I would now like to hand the conference over to Ms. Sophie Moloney, Chief Executive Officer. Please go ahead.
Kia ora koutou, nau mai, haere mai [Foreign Language]. Hello, everyone, and welcome to Sky's twenty twenty-four annual results briefing. Thank you for taking the time to join today's call. I'm Sophie Moloney, your Chief Executive here at Sky, and I'm pleased to be joined today by Ciara McGuigan, Sky's Chief Financial Officer. I'll start today's presentation with an overview of what we've achieved in FY twenty-four, followed by a look at our performance in key parts of the business. Ciara then will take you through the numbers in more detail before I take you through our capital management program and the outlook for FY twenty-five. We'll then hand back to the operator and open the lines for your questions. So turning to the year-end highlights, it's a solid result for Sky, with all metrics delivered within guidance, albeit with revenue at the lower end.
In the context of the economic environment and the media sector as a whole, the business has performed well. It will come as no surprise that household spending has been under immense pressure during the second half of FY 2024, which has meant that full year revenue growth is not where we wanted it to be. Despite the economic pressures, I'm very proud of the way my team has responded to deliver a third year of revenue growth with increased diversity, a disciplined approach to costs that's expanded margin, NPAT that's close to the midpoint of guidance, and perhaps most importantly for our investors on this call, we have delivered strong free cash flows to fund significant dividend growth, well above the increase signaled at the half year. As you can see on Slide four, we've delivered on all three key priorities identified at the start of the financial year.
Lifting employee engagement by twelve points, rolling out new Sky Boxes and pods to 21% of our base, and lifting advertising revenue as we also added a new digital revenue stream in the second half. Like revenue, customer numbers were not where we had wanted them to be, particularly across Neon and Sky Box, due to factors we'll cover off later in the presentation. Notwithstanding these factors, we've remained focused on delivering an improved customer experience, which saw a six-point lift in overall NPS, a positive signal as we head into FY 2025. Turning to Slide 5. The growth in revenue is the result of a strong performance across the key growth engines of the business, including another year of standout performance from Sky Sport Now, along with the continuation of Sky Broadband's growth trajectory.
Adding to this momentum, in the first year of accelerating our ambition in advertising, we've delivered a considerable 13% uplift in revenue. This more than offset the decline in Sky Box and uncharacteristic reduction in Neon revenues to deliver an overall increase of NZD 12.4 million, a 1.6% increase year on year. Moving to our EBITDA bridge. Importantly, EBITDA growth of 2.9% surpassed revenue growth to deliver increased operating leverage. This included a disciplined approach to spending, as evidenced by the delivery plan on the NZD 6 million in annualized savings promised from transformation projects announced in FY 2023. That meant our savings were able to more than offset the impact of investments in our capability, our content, and the inflationary pressures on certain cost lines.
As a result, despite CPI running at 3.3% over the same period, cost increases were limited to 0.8%, and this also catered for the cost to fund growth in broadband, advertising, and Sky Sport Now. At the end of the last financial year, we shared our three-year targets to highlight our areas of focus as we deliver on our strategy. One year on, our results show we're on track to deliver, with the exception of one target, and that's revenue, given it was stated on a CAGR basis. The stronger-than-expected headwinds, particularly in H2, have meant that in year one, we've fallen behind in chasing down this target. While my team and I have no shortage of ambition, this slower start means we need to call it early and reset this target to give clarity on our revised expectations.
This now sees us delivering annual growth of 1-2% per annum through to FY 2026. Importantly, all other targets remain unchanged, including our programming costs and CapEx targets, which are set as a percentage of revenue. A five-point improvement in employee engagement is considered exceptional, so our 12-point uplift is a fantastic achievement in a single year. This reflects the importance we place on our people, including the investment we've made to boost leadership skills and build clarity around our purpose and our ambition. I'm also extremely pleased to see customer NPS increasing by six points. This demonstrates the effort we've made to deliver on our service promise and lift customer experience with more on this front to follow. Importantly, the significant lift in dividends is evidence that we're making good progress to our FY 2026 target of NZD 0.30 per share.... Turning to slide 8.
