Stingray Group Inc. (RAYA) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and welcome to the Annual Meeting of Shareholders of Stingray Group Inc. [Foreign Language] My name is Mark Pathy, I'm the Chairman of the Board of the Corporation, and I will preside at the meeting as Chairman. As was the case last year, the Board of Directors has chosen to hold this year's General Meeting of Stingray Group Shareholders in a virtual setting. [Foreign Language] Meeting will consist of 2 parts. The first, which I will conduct, will be the legal part. After that, there will be a much more interesting presentation by Eric Boyko, the President and Chief Executive Officer of Stingray Group; and Jean-Pierre Trahan, the Chief Financial Officer of the Corporation. Before we start the legal portion of the meeting, I would like to present the other current Board members in addition to Eric Boyko and myself: Claudine Blondin; Karinne Bouchard; Frédéric Lavoie; Jacques Parisien; Gary Rich; François-Charles Sirois; Robert Steele; and Pascal Tremblay. Mr. Parisien is not standing for reelection as a Director today, and Stingray wishes to thank him for his dedication and contribution to the corporation over the years. In his stead, we are very excited to introduce Ms. Mélanie Dunn as a new nominee to Stingray's Board of Directors. Also present at the Board meetings is Alexandre Décary as observer. Stingray's management team consists of Eric Boyko, Sebastien Cote, Mario DuBois, Lloyd Feldman, Valérie Héroux, Ratha Khuong, Ian Lurie, Mathieu Péloquin, David Purdy and Jean-Pierre Trahan. Now we'll start with the legal portion of the meeting. As this meeting is held virtually via live webcast, it is helpful to set out a few rules for the orderly conduct of this part of the meeting. A, registered shareholders and duly appointed proxy holders wishing to participate and vote today on the various motions should have received, prior to the meeting, their respective control number in order to access it. B, questions in respect to the motion can be submitted in writing using the instant messaging service of the virtual interface. C, questions will generally appear shortly after they are submitted, but will only be addressed during the question period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. D, for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each motion after the presentation of all motions in this legal portion of the meeting. Finally, E, when you are asked to vote, you will be able to access the electronic ballot from the voting icon at the top of your screen on the virtual interface. You will only have a certain amount of time to do so when the polls are open. To expedite the formal part of the meeting, I will move and second all motions. I now ask that the Annual Meeting of Shareholders of Stingray Group Inc. come to order. I hereby appoint Lloyd Feldman, Corporate Secretary of the corporation, to act as Secretary of the meeting. For the purposes of this meeting, I hereby appoint Francine Beauséjour and Isabelle Vachon of TSX Trust Company as scrutineers to compute the votes of any polls taken at this meeting and to report thereon to the Chairman. The purposes of today's meeting are set out in the management information circular dated June 9, 2022. The notice calling this meeting and the formal proxy were mailed to shareholders on or around July 4, 2022, along with the audited consolidated financial statements of the corporation for the fiscal period ended March 31, 2022, and related MD&A to shareholders of the corporation who requested such documents. Unless there is any objection, I will dispense with the reading of the notice of meeting. Copies of the management information circular and other meeting materials are available under the corporation's profile on the SEDAR website as well as on the corporation's website. Our transfer agent, TSX Trust Company, has attested to the proper mailing of the notice of this meeting, and they have been filed with me prior to proof of service of such mailing provided by the corporation's transfer agent and direct that a copy of such proof of service be annexed to the minutes of this meeting. I have been advised that there are voting shares representing more than 76.25% of all outstanding voting shares of the corporation present, and therefore a quorum of shareholders of the corporation is present, and the meeting is properly called and duly constituted for the transaction of business. I have received the scrutineers' report, and I direct that their formal report be annexed to the minutes of this meeting. First item on the agenda is to receive the consolidated financial statements of the corporation for the fiscal year ended March 31, 2022, together with the auditor's report thereon. Copies of such documents have been mailed to the shareholders who requested such financial statements, and it is not proposed to read them to the meeting. I direct that a copy of the consolidated financial statements of Stingray Group Inc. for the fiscal year ended March 31, 2022, together with the auditor's report thereon as both appear in the annual report of the corporation be annexed to the minutes of this meeting. The meeting will now proceed with the election of the Directors of the corporation. The 10 Directors to be elected by the shareholders of the corporation shall hold office until the close of business on the first annual meeting of shareholders of the corporation following election or until their successors are elected or appointed. Claudine Blondin; Karinne Bouchard; Eric Boyko; Mélanie Dunn; Frédéric Lavoie; Gary Rich; François-Charles Sirois; Robert Steele; Pascal Tremblay; and myself, Mark Pathy, have been nominated as Directors for the ensuing year or until their successors are elected or appointed. Each of the persons nominated has confirmed that he or she is prepared to serve as a Director. Since there are no other