little bit in the presentation, but you how how should we be thinking about the total opex um for Vista and FY22? Um do we double the second half um plus a little bit more in the variable components? Um could you give us a little bit more detail on that please? Uh yeah, absolutely Tom and that's pretty much it. Um we haven't given EBA guidance um because it's a slightly more difficult one of course um and we'd like to be out the other side of the pandemic before we we we get back to that. Um but yes, you can see that the expenses are for the second half of 2021 are 52 million or 51.9. So, you're doubling that plus a little bit more growth back into those things that I mentioned around sort of market recovery related costs, uh, marketing, uh, travel, a little bit of hosting, and we're still not up to full team strength. Um, so we've got quite a few vacancies, but but I think, uh, so yes, you'll see a little bit of a bump, but, um, certainly it's going to be good to see the recurring revenue line, um, ahead of that cost growth. Absolutely, Matt. No, that's that's helpful. Thank you very much. I'll jump to the back with you. Cheers. Uh, thanks. Thanks, Tom. Uh, the next question is, uh, from Phil Campbell from UBS. Go ahead, Phil. Yeah. Can you hear me? Uh, yes, can indeed. Uh, yeah, just had a couple of questions, I suppose. Um, just listening to the presentation and kind of the implied guidance for FY22, how would you kind of describe 22 is it sounds as a a little bit of a transition year. Then maybe when we get into FY23, we're going to have, you know, more scaled cloud business and possibly, you know, the box office getting back to, you know, maybe closer 2019. So that was kind of my first question. Um, maybe so I guess the first part I think you probably characterized it pretty well. um the you know the box office projections for 23 uh you know the question of whether it goes back to 2019 is kind of like you know who knows right but getting back to as they are projecting at the moment 33 billion in this year is a pretty good outcome um and you know some people are suggesting the high30s for 23 some have gone you know back to 2019 it'll be somewhere in that vicinity right and if I can add to that Phil the um the guidance that we've put out there of 118 to 123 assumes um still that the the market is not fully recovered of course. Um so there's still a fair bit of upside we think in in the sort of underlying business for us. Great. Um and just to follow up from that so I think you said in the presentation that you're still not really getting 100% collections even though you know the receivables book has improved dramatically. Is it what what's the kind of reason for that? Because obviously if you're looking at where the box office is at the moment, that should imply that the exhibitors are free cash flow positive. You know, are they kind of prioritizing like the repayment of some of the the rental abatements ahead of you or is is there something else going on? Uh yeah. Uh yes. I mean it's fantastic that um the box office is at a level that they are free cash flow positive. I I don't think at the mid year we were kind of going to be so bullish to predict that. Um and but I think that's why we came in with a good result towards the end of the year. Um I there's a little bit of sorry there is some still some stubborn old debt. Um and it's getting chipped away. I do we put a lot of customers on payment plans and largely they're adhering to them. Um and that's off the back of just cash going over their tills and and delighted movie goers. Um so I just think it'll take a little bit longer. um we've got still got some there are still well provisioned um in terms of the aged debt um going into 2022. So um if we're able to keep people holding to plans and actually we haven't had any customers go into chapter 11 or any sort of managed um position uh since the first quarter I'm going to say maybe April of 2021. So it's almost been a year um of customers um you know surviving um and earlier on in 21 and then you know getting cash in 22. So I think we are high on their payment list Phil I don't think that's changed. Um so I I would expect if the box office holds as it's doing pretty well now um that we'll be able to continue to chip away that and release our provisions too. Great. Um, and just one last one for me. Just I just noticed a number of the exhibitor results seems to be very big increases in concession, you know, food and beverage and stuff like that. So, I'm just wondering with the cloud roll out, like is there a bit more of a focus on some of the functionality within that to try and help exhibitors kind of optimize that trend? Oh, absolutely. And digital as well. I'll let um Kimble talk to that. We've seen I'll talk from an investment side of things and then Kimble could talk from a market perspective but but internally our spend has definitely pivoted to ensuring the profit not just movie goers buy tickets but the profitability of our customers is raised and and we uh we we bring I guess to the their attention opportunities. That's why the the um we're I guess we're increasingly bullish on the upside of both cloud and digital and Movie OE EQ all combined into a platform presents a pretty compelling offer um to um to customers to satisfy that movie goer not just from seeing the movie but uh all the opportunities for increasing um share of wallet of their entertainment wallet. I I guess the thing I'd add um is I think the majority of cinemas are now are now much clearer in their minds that they are competing in terms of an outdoor entertainment experience and so some of them you know some of the ones who in the past might have thought it was okay just to open the doors and warm the popcorn up are realizing they need to go further than that and so what we do uh is very supportive of that is that I I'm not sure if you were involved in it but just I was watching the events cinema presentation last week and they were talking about kind of optimized food and beverage and using data and stuff like I don't know if they're using your platform to help them with that or uh they they certainly use our platform. I I wouldn't be able to speak specifically to whether they're using it around optimized nan beverage but but that's a sort of it's a I guess a sign of what you see from the leading and I would you know characterize the pent as one of the leading um exhibitors um around the world actually right I think they do do a very fine job um you know they they realize that the you know there's simply relying on on the studio and the content to drive their uh success is no longer sufficient And so that's is the kind of conversations that we're having in multiple parts of the