We've talked before about our strategic strengths as underpinned by our core competitive advantages. I want to touch briefly on three of these today. First, our multi-platform strategy, which has contributed to Sky's resilience in these tougher economic times. The choice we offer through diversified platform, packages, and pricing options, along with free-to-air delivery, ensures Sky is accessible to all New Zealanders. You'll see that we've highlighted the extent of our existing digital relationships in this slide. These include our streaming and new box and pod products, along with thousands of connected satellite boxes, and the ability for Sky Open customers to access their content via Sky Go. This leads nicely to the second competitive advantage, where increased use of these digital products provides rich and unmatched viewership data to inform much of our critical decision-making.
Deep viewership insights now play a central role, not just to our vital content negotiations, but also in terms of our approaches to customer care, engagement, and retention. You'll no doubt have questions on our New Zealand Rugby renewal, with these rights held through to the end of calendar year 2025. Suffice to say, we have a clear view on value, with constructive discussions ongoing with this important partner. Turning to slide 10, and our third competitive advantage, which is our unrivaled bundle of content. No one comes close to having as much must-watch sport as Sky, nor does any other entity in this country have access to the immense production expertise and experience of the Sky Sport production team.
There's no better example than our recent coverage of the Olympics, with one hundred and thirty crew on the ground in New Zealand, managing multiple feeds, including many live crosses from our extremely hardworking teams on site in France. FY twenty-four also included four World Cup tournaments, as well as many marquee events and regular week-in, week-out, season-long competitions, such as the NRL. For lovers of sport, and New Zealand has plenty of them, engaging with Sky Sport content, whether as a direct subscriber, via Sky Open, or through our commercial customer venues, is pretty much essential. But we're not just about sport. Our entertainment content bundle includes an amazing array of news, TV shows, movies, and more.
We support this incredible breadth and depth with a significant number of studio partnerships, and on this note, we were thrilled to renew and expand our partnership with the BBC earlier this year. And of course, our own Sky Originals productions add an important local lens that connects with an increasingly diverse New Zealand audience. On this front, we've been pleased to have international studios, such as Lionsgate and BBC Scotland, wanting to partner with us. We're also very pleased with the support of New Zealand On Air funding to invest in local production. And in the year of elections, with the battle in the U.S. heating up, there's no better place to watch twenty-four by seven coverage via our news services, whatever your political taste. As with sport, our entertainment bundle remains an essential element of the weekly viewing diet enjoyed by many of our customers.
Moving then from a brief recap of some of our strategic strengths to the operational performance of the business in the first half. Starting then with the new Sky experience, and I'm extremely happy to report, after a couple of reporting cycles, where, let's face it, this was tougher going. We now have one hundred thousand households, or 21% of the Sky Box base, using this product, with the actual take-up higher again at over a hundred and twelve thousand new devices in use. Having refreshed the go-to-market setting that included suspending the upfront device fee, as well as making it easier for new and existing customers to enjoy the new Sky experience, we've seen a significant momentum shift. Monthly orders are now hitting the levels we're targeting, with Q4 sales averaging over eleven thousand boxes per month.
The additional features and ease of use now see customer NPS scores for new products that are 12 points higher than the wider Box base. This confirms that pausing the program was the right thing to do, and it's allowed us to reset, and we're seeing very positive momentum since. Turning to slide 14, moving to the overall picture for Sky Box. As we've already covered, revenue was down year-on-year. Most of this impact came from a lower opening position and stronger headwinds early in H2, that saw an uptick in churn. Given the decision to suspend the upfront fees, income from device revenue was also paused, and sports penetration came back from the highs of H1, although still remains above 70%. In contrast, the ARPU story is one of continued growth, up 2.5% year on year.
The drivers included price rises in our sport and entertainment packs, and average sports penetration of 71% throughout the year. This more than offsets some spin down from non-sport packages and add-ons. The next slide demonstrates that we've performed well in a challenging market. Having resumed marketing activity early in the second half, activations were down by just over 1,000 year-on-year, and disconnections were held to just 3,000 above the prior year. And throughout, we remained focused on margin, with a 34% reduction in foregone revenue from discounting. While churn was higher at 11.5%, this was skewed to the beginning of H2, and a greater focus on save activity has since seen this trending back down at year-end.
