Vista Group International: A Re-Rating Story in the Making?

In the high-growth software sector, where investors demand both scalability and margin discipline, Vista Group International (NZSE: VGL) has emerged as a compelling case study. The company's recent half-yearly results—11% revenue growth to NZ$77.0 million and a 39% surge in EBITDA to NZ$10.0 million—have sparked renewed interest. But does this progress, coupled with a strategic pivot to cloud-based solutions, justify a re-rating in a sector where SaaS firms routinely trade at 7.5x revenue multiples? Let's dissect the numbers, strategy, and risks.

Financials: From Break-Even to Breakthrough

Vista's H1 2025 results highlight a narrowing of losses and margin expansion. While the company broke even at the statutory EPS level, its EBITDA margin expanded from 10% to 13%, driven by a 24% increase in SaaS revenue to NZ$31.6 million and a 11% rise in recurring revenue to NZ$70.4 million. This shift toward recurring revenue—a hallmark of high-growth SaaS firms—is critical. Analysts project 2025 EBITDA margins of 16–18%, with long-term targets of 33–37%, aligning with the sector's premium valuations.

However, earnings forecasts have been trimmed, with 2025 EPS now at NZ$0.022, down from NZ$0.028. This reflects cautious near-term expectations, particularly as Vista invests in scaling its Vista Cloud platform. Yet, the company's free cash flow positivity—NZ$14.1 million in operating cash flow for H1—demonstrates financial discipline.

Strategic Positioning: Cloud and AI as Growth Levers

Vista's transformation into a cloud-first software provider is its most compelling narrative. The Vista Cloud platform, now live at 747 sites (with 1,600 expected by year-end), is a cornerstone of its strategy. High-profile clients like Odeon Cinemas Group and Village Cinemas Australia have adopted the platform for operational efficiency, leveraging 42 new features deployed in 2025.

The embedded payments initiative, targeting NZ$15.0 million in ARR at full deployment, adds another revenue stream. This move mirrors successful SaaS models that monetize ancillary services, enhancing unit economics. Meanwhile, AI-driven tools are being scaled to meet demand, further differentiating Vista in the cinema and entertainment technology niche.

Competitive Advantages: Niche Dominance and Margin Potential

Vista's dominance in the cinema segment—accounting for 80% of revenue—provides a stable base. The Cinema segment grew 9% to NZ$60.5 million, while the Film segment surged 16% to NZ$16.5 million. A favorable box office outlook (U.S. domestic revenue projected at $9.4 billion for 2025) strengthens this foundation.

The company's balance sheet is another strength. With two consecutive halves of free cash flow positivity and a robust pipeline, Vista can fund growth without dilution. Its upgraded ARR target of NZ$315.0 million by 2025 underscores confidence in recurring revenue scalability—a metric investors in the sector prioritize.

Sector Context: Aligning with High-Growth Benchmarks

While Vista's 11% revenue growth lags the 50–200% rates typical of venture-backed SaaS firms, its margin trajectory is impressive. EBITDA margins expanding to 13% and a path to 16–18% in 2025 align with the sector's median EBITDA multiple of 19.2x for private firms. Public SaaS peers trade at 38.6x EBITDA, suggesting Vista's current valuation (trading near NZ$3.50, with price targets up to NZ$4.70) offers upside if it hits margin targets.

Risks and Cautions

The company's reliance on the cinema segment (80% of revenue) introduces sector-specific risks. A downturn in box office demand could pressure growth. Additionally, embedded payments and AI initiatives are still nascent, requiring execution discipline to meet ARR targets.

Investment Thesis

For investors with a 3–5 year horizon, Vista Group presents a compelling case. Its strategic shift to cloud, margin expansion, and recurring revenue focus position it to align with sector multiples as it scales. While near-term earnings revisions are a caution, the long-term trajectory—33–37% EBITDA margins, NZ$315.0 million ARR, and a diversified SaaS platform—justifies a re-rating.

Entry Point Considerations:
- Price Targets: Analysts' range of NZ$3.20–NZ$4.70 suggests a 30–40% upside from current levels.
- Valuation Metrics: At 7.5x 2025 revenue (assuming NZ$166.6 million), Vista trades at a discount to public SaaS peers.
- Catalysts: Client onboarding progress, embedded payments deployment, and AI tooling adoption.

In a sector where recurring revenue and margin expansion command premiums, Vista Group's transformation is far from complete. For patient investors, the narrowing loss and 11% growth are not just numbers—they're the first steps in a re-rating story.