Box office records are being broken in 2023. Here’s one ASX stock with direct exposure to Hollywood
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The film industry has become vibrant again with summer box office this year exceeding US$4 billion for the first time since 2019. This is double the amount of the 2022 box office.
July 2023 was the fourth largest domestic box office month ever at US$1.37b. August meanwhile was the second month in a row with a monthly global box office on or above 2019 levels.
Barbie and Oppenheimer led the pack along with Alejandro Monteverde’s Sound of Freedom; while on stage, Taylor Swift’s The Eras Tour dominated ticket sales.
One ASX-listed company with a direct exposure to all this is Vista Group International (ASX:VGL).
The NZ-based company provides cinema management software, film distribution software and customer analytics software to companies across the global film industry.
Founded in Auckland in 1996, Vista’s growth has led to client installations in more than 100 countries and an estimated 51% global market share of the large cinema circuit outside of China.
Cinema management is Vista’s bread and butter and in 2021, Vista introduced its SaaS offering, Vista Cloud – a comprehensive cinema management solution fully hosted and managed by the company.
A related platform, Vista Digital, allows cinemas to deliver digital experiences with flexible, scalable, and seamlessly integrated sales channels.
The company’s Movio platform is the global leader in marketing data analytics and campaign management solutions for the cinema industry.
With a global database of over 100 million moviegoers, 750 million behavioural records, and more than 5000 movie titles, Movio is said to be the world’s most comprehensive source of moviegoer data.
The Veezi solution meanwhile is a cinema management solution especially tailored to independent exhibitors used by hundreds of sites, across multiple countries. This cloud-based solution focuses on the unique needs of smaller to medium-sized cinemas across the world.
Vista also offers the Numero platform, which provides an aggregated box office reporting platform giving the film industry clean and up-to-the-minute information.
Other platforms include the Maccs which manages the distribution of movies to cinemas.
Flicks, on the other hand, is a movie, cinema and streaming website as well as app operating in Australia, NZ and the UK reaching over 1.4 million unique visitors per month.
And finally, Powster is Vista’s award-winning creative studio and production company for over 150 movie distributors including all five major studios, streamers, broadcasters, brands and various major music labels globally.
Vista’s clients include Hoyts in Australia, Cineplex in Canada, jPic Theatres and Bow Tie Cinemas in the US, and Lumiere Pavilions in China.
In all, over 500,000 screens around the world use at least one Vista software for their operations.
In its Investor Presentation deck presented to US investors last Thursday, Vista says cinema has traditionally fared well during tougher times.
Data shows that the US box office actually grew during three of the last four recessions.
Data also shows that on average, “a person must work 26 minutes to buy a movie ticket at the average price in their home country.”
The company believes cinemas are now back in full swing, and audiences are returning again en masse to movie theatres.
Recent domestic box office records show that 2 of the top 5 highest grossing movies of all time – SpiderMan: No Way Home and Top Gun: Maverick – were released post Omicron.
Since Omicron, the industry has in fact broken four additional calendar-based records in the US:
July 4th 2022 : Minions – The Rise of Gru at US$123.1m
May 2022 Memorial Day Weekend: Top Gun: Maverick at US$160.1m
Dec 2021: SpiderMan: No Way Home at US$260.1m
Sep 2021 Labour Day weekend: Shang-Chi and the Legend of Ten Rings at US$94.7m
A diverse slate of films for the rest of this year and 2024 is also looking pretty strong, with titles like:
Joker: Folie a Deux, Gladiator 2, LORT: The War of the Rohirrim, and Deadpool 3 set to hit the screens.
At the corporate level, Vista’s most recent H1 revenue came in at $69.7m, up 12% on the pcp. Annual recurring revenue (ARR) was $60.5m, up 13% on the pcp.
The company however reported a bottom line loss for the half of $8.5m, which was down from a loss of $18m in the same period last year.
For the full year, Vista has reaffirmed its guidance for total revenue to be in the range of $142m – $147m.
The company is also targeting an ARR of $175m to $205m by 2025, which is a growth of 15-20% per annum from 2022.
Vista says the macro picture looks good for the industry, however the company acknowledged there will be short term headwinds in the form of higher wages and actor strikes in the US.
Vista’s business model is also scalable, with the company stating “we do not require any cash to execute on our strategic growth plans.”
“Cinema continues to show great strength, with upside to come,” said Vista.
“Our experience delivers the best experience in the industry, client interest is strong, and our value proposition is clear.”