Broadband Attachment acquisition climbed to 16% from 10% in FY 2023, and the key metric is that we're now seeing evidence that bundling improves retention, with churn improved by 13% for bundled Sky Box customers. Turning now to our streaming business, beginning with Sky Sport Now on Slide 16, and what has been a phenomenal year. The first half included an incredibly strong content lineup that boosted customer numbers and revenue to new highs. The 33% growth in revenue included strong transactional pass sales that pushed Sky Sport Now revenue above Neon for the first time, and staggered price increases across all pass types flowed through to an 11% jump in ARPU for recurring customers. Recently, we also tested a spot increase for weekly passes during a particularly high-value content period, and this delivered a very good result that has since been repeated.
As expected, customer numbers came back from the post Rugby World Cup highs that were evidenced in the H1 numbers. However, the new season of winter sport gave us the opportunity to rebuild, and by year-end, customer numbers were up on last year. At the same time, the win-back pool is now significantly larger, demonstrating the size of the addressable market and providing access to a low-cost marketing opportunity. The new financial year has started well, with a far better than forecast number of Olympic event passes sold, and just over half of those being first-time Sky Sport Now customers. We've also had phenomenal viewership stats throughout the games. Looking now at Neon, which has come under pressure during the financial year.
This is partly from the prolonged impact from industry strikes on the pipeline of acquisition-driving titles, as well as from the trend of some customers more closely managing their entertainment app spending. While we were pleased to see House of the Dragon bringing customer numbers back into growth in June, this was too late in the period to have a meaningful impact on revenues. What we have seen since the past year is a stable product mix, with 86% subscribed to the standard tier and growth in average tenure to 27.8 months, suggesting that the core customer base is behaving more like a stickier Sky Box customer. Along with the January price rise, this helped to soften the revenue impacts, and our focus now is on making the most of the content runway ahead and the opportunity to win back customers.
We were pleased to report another period of strong growth for Sky Broadband, with impressive gains in customers and revenue, despite an increasingly competitive market. The increased scale delivered additional margin growth, and our high-quality product and service performance continue to compare well. The popularity of our One Gig product remains high at 49%, and we're pleased with the growth in the Fibre Starter product, which now accounts for 16% of customers. Turning now to Slide 19, and our commercial business is performing well despite the economic conditions. Revenue growth is more modest as a result, with some customer loss in the retail sector, but with generally good performance in the accommodation and hospitality segments.
Sky offers commercial customers the chance to differentiate from their competitors, and the Sky Business team are working hard to make sure their customers see their service as essential in adding value to their business. Turning then to Slide 20. The investment we've made to go after a bigger share of advertising has been incredibly effective. Through strengthening capability and a renewed focus across the business, we have a better place to lean into the opportunities. This saw Sky's advertising revenue grow by 13% in a market that contracted by 14% year-on-year. This phenomenal effort included strong sales across Sky Box and Sky Open, with the first period of digital revenue from our streaming products delivered as planned early in the second half with our Neon service. The first period of revenue growth has come from unlocking new inventory and in-app integrations, alongside other technology innovations.
The groundwork to strengthen our engagement with advertising and agency partners and new technology deployments have got us off to a great start. The next phase will see us launch digital ad replacements, offering a high-value, targeted approach for advertisers. Sky Sport Now is set to launch in H1, and Sky Go is on the roadmap for H2. Delivering on our priority to grow advertising and create a new digital revenue stream has been a winning strategy in FY 2024, and we see significant opportunity ahead, and with that, I'll hand you over to Ciara, who will take you through the numbers in more detail.
Thanks, Sophie, and good morning, everyone. It's great to be presenting to you for the first time as your CFO. So let's look at our overall performance. We are pleased with the outcome for the year. We are continuing to deliver growth. All metrics are within the guidance provided a year ago in what was a very different market context. That said, I share Sophie's ambitious outlook. In the time that I've been with Sky, I am encouraged to see the level of energy and determination to drive performance. This will continue to be key as we head into FY 2025. At the top line, revenue continues to grow faster than costs. In a high inflation environment, we were pleased to hold cost growth at 0.8% year on year.
