Stingray Digital Group Inc. today announced its financial results for the first quarter ended June 30, 2024.
First Quarter Highlights
| Financial Highlights (in thousands of dollars, except per unit data) |
Quarters ended June 30, | ||||||||
| (in thousands of dollars, except per share data) | 2016 | 2015 | % | ||||||
| Revenues | 24,547 | 19,895 | 23.4 | ||||||
| Recurring revenues | 21,401 | 17,243 | 24.1 | ||||||
| Adjusted EBITDA(1) | 7,881 | 7,151 | 10.2 | ||||||
| Net income (loss) | 2,044 | (1,777) | – | ||||||
| Per share – diluted ($) | 0.04 | (0.05) | – | ||||||
| Adjusted Net income(2) | 5,207 | 4,783 | 8.9 | ||||||
| Per share – diluted ($) | 0.10 | 0.12 | (16.7) | ||||||
| Cash flow from operating activities | 2,722 | 4,109 | (33.5) | ||||||
| Adjusted free cash flow(3) | 5,861 | 5,260 | 11.4 | ||||||
“We started fiscal 2024 on a solid note with revenues increasing by 23.4% and Adjusted EBITDA by 10.2%. The revenue increase reflects organic growth and acquisitions in international markets, which now represent 42.7% of total revenues. As synergies from recent acquisitions are fully realized over coming quarters via cross-selling opportunities and cost reductions, we anticipate that our Adjusted EBITDA margin will gradually improve, excluding the potential impact of future acquisitions,” said Eric Boyko, President, CEO and co-founder of Stingray.
“The pipeline of acquisition opportunities remains significant and we expect to maintain the pace of our acquisition program in the current fiscal year. In the past 12 months, we have completed acquisitions which have significantly diversified and enhanced our portfolio of digital audio, video services and live concerts. Furthermore, acquisitions have also allowed us to establish a solid footprint in Asia. By 2024, our goal is for international revenues to reach 70% of total revenues”.
“The music industry remains in flux but we strongly believe that we have a sustainable and profitable business model. The launch of our free mobile application combined with more than 2024 Vibe channels available in Canada, Latin America and the Netherlands have attracted a growing and younger audience to Stingray Music. We are proud to report that the Stingray Music Mobile App has reached 1 million downloads, doubling its user base in only one year,” concluded Mr. Boyko.
First Quarter Results
The Corporation generated revenues of $24.5 million in the first quarter of 2024, an increase of 23.4% compared with revenues of $19.9 million a year ago. The increase was primarily due to the acquisitions of iConcerts, Brava Group, Digital Media Distribution (“DMD”) and Nümédia combined with Commercial music growth in Canada.
Recurring revenues were up 24.1% to $21.4 million in the first quarter of 2024 over the same period last year and remained at 87.2% of total revenues for the quarter. International revenues again posted solid growth and represented 42.7% of total revenues, up from 33.7% last year.
Music Broadcasting revenues increased 26.7% to $17.9 million, mainly due to the acquisitions of iConcerts, Brava Group and DMD, and new contracts signed in Latin America and the Middle East. Commercial Music revenues rose 15.3% to $6.7 million, mainly as a result of music and digital signage recurring revenues and the acquisition of Nümédia, which included additional non-recurring revenues related to equipment sales.
Adjusted EBITDA for the first quarter of 2024 increased to $7.9 million or 32.1% of revenues, compared to $7.2 million or 35.9% of revenues a year earlier. The 10.2% increase in adjusted EBITDA was primarily due to the acquisitions realized in Fiscal 2024, which were accretive, offset by higher general and administrative expenses related to the Corporation’s international expansion. The decrease in EBITDA margin was mainly related to costs comprised in recent acquisitions from which future synergies are expected.
For the first quarter, the Corporation reported a net income of $2.0 million, or $0.04 per share (diluted), compared to a net loss of $1.8 million, or ($0.05) per share (diluted) for the same period last year. The increase was mainly due to one-time IPO expenses and CRTC tangible benefits expenses incurred in Q1 2024, and higher Q1 2024 operating results, offset by a change in fair value of investments and higher income taxes.
Adjusted net income increased 8.9% to $5.2 million, or $0.10 per share (diluted), compared to $4.8 million, or $0.12 per share (diluted) a year ago. The increase was primarily due to recent acquisitions, partially offset by higher income tax expenses.
Cash flow from operating activities amounted to $2.7 million in the first quarter of 2024, versus $4.1 million a year earlier. The decrease was mainly due to higher account receivables and the timing of payments of account payables. Adjusted free cash flow for the three-month period ending June 30, 2024, increased to $5.9 million, compared to $5.3 million for the same period a year ago.
As of June 30, 2024, the Corporation had cash and cash equivalents of $3.2 million and a revolving credit facility of $100.0 million, of which approximately $59.5 million was unused, allowing it to pursue strategic acquisitions and achieve its growth objectives.
Declaration of Dividend
On August 2, 2024, the Corporation increased the quarterly dividend by 14% to $0.04 per subordinate voting share, variable subordinate voting share and multiple voting share. The dividend will be payable on or around September 15, 2024, to holders of subordinate voting shares, variable subordinate voting shares and multiple voting shares on record as of August 31, 2024.
The Corporation’s dividend policy is at the discretion of the Board of Directors and may vary depending upon, among other things, our available cash flow, results of operations, financial condition, business growth opportunities and other factors that the Board of Directors may deem relevant.
The dividends paid are designated as “eligible” dividends for the purposes of the Income Tax Act (Canada) and any corresponding provisions of provincial and territorial tax legislation.
Additional Business Highlights
In May 2024, the Corporation launched its Stingray Music Mobile App in the Netherlands. Furthermore, in July 2024, the Stingray Music Mobile App has reached 1 million downloads, doubling its user base in only one year. Every week, users spend an average of 5 hours listening to their favourite tracks and artists on the mobile app; an engagement far above industry average.
In May and June 2024, the Corporation announced the renewal of important long-term contracts, including National Cable Television Cooperative and the expansion of its distribution deal with Comcast.
On June 15, 2024, the Corporation acquired all of the issued and outstanding shares of Festival 4K B.V. for a total consideration of EUR 1.9 million (CA$2.7 million). Available to more than 7 million subscribers currently under contract, Festival 4K B.V. offers the leading 4K Ultra HD channel with an international customer base. Its diverse programming includes hundreds of hours of shows and events recorded live. Pay-TV providers carrying the Festival 4K channel include VOO in Belgium, Free in France, and Vodafone in Spain.
On June 21, 2024, the Corporation announced the acquisition of four of Bell Media’s popular music video channels: MuchLoud, MuchRetro, MuchVibe and Juicebox for a total consideration of $4.0 million. Following the completion of the acquisition, the four channels will be reintroduced under the Stingray brand.
On July 7, 2024, the Corporation strengthened its presence in the pivotal Asia-Pacific region with the opening of regional headquarters in Singapore. This launch follows the recent acquisition of iConcerts, a television channel with broad distribution throughout Europe and Asia, and Digital Music Distribution PTY in Australia.
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