nominations, I move and second a motion to elect the directors. Unless there are any questions, I will move to the next item of business. The final item of business for the meeting is the appointment of KPMG LLP, chartered special accountants as auditor of Stingray Group for the ensuing year, at such remuneration as may be fixed by the Board of Directors of Stingray Group. I move and second that KPMG LLP, chartered professional accountants, be appointed as auditor of Stingray Group until the close of the next annual meeting and that the Directors be authorized to fix their remuneration. Unless there are any questions, we will proceed with voting. Okay. As we mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be open to registered shareholders and duly appointed proxy holders. Polls are now open. And at this point, all registered shareholders and duly appointed proxy holders who have properly logged in with their control number and wish to vote will be able to see on the screen all motions being brought forth at this meeting. Please register your votes by accessing the voting page and selecting the "for" or "withhold" buttons, next to the name of each proposed director, and next to the resolution with respect to the appointment of KPMG LLP, chartered professional accountants, as the corporation's auditor. We will provide registered shareholders and duly appointed proxy holders approximately 1 more minute to complete the electronic ballots. Once the electronic balloting closes, the voting page will disappear and your votes will automatically be submitted. We'll now take a 1-minute pause to allow voting to proceed. [Voting]

Okay. I've been advised by the scrutineers of the ballots and proxies deposited for the meeting have been voted in favor for each of the resolutions. Each of the 10 nominees have been elected as Directors of the corporation to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. The appointment of KPMG LLP, chartered professional accountants, as the auditor of the corporation, has been approved, and the Board of Directors have been authorized to fix their remuneration. I direct that the results of the poll be included with the minutes of this meeting, and the results of the voting for the election of directors will be announced in a news release in accordance with the policies of the TSX and filed on SEDAR. The formal items of business as set out in the notice of meeting have now been dealt with, and I move and second that this meeting now terminate. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I will now turn the meeting over to Eric Boyko, the President and Chief Executive Officer of the corporation, to be followed by Jean-Pierre Trahan -- sorry, the opposite, I will turn the meeting over to Jean-Pierre Trahan, the Chief Financial Officer of the corporation. And after jean-Pierre has finished, Eric Boyko will proceed with his presentation. After that, there will be a question period. And please hold off on your questions until after the presentation and the question period has commenced. Jean-Pierre Trahan?

[Foreign Language]

Well, we'll move back to English. So Stingray business, building solid momentum for growth. So next page, please. All right. So we're moving to do business, consumer and radio. So if we start with Stingray business, Stingray Business power's commercial experiences for over 140,000 locations worldwide, the most compelling value proposition with innovative digital assets, including in-store audio advertising, Stingray Advertising, and AI-driven insights, Chatter by Stingray, leveraging relationships with customers to increase average revenues per brand, leveraging Stingray Business operations to quickly grow Stingray Advertising and Chatter by Stingray. Second part is we talk about Stingray Advertising, a solution for retail media fast-growing category. Retail media is a marketing to consumer at or near the point of purchase, online or in-store. It represents one of the fastest-growing advertising trends. Audio Out-of-Home is the delivery of targeted digital audio ads in stores. Stingray leverages its technology, curated music services and advertising sales teams to offer a turnkey solution. In a short period of time, Stingray's retail offering through the Out-of-Home solution has evolved from a nascent to a dominant, with the development of a robust technology stack, the onboarding of Walmart, Metro, Dollarama, and expansions in the U.S. representing more than 20,000 locations. Next page, thank you. I think this shows you a good map of our presence that we have in Canada and the U.S. And what's unique about our presence with all of our 20,000 locations is we really represent every city, almost. If you put dots on the map, the map will be covered with dots. So that's the beauty of us is we're able to offer a North American presence. Go to the next page. Okay. Stingray Advertising, opportunities to simply increase monetization of current network. So first thing we want to do is increase pricing. So to do that is CPM, cost per thousand, in the U.S. and Canada levels by upgrading the U.S. network into a more data-driven, automated, targetable and measurable solution. B, add new sales channels, grow the national sales teams and leverage an increasingly effective network effect of improve the sell rate out of the current inventory. We increased the maximum number of ads to be put -- played per hour for selected retailers. Simultaneously expanded network from 20,000 drugstores, grocery stores within the total addressable market of 300,000 locations in Canada and the U.S. Now if you go to AI-driven insights, adding digital solutions to commercial services. Chatter by Stingray uses an AI-driven SMS conversation to provide a superior feedback experience for all categories of retailers. So our 2 goals here is: To continue deployment to major enterprise brands; and also addition of capabilities to grow