This had lifted our EBITDA margin to 20% and delivered EBITDA of NZD 153 million, which is growth of 2.9% year on year. Looking to the NPAT line, you will see that the expected rise in depreciation offset the EBITDA growth, with full year NPAT of NZD 49.2 million, coming in just below the midpoint of guidance. CapEx spend of NZD 83 million was higher year on year as signaled, and despite this important lift in investment, there has been strong growth in free cash flow of over 43% year on year to fund the step-up in shareholder dividends. Looking at the build-up in more detail, let's firstly turn to revenue. On slide 24, you can see the growth paths that have become a consistent feature of the last three years, albeit the momentum slowed in FY 2024.
Sky Sport Now, broadband and advertising delivered strong growth of NZD 29 million year on year, as Sophie already pointed out. This growth more than offset softness in the Sky Box and Neon, and clearly demonstrates the resilience that has been built up through diversification. Turning to slide 25, the expenses story is one of disciplined spending. You can see in the programming cost line, where the overall increase was contained to NZD 7.7 million year on year, which is just 2%. This in spite of a big sporting year with World Cup events, plus the full year impact from World Rugby, the NRL, and Formula 1. The most significant area of savings within subscriber-related costs, which were reduced year on year by NZD 12.6 million, or 14% to NZD 81 million.
This included efficiencies from partially outsourced call center operations and fully outsourced warehousing and logistics, along with reduced marketing spend. Now, fully operationalized, new logistics settings led to a 22% reduction in service call outs in FY24. That has delivered considerable savings, while also improving customer service. The 9% or NZD 7.5 million increase in broadcasting and infrastructure costs, largely related to variable costs, driven by the growth in broadband and the growth in streaming. Lastly, a 5% or NZD 2.4 million increase in other costs, mainly relates to investments in advertising capability and some inflationary impact from people investments. Limiting cost growth to 0.8% year-on-year in a period of inflationary pressure is a significant achievement, particularly as this includes the cost of revenue growth.
It is by far the best performance in some years, noting, of course, that FY 2021 included significant COVID-related programming rebates. On to slide 26. CapEx spend increased as expected, largely due to accelerated investment to roll out new products, feature development, and investment in advertising tech. At the same time, the mix of this year's spend saw some movement from software development to hardware as we progressed the rollout phase. Total CapEx spend also included NZD 4.5 million for satellite migration activities in FY 2024. This was lower than initially expected due to phasing and will run through to FY 2025. In total, CapEx as a percentage of revenue rose to 10.8%, with a strong weighting towards growth. Even including migration spending, actual CapEx was at the midpoint of guidance due to optimization savings. These savings included higher than expected self-installation rates of 96%.
That meant these costs were slightly down in a year when they were expected to increase. As a result, in FY 2025, excluding satellite migration, we are guiding to a faster reduction in CapEx, which is earlier than originally expected. This means the higher period of CapEx intensity has come to an end. Moving to cash flow, where we delivered NZD 139 million net cash from operating activities. This is 19% growth year on year. This has enabled increased investment, whilst at the same time delivering shareholder returns. CapEx investment was NZD 17 million higher than the previous year in cash terms, due to the increased investment and also including a payment for hardware delivery of NZD 5 million, that was actually delivered in FY 2023. Lease costs were close to NZD 2 million lower year-on-year as a result of the Optus variation announced in August 2023.
42 million of distributions represented a 14 million increase in the amount returned to shareholders through dividends and share buybacks. We closed out the period with a cash balance of NZD 37.8 million. Lastly, I am pleased to let you know that we successfully renegotiated our banking facility, continuing with the existing three-bank syndicate after a competitive process. At the same time, we have taken the opportunity to reduce the limit to NZD 100 million, given the ongoing positive outlook for our cash flow generation. This is a significant milestone achieved on more favorable and flexible terms, which is a reflection of a significantly transformed business. With that, I'll hand now back to you, Sophie.
