Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sky Network Television Ltd (ASX:SKT, Financial) delivered all metrics within guidance, with revenue at the lower end.
- The company achieved a third year of revenue growth despite economic pressures.
- Strong free cash flows funded significant dividend growth, well above the increase signaled at the half year.
- Employee engagement lifted by 12 points, and customer NPS increased by 6 points.
- Sky Sport Now and Sky Broadband showed strong performance, contributing to a 1.6% overall revenue increase.
Negative Points
- Full-year revenue growth was not as high as desired due to economic pressures.
- Customer numbers for Neon and Sky Box were below expectations.
- Revenue from Sky Box and Neon declined, impacting overall revenue growth.
- Churn rates increased, particularly in the second half of FY24.
- The company had to reset its revenue growth target to 1%-2% per annum through to FY26 due to stronger-than-expected headwinds.
Q & A Highlights
Q: Have you got targets internally for where you want Sky Box penetration to lift by the end of this year? And are you planning to push the box to satellite subscribers harder in FY25?
A: Yes, we have targets. For FY25, we aim to move from the current 21% penetration to 35% by the end of the year. We are making it easier for customers to upgrade, but ultimately, it is customer choice. New customers have the option of the pod or the new Sky Box.
Q: Are there any initiatives planned for FY25 to get the pod into more homes without requiring Sky Starter?
A: Yes, we plan to bundle the pod with broadband later this calendar year to offer great value. The products and packaging will remain consistent, but we will introduce interesting bundling options.
Q: Can you confirm if the cost reduction opportunities are included within the guidance range?
A: Any one-off costs of transformation are excluded from EBITDA and NPAT guidance. We manage our budget and cost lines within the guidance, but significant one-off costs are excluded and will be clarified as they occur.
Q: Do you have any intention to put price increases on any platforms in your FY25 budget?
A: We will assess the economic situation and household spending at the start of next year. Any price increases would likely be on the sports side, considering the impressive content lineup for calendar year '25.
Q: What is the status of negotiations with the rugby contract?
A: We are in constructive conversations and typically agree to renewal terms by the end of the calendar year. We will make an announcement when appropriate.
Q: How many new customers are signing up for the new Sky Box and pod?
A: We haven't broken out new customer numbers for new products, but we do track broadband attachments. We may provide more details in the next financial year.
Q: Can you provide more detail on the Optus satellite situation and its potential impact on the business?
A: We had planned for satellite migration but need to accelerate our plans. The cost may be $10 million to $15 million, but we have offsets in place with Optus. We are confident in our team's ability to manage the transition.
Q: Will you start testing for the satellite migration soon?
A: Yes, testing will start in a few weeks to ensure dishes can point to the relevant satellite crafts. The switch-off is scheduled for May 2025.
Q: Why did you downgrade FY26 revenue growth but keep the dividend target the same?
A: We adjusted the revenue target due to the slower start in year one but maintained confidence in our ability to deliver on other targets, including the dividend, based on our overall business performance and cost management.
Q: What was the driver for lowering the revenue growth target?
A: It was a holistic assessment of our numbers across the business, not specific to any one line. Despite the adjustment, we remain confident in delivering on all other targets and the dividend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