the product from a feedback platform to a consumer engagement platform for retail business. Introducing Chatter for online reviews, a new reputation management solution for brands, and we have here a few of our current customers. And also a very nice interesting pipeline in this segment. Now if we go for digital fueling organic growth. So now we're in the Consumer section part of our presentation. So a pivoted product offering to become the leading music distributor in audio and video channels through connected cars, SVOD, apps, FAST channels and more. The transformation and expansion of Stingray's broadcast and streaming division supports a strong organic growth in the U.S. and abroad for years to come. Best-in-class asset and rights management programming, AI and delivery technology allows Stingray to scale across all platforms. Now if we go to our SVOD and apps, tapping into a market that's expected to grow 65% to 1.5 billion subscription by 2026, that is 14,000 new subscribers in Q1 of '23, a year-over-year growth of 27.6%. Leverage new global relationship with Amazon for new market launches, including India, Australia, of all our products. Focused attention on profitable SVOD products and B2B2C distribution in lieu of apps. And we also see a few of our customers around the world. So very pleased with this increase in the last few years. If we go now to the FAST and AVOD. So U.S. connected TV advertising growing by 25% year-over-year to 14.6 billion in 2023. Significant growth, 86% year-over-year in streaming hours. Launched a suite of AVOD and FAST channel with LG TVs and WebOS operation worldwide with our products. Also deploying under the TCL platform to come in Q2, U.S., Mexico, India, Brazil and Australia. And as you can see, we are working with most of the major TV manufacturers in the world. Okay, connected cars. So this is -- we call the new frontier because it is exciting. So making inroads in the connected car space, a sector that will experience tremendous growth. Tesla is one of Stingray's partners with a very successful in-car karaoke, called Karaoke, Stingray's set of collaboration. Tesla has 2 million cars currently on the road. And Stingray works with VinFast, a new fast-growing electronic car manufacturer to develop a unique offering. Stingray partnered with ACCESS Europe to bring Stingray Music to cars across Canada and the United States through its In-Vehicle [ Infotainment Platforms ]. And I must say that we are [indiscernible] with, now that we're talking to every car manufacturer in the world, and very well positioned with our Karaoke product, and we're also positioning our Music. So I think it's going to be interesting what will happen over the next few, say, even quarters. Finally, if we go to the Radio section. So Stingray, we are a leading radio operator in Canada. Q1 overall organic growth of 9%, so very happy with that. Increase was locally driven as economic uncertainty and supply chain issues continue to affect advertising and key advertising categories, example automotive. Revenue growth was muted due to a higher proportion of Stingray revenues coming from Atlantic Canada, which did not experience declines as significantly as the rest of Canada during the pandemic. So revenue gains are in the low single digits. Growth of the digital offering remains strong, up 49% year-over-year. And again, strong cash flows fueling Stingray's strategic initiative. So if we finish with the highlights, the investment highlights. So we've here 5 buckets. So fast-growing business segments using organic growth. So we've got retail media, we got consumer insight, Chatter, we've got the streaming services and connected cars. Experts in music distribution and rights management. More than 400 million subscribers through multiple platforms, 101 radio licenses, 160 apps downloads and over 200 licensing relationships. Three, strong and predictable cash flow, long-term contract and strong B2B relationships. Four, strong advantage with proprietary innovation technologies and leading content curation expertise. Five, track record of successful acquisition and integration. Over 45 acquisitions completed, representing an outlay of approximately $845 million. So this is the end of the formal part of my presentation. I know I'm very excited with unleashing the power of music. First, I'd like to take the Board and Chairman for the work in the industry. Also I'd like to thank our colleagues that really worked hard during the pandemic and -- to make sure Stingray is doing well. And also, the finance team and everybody else who worked hard for this AGM and this meeting. So -- and also, I want to say thank you for the shareholders for your confidence in Stingray, and we appreciate our shareholders and appreciate the partners. So with this [Foreign Language]. So I'll pass on to Mark.

Thank you, Eric, and thank you, JP, with your interesting presentations. And this brings us now to the question period. I ask that anyone who would like to ask a question, do so in writing by using the instant messaging feature of the virtual interface. We will answer as many questions as time permits. [Operator Instructions] We will now give attendees a moment to type in their questions. For each question we answer, we will summarize the question and read out loud the name of the person who asked the question, and if applicable, the entity that such person represents. Just to note that questions which were already answered, or that are redundant or repetitive, may not be published or answered. Okay. Well, it looks like we've done such a good job covering the material as there are no questions. And this does conclude the question period and also concludes this year's Annual Meeting of Stingray Group shareholders. On behalf of the Corporation's Board of Directors and executive team, I wish to thank Stingray employees and stakeholders for their hard work and dedication.