Thanks, Ciara. Great job! Sky's management and board is highly focused on delivering returns to shareholders, as clearly evidenced by its action over the last few years. This year, it has led to a 26.7% increase in fully imputed dividends, which is above the improved guidance provided at the half year. Our board has consistently stated that Sky shares remain undervalued, and demonstrated this again through approving a second buyback program for up to NZD 15 million. This was initiated on 1 April 2024, as an immediate follow-up to the conclusion of the first program, and to date, Sky has bought back 5.4% of issued shares across both programs, with approximately NZD 7.8 million still available to deploy during FY 2025, so to our outlook and guidance for the full year.
We are expecting economic conditions in FY 25 to be largely unchanged, and this is reflected in the revenue guidance we've provided. Given this context, we've already identified further opportunities to reduce costs that we've already begun to action, and any one-off costs from any such transformation activity have not been factored into EBITDA or NPAT guidance. Our CapEx guidance excludes satellite migration spending and is trending lower, as Ciara mentioned, which means that we expect to achieve the 7%-9% of revenue target a year earlier than previously set out. Last but not least, we're expecting to continue lifting the dividends, this time to at least NZD 0.21 per share in FY 25.
The work completed in each of our FY twenty-four priority areas achieved great results for the longer term, and our FY twenty-five priorities build on last year's momentum, along with adding a fourth area of focus to deepen our content engagement. So, as we move through the halfway point of our three-year targets, with the revenue target duly reset, it perhaps goes without saying that my team and I remain focused on delivering against our strategy and building on execution momentum for the benefit of our crew, our customers, our partners, and our investors. And with that, I'll now ask the operator to open the line for your questions. Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two, and if you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from 09937606860
Oh, good morning, and thanks for the presentation. First question, just on the Sky Box. Have you got targets internally for where you want that penetration to lift by the end of this year? And also, just on the satellite subscribers, so those subscribers on satellite, is the intention to push the box to those customers harder in FY twenty-five, or are you actually happy to let the customers dictate the pace with which they migrate to the new box?
Thanks, Arie. I'm very excited about our new Sky Box numbers, and yeah, we are currently. Of course, we do have targets. So, for FY 2025, you know, moving from the 21% that we're at now to 35% by the end of the year. But, and we've had 11,000 a month in Q4, as we mentioned, so, in our announcement, I think. And, we're definitely keen to ensure as many of those customers enjoy the experience. I think the Olympics was an incredible showcase of the, you know, the live and on-demand content coming in overnight, which I know a number of customers have referenced. But ultimately, Arie, it is customer choice. So, we're making it much easier for them to upgrade now.
And obviously, for new customers joining us, they have the choice of the Pod or the new Sky Box.
Yeah, and just on the Pod quickly, are there any initiatives planned for FY twenty-five to get that into more homes, you know, albeit without any requirement to take Sky Starter?
No. The plan. Well, so first of all, yes, the plan is to get the Pod out into more New Zealand homes, and we're looking at a really interesting bundle with broadband for later this calendar year that we think is going to give great value. And but the products and packaging remain consistent as they are now. That said, there will be some really interesting bundling options later this year that we'll communicate, that we think will celebrate Sky-made for entertainment in terms of our broadband products, obviously, with the Pod, which is IP delivered.
Great, thanks. Just on the cost reduction opportunities you called out in the guidance, can you just confirm? Yeah, so the reference there to cost reduction opportunities, the plans there, they are included within the guidance range?
Any one-off costs of transformation are excluded from EBITDA and NPAT, but we've already, you know, we've got, we've obviously got numbers in our budget that we're forecasting. Is that what you're referencing, any one-off cons-
Yeah, yeah. So, Well, that was the second part of the question, yes. Because I know you've moved away from reporting adjusted EBITDA this year.
Yeah
... versus other years. But then you're sort of indicating that the EBITDA guidance excludes one-off costs, so just that makes sense. But so I guess I was, yeah, looking to just confirm that the cost out is included in the earnings guidance, and then just a bit of a guide to what you expect the one-off transformation cost to be in FY 2025.
Yeah. So basically, we're. Yeah, you're right. We, we manage our budget and our cost lines, and they're included within guidance. We're just talking about if there are any, you know, just more significant one-off costs in the year, those are excluded. And obviously we'll give, we'll give more clarity, when we can, but we're excluding them at this stage 'cause we're, we need to see exactly where they land during the year.
