Jarden’s Guy Hooper said there was also an upside surprise in operating leverage. Vista increased its full-year ebitda margin guidance to a stronger-than-expected 13%-14% – and it bumped up its 2025 outlook from 15% to 16%-18%.

“You’re just about to enter the promised land of break-even,” said Canaccord’s Owen Humphries on a conference call, picking up on Vista chief financial officer Matt Cawte’s confirmation that the firm will become cashflow positive in the fourth quarter, “just two months away”.

Humphries was probing for news of a strategy shift once Vista was in the black. Chief executive Stuart Dickinson said it would be up to the board whether the dividend (suspended since Covid) returned. Hooper told Herald he thought a profit payout was off the cards.

Cawte and Dickinson said the focus would still be on migrating clients to Vista’s cloud-based products. The pair said the efficiencies of the cloud contributed to tighter cost controls, which in turn had fuelled higher than expected ebitda margin.

Dickinson said multiple business units had been reduced to just two: one focused on cinemas, one on films. Staff head count had been reduced by 8% to 710.

Boutique local cinema chain Silky Otter was touted as a model customer for Vista’s new cloud and digital products. But Dickinson added that the firm will have “more clarity” on its ebitda margin boost once two “billion-dollar customers” transition from Vista’s on-premise products to its cloud: North American giant Cineplex, which is in the midst of a multi-year upgrade, and Europe’s Pathé – which should complete its upgrade by year’s end.

If Vista Group does hit cashflow positive status by year’s end, it will be the first time it’s broken even since the pandemic (in 2019 the firm made a $12.8m profit on full-year revenue of $144.5m, but lockdowns brought a $56.7m net loss in 2020 as revenue crashed to $87.5m).

With its transition to its new business model, Vista’s fortunes will become increasingly tied to box office receipts.

Dickinson told the Herald that today some 12% of Vista’s revenue is impacted by its customers’ box office receipts and other transaction revenue. Vista sees that figure increasing to 50% over the next few years.

The global box office hit US$33.9 billion ($57.1b) in 2023, up 30.5% compared to 2022, according to Gower Street Analytics estimates.

But takings were still 15% behind the average of the last three pre-pandemic years.

“I’m not sure it will get back to pre-Covid in terms of admissions, but certainly in terms of revenue,” Dickinson told the Herald.

The second half of Vista’s financial year – and Hollywood’s fortunes – have been buoyed by two monster hits: Deadpool & Wolverine and Inside Out 2, with the likes of Moana 2, The Lord of the Rings: The War of the Rohirrim, Mufasa: The Lion King and Gladiator II on the way in the coming months.

But it would not be enough to make up for the slow revenue in the first half, Dickinson said.

Vista shares were down 1.69% to $2.32 (for a market cap of $551m) in late trading, pacing the broader market’s fall after the bloodbath on Wall Street overnight. The stock is up 26.8 per cent for the year.

Craigs’ Ridgewell and Morrison gave the stock a $3.14 price target in June. The pair will update overnight.

Takeover candidate?

Vista spiked in May after Australian private equity firm Potentia Capital paid $92.2m ($2.10 per share) for an 18.5% stake (now topped up to 19.9%).

Potentia said in a May 27 market filing that its Vista block trade had an “escalator” clause.

Namely, if a successful takeover bid for Vista is made by May 2025 at a price higher than $2.10, then the institutions that sold the 19.9% stake to Potentia (primarily Sydney-based Spheria Asset Management) will be paid the difference.

The clause inevitably led to market chatter about a possible private equity takeover.

Today, Dickinson would only say he had met with Potentia twice. The Australian firm had “asked for a board seat through the media”, the chief executive told the Herald. There had been no change to the board.

Ridgewell noted that Potentia had launched three prior takeover attempts of publicly-listed, mid-size tech companies after first buying a minority stake – although only one had been successful (Nitro Software for A$532m ($583.4m) in early 2023.

“Potentia is relatively small with A$1 billion funds under management, having raised its second fund of A$635m in June 2022. [It] has a patchy track record of completing deals.”

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.