world. Yep. Gotcha. Thank you. Thanks, Phil. Uh, next question is from Rob Morrison of Craigs. Go ahead, Rob. Oh, good. So, Steven Ritwell here. Um, morning guys. Um, yeah. Um not sure how that came up but look just just first of all congratulations on a much improved result. Um couple of questions on Vista Cloud roll out to start. Um you know you've noted the revenue multiplier from from the move to to Vista Cloud could be perhaps a bit better than the one and a half to two and a half times you've you've kind of previously talked to and I was just interested in and you know what's given you the confidence to make that statement. you know, is is that based on kind of pricing that's that's been achieved with with kind of contracts that you've already signed or is that is that more of a forward-looking expectation? Uh, mostly uh things we've already done. Okay. So, um you know, uh I'm also conscious obviously, Stephen, that some of our customers listen to our investor calls. So, I have to be a bit thoughtful about how I characterize it. But um the uh evidence to date in terms of deals that we've done and and numbers that we're putting in front of customers, right, support that we were a bit conservative. Okay, that's that's great. Um and then I guess what can you mentioned that there been a couple of months delay perhaps in some of the um initial on on boarding and that perhaps would flow through a little bit into this year. um can you give us a little bit of color as to what was behind that and do you feel those delays are overcome and you're kind of back on track? Well, I think the delays were, you know, primarily due to the things that we had to do um in responding to the pandemic back in 2020. Um you you may recollect that, you know, and we set out with a a bunch of external parties um helping us build to accelerate much faster, right? And um as the circumstances prevailed back in March 2020, they were the first uh parts of the organization to leave the building. Um so we've been relying entirely on the what I'd call business as usual engineering resource. Um which we also, as you might recollect, downsized back in 2020. So um you know, we've had fewer people doing the work and and I and it's just taken us longer than you know, than we probably originally anticipated. Um, but I'm I'm really pleased at where we've got to given the circumstances. And and I think the thing I'd underline, Stephen, is, you know, I I I feel like the the uncertainty which has been kind of beeviling the industry over the last couple of years is behind us now. And so that makes us much more uh positive about the way we can go about accelerating what we're going to do. I'd be I think most people would would look at the impact of the pandemic on our company and say it's not surprising we're a little bit behind schedule. No, that's fine. I mean I I guess I was just wondering if that was relative to kind of what the comments in August as opposed to a couple years ago, but um you know you're on track in terms of where you were at or thinking it'd be in August. Yeah, absolutely. Okay. No, that's great. Thanks for the clarification. Um and then I guess as well um in terms of market share you know steady around about 51% of the large circuits and you know for fairly obvious reasons you know perhaps cinemas haven't been looking to change their software in the middle of the pandemic. Um in terms of conversations you have Kimble is is there a you know growing interest in in you know changing platforms now or is that still a little bit early um and and the focus remains on kind of converting your existing base over to the cloud product? I'll be honest, I I feel like I'll be much better equipped to report back to you um after I've been to Cineacon and Cine Europe. Um which are the my first kind of overseas trips for a while. Um but certainly in terms of the customers I spoke to, I did get the benefit of two weeks away in November last year as part of the uh government's uh selfisolation pilot. um the once they start to see some consistency around content and that their businesses are more right side up um those conversations are proving to be as posit positive as they always were. So yeah, we're making good progress. Great. Thanks. And if I can slip on just a couple more on the guidance. Um Matt, just just for you um you know the the growth in revenue s 20% um how material you expecting sort of Mr. cloud to be within that revenue pot in in 22 or is it going to become more material into FY23? Yeah, it'll be FY23. I think there'll be uh given it of course it's not licensed so it's subscription only um as we bring customers on it it will be modest in 22 uh in terms of impact on that guidance number. Got it. And then just just one last one um on operating leverage. So a little bit confused as to to to what we should be taking away from the call on the slides because you know on the slide you got a Vista cloud you're sort of saying look operating leverage is probably more an FY23 story for Vista cloud. Um but in response to Phil's question you seem to be implying you're expecting cost to not grow as fast as revenue. So you know are you expecting you know without sort of asking for specific kind of D but are you expecting to generate some operating leverage in FY22? Yeah. Yes. Definitely uh definitely Stephen sorry the two are I think the operating leverage expectation is around the cloud impact across the entire P&L. Yeah. Um and so there will be a very obviously we bear costs today of cloud that that have a very limited revenue pool should we say. Um, but we know and and and that's why we're very happy to put out there in terms of the the expectations around the the uh top end of that one and a half to two and a half multiple is is we know that we're more valuable to our customers now and I think that's given us that confidence and we're more valued by our customers because we do more for them and we think cloud will do cloud and digital and move eq will do more for our customers and it's that uh when we get into that we um uh that space, you know, a little bit this year, but definitely in 2023, the operating leverage will begin to kick in of um that cloud impacts the rest of the business. Um I think my answer to Phil was more around the total P&L um to see that revenue growth was pushing ahead of um of costs. Yeah. No, that appreciate the clarification. Thanks, Matt. That's um that's all from me. Great. Okay. Thanks, Stephen. And apologies for getting your name wrong. Came up as Rob on our uh on our screens. Uh that's all questions for now. So, thank you very much for attending. Um we appreciate your support and interest in in this group and wish you all well for the rest of your days. Take care. Thank you very much.