Okay. No, that's cool. Just on price increases, I mean, obviously, a reasonable amount of cadence on them across the various products over the last couple of years. Have you got any intention to put price increases through on any of the platforms in your FY 2025 budget?
So I'm interested to look at the start of next year and see where the economy is, see where household spending has got to. You know, we've still got the full freight of the rugby deal right through this term, and so I'm not looking at entertainment pricing at this stage. It's more on the sports side, so it would be around. If we go there, it would be in respect to the sports pack and Sky Sport Now, because that bundle of content that we have throughout calendar year 2025 is pretty impressive. And so we're looking at that, and we'll also discern where consumer spending and confidence has got to at the start of next calendar year.
That makes sense. And then last question from me. Just the status, just any comment on the status of negotiations with the rugby contract, just where that's at in that process?
Well, you know, and as per prior cycles, you know, we're in good conversation. You'd normally anticipate that we would agree terms, any renewal terms, by the end of the calendar year, because for rugby and for Sky, we all need to know as we get into plans for if, you know, for calendar year 2026, when the new deal would kick in. So we're in constructive conversations, but obviously we'll make an announcement as and when appropriate, later this, you know, hopefully later this calendar year. But we'll just have to see how negotiations go.
Are you in exclusive negotiations still?
That's not something I'm commenting on, Arie, because it's part of a confidential deal.
Okay. Thank you.
Thanks, Ari.
Thank you. Your next question comes from Phil Campbell, from UBS. Please go ahead.
Morning, Sophie and Ciara. Just following on from a couple of Ari's questions. Are you able to tell us in terms of the new Sky Box and the Pod, like, how many kind of new customers are signing up for that? And then just to follow on, in terms of obviously we're in a pretty tough economic cycle at the moment, just, you know, what you kind of alluded to the Pod plus the broadband bundle, which will be good, but, you know, obviously potentially 4K being launched later this year. Just interested to see what kind of, you know, other kind of promotions there would be to try and, you know, attract more new customers to the Sky platform.
Yeah, look, we're super mindful of the environment that we're in, and that's why, you know, I've been really pushing the team to look at how we can actually give some very good value to customers through bundling with broadband. We know bundling makes sense, and so we also wanna do the same thing and continue to offer the same on our Sky Box as well. That said, as you know, we do have a standalone app in Sky Sport Now, which works for a number of customers and certainly has this past year. Neon, we think is competitively priced for the depth and breadth of content that is delivered via that service.
Equally, I think this is why it's really important that, you know, we are also looking to maximize customers' access via Sky Open to the content array that we have with the support of advertising partners. In particular, as that, you know, household wallets are under pressure, and it's an opportunity to enjoy some of our content, and hopefully, you know, when household wallets are feeling a bit better and rate rises have changed, you know, they'll be able to come back to us. We haven't broken out in terms of new customers in terms of the new products. We do break out broadband attachment, but that's something we can probably look to in the next financial year.
... Great, and is it possible just to give us a bit more detail? I know you did an announcement a couple of days ago, just on what's going on with the Optus satellite and the potential impact on the business as a result of that.
Yeah. So look, we had always planned for the satellite migration. It's just we're needing to accelerate our plans. We've got a highly experienced team, a number of whom were here when we did this last, you know, in two thousand and six. So, we've got the team to deliver on it. We've given a reference in the announcement that, you know, that the cost may be NZD 10-15 million, but obviously we have a broad offset already in place with Optus. So we don't see it as being a, you know, a significant cash impact at all. It's just that we're gonna need to, given the new timeframes that Optus only shared with us, you know, late last week, we just now need to reprioritize and replan our resources.
But I'm highly confident in the team that we have, that we're gonna make sure that we ensure all of those New Zealanders who still enjoy and rely upon satellite delivery can continue to consume their content in that way. But equally, as we've referenced in the announcement we made, IP delivery is an important part of how we already deliver. And we've referenced in our announcement today, you know, the sort of 700,000 connected customer relationships, that means that those are customers that we have access to via IP. So I think, unlike when Sky did this back in 2006, we're in a hugely different position.
And so overall, it's gonna be undoubtedly a lot of work for the team, and but we know what we need to do, and it's a big priority for this financial year.
