ASX:VGL
Vista Group International Ltd
Investment Summary
The fund managers believe that Vista Group International Ltd is showing promising growth indicators, as evidenced by a 20% rise in share price following the announcement of robust financial results. They highlight that recurring revenue and SaaS revenue grew by 10% and 20%, respectively, contributing to a 25% increase in EBITDA. Despite significant R&D investments for cloud transformation, the rollout is progressing, with the first multi-territory client now operational and new agreements covering approximately 350 sites. The company maintains a positive outlook, aiming for an Annualised Recurring Revenue (ARR) of $175m and an EBITDA margin of over 15% by the end of CY25, with expected free cash flow positivity in Q424. The fund managers recognize Vista's strong market position, holding over 50% market share excluding China, and its strategic shift to cloud revenue is anticipated to enhance growth in both revenue and earnings.
Commentary From The Managers
Spheria Asset Management
31 Mar 2024
$1.84
- Vista Group International (VGL.ASX) share price increased by 20% in March following their full-year results announcement.
- Recurring revenue and SaaS revenue grew by 10% and 20% respectively.
- EBITDA grew by 25%, despite continuing to capitalize on high R&D for cloud transformation.
- Cloud rollout is gaining momentum with the first multi-territory client now live and multiple new signings covering ~350 sites of the total ~7,800 sites.
- Medium-term targets include Annualised Recurring Revenue (ARR) of $175m and an EBITDA margin of 15%+ by the end of CY25.
- Vista aims to be free cash flow positive in Q424.
- Spheria Asset Management has maintained its position as a long-term shareholder due to Vista's strong market share (>50% ex-China).
- The transition from on-premise to cloud revenue is seen as a key driver for significant growth in revenue and earnings.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.