Great. And would you kind of start doing some testing on that pretty soon, would you? 'Cause I think, is it May twenty twenty-five, is the switch off?
Yeah. Yeah, the testing is gonna be starting in a few weeks to make sure we can. You know, it's all about ensuring that the dishes attached to people's homes can point to the relevant satellites in space, which are in space. So that's a key piece. It's all about what we need to do on the ground to give effect to that new signal coverage. It's probably the simplest way to articulate it.
Okay, great. Thanks.
Thanks, Phil.
Thank you. Your next question comes from Rob Morrison from Craigs. Please go ahead.
Hey, morning, guys. Can you hear me okay?
Yeah. Hey, Rob. How are you doing?
Oh, yeah, yeah. Good, good, thanks. Hey, good job on delivering around the middle of the NPAT guidance range and what's been... I think we looked it up, it's one of the worst, you know what I mean, per capita consumer recessions ever.
Mm.
The questions, so you downgraded FY 2026 revenue growth, or the revenue growth to FY 2026, but you kept the dividend the same?
Yeah.
So it seems to me either you were being pretty conservative before, or there's been some new reduction in OpEx or CapEx. Is that the right way to look at that? Could you talk to that, please?
I mean, I think the first thing I'd say is there's, you know, these are targets, and they're pretty ambitious. So I think I'm not. I sort of think downgrading feels a bit harsh. We've just reflected that as we went on a compound annual growth rate, we needed to adjust it back to year one. So, you know, of course, as my team know, I always wanna try and outperform, but we did need to reassess it. But at the time we were doing it, we did go through process with the board and just make sure that absolutely we had the capability of being able to say that we were gonna be able to double that dividend, and that wasn't just contingent on where that revenue sat.
You know, it's looking across our business, and I really do hope that notwithstanding that revenue piece, if you think and if you look at this year, how we've managed the cost line, and we look at that free cash flow generation, as Ciara shared in the presentation just now, 19% growth year on year to then drive a 26.7% uplift in dividends, I'm hoping, Rob, that that gives you a sense that we really do understand our business, and that's why we still have confidence in delivering on all of those targets, even those that are toggled to as a percentage of revenue, which includes programming and CapEx.
Yep, yep, that makes sense. Thank you. So then on just on that, that lowering of the growth from 3-4% to 1-2%. So what was the driver? Was it, you wanna mean lower revenue, lower revenue for the box or for streaming or kind of fifty-fifty?
Well, it's just looking across the piece at where our numbers were. You know, we've talked about, and I was up front, that you know it was disappointing to see our customer numbers this financial year. You know, the world we're now in, with us being in a streaming business as well as, if I could have moved the balance date to thirty-one July, then it would have been a much more positive story. We would have been back up over a million customers at that time. So just to, you know, to make that point. So, it's not looking at any specific or one line and saying, "Right, we need to pare it back." It's looking at it in the round, and that is the joy of our business. We're a portfolio business.
We have a bundle of content. We have a range of products that we can price, we can bundle, and as well as now working with advertising clients and seeing a 13% growth in that line. So lots of, lots of lines that go into the mix, and that's why, again, we did need to pare it back just because we had it as a CAGR. And so that's the reason we've done it, and we're owning that story. But I think what's critical is that we've still got the confidence on delivering on all of those other targets, and as you mentioned, the all-important doubling of the dividend to at least NZD 0.30 per share in FY 2026.
Okay. Okay, now that makes sense. Thank you. Okay, that's all for me.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one and wait for your name to be announced. We'll pause for any further questions to register. Once again, to ask a question, please press star one. Thank you. There are no further questions at this time. I'll now hand back to Sophie Moloney for closing remarks.
Look, thank you. Thank you to everyone who's listened today. As we're preparing for the season, I just wanna say I'm hugely proud and grateful to my team. It's been, you know, phenomenal delivery in a tough economic climate, and we're already excited about FY 2025, and it's all about the teamwork across the company that's gonna ensure that we can deliver on the guidance that we've given to the market today. We really look forward to engaging with our investors, and of course, our analysts in the next few days, and look forward to being in touch soon. Thank you, everyone.
That does conclude our conference for today. Thank you for participating. You may now disconnect.