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. [Foreign Language] The meeting will consist of 2 parts. The first, which I will conduct will be the legal part. After this, there will be a 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, those would be Claudine Blondin, Karinne Bouchard, Mélanie Dunn, Frédéric Lavoie, Gary Rich, François-Charles Sirois, Robert Steele and Pascal Tremblay. Stingray's management team consists of Eric Boyko, Mario Dubois, Lloyd Felman; Marie-Helene Fournier, Valérie Héroux, Ratha Khuong, Ian Lurie, Mathieu Péloquin, David Purdy and Jean-Pierre Trahan. Now let's begin with a 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. 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. Questions in respect of a motion can be submitted in writing using the instant messaging service of the virtual interface. 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 question was regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. 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. 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 27, 2023. The notice calling this meeting and the form of proxy were mailed to shareholders on or around July 7, 2023, along with the audited consolidated financial statements of the corporation for the fiscal period ended March 31, 2023, and related MD&A to the shareholders of the corporation who requested such documents. Unless there is any objection, okay, I will dispense with the reading of the notice of meeting and copies of the meeting -- sorry, 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. There has been filed with me, prior to this meeting, proof of service of such mailing provided by the corporation's transfer agent and I 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 98% 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 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. The first item on the agenda is to receive the consolidated financial statements of the corporation for the fiscal year ended March 31, 2023, 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 this meeting. I direct that a copy of the consolidated financial statements of Stingray Group, Inc. for the fiscal year ended March 31, 2023, together with the auditor's report thereon as both appear in the annual report of the corporation, the annex 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 of 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. Okay. The third item of business for the meeting is the appointment of KPMG LLP, chartered professional accountants as auditor of Stingray Group for the ensuing year and 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 the remuneration. Unless there are any questions, I will move to the next item of business. Okay. The next item on the agenda is the adoption of an ordinary resolution approving all unallocated options under the corporation's stock option plan as is required by the rules of the TSX. The text of the resolution to be adopted is set out on Pages 55 and 56 of the management information circular prepared in connection with today's meeting. The French version of the resolution is on Pages 57 and 58 of the French circular. Unless there is any objection, I will dispense with the reading of the resolution. Okay. I move and second that the resolution reproduced on Pages 55 and 56 of the management information circular and approving all unallocated options under the corporate stock option plan be approved. Unless there are any questions, I will move on to the next segment of business. Good. The final item of business for the meeting is the adoption of an ordinary resolution approving all unallocated performance share units under the corporation's Performance Share Unit Plan, as is also required by the rules of the TSX. The text of the resolution to be adopted is set out on Pages 56 to 57 of the management information circular prepared in connection with today's meeting. The French version of the resolution is on Pages 58 and 59 of the French circular. Unless there's any objection, I will dispense with the reading of the resolution. I hereby move and second that the resolution reproduced on Pages 56 and 57 of the management information circular and approving all unallocated Performance Share Units under the corporation's PSU plan be approved. Unless there are any questions, we will now proceed with voting. Great. 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 proxy holders. The 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 against button next to the name of each proposed director and next to the resolutions with respect to the unallocated stock options and Performance Share Units, respectively, and selecting the for or withhold button next to the resolution with respect to the appointment of KPMG LLP, chartered professional accountants as a corporation's auditor. We will provide registered shareholders at deliver a proxy will look approximately 1 more minute to complete the electronic ballots. Once the electronic balloting closes, the voting pages will disappear, and your votes will automatically be submitted. I will now pause for 1 minute. [Voting]

Okay. The votes have been rolling in, and I've been advised by the scrutineers that 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 has been authorized to fix their remuneration. Each of the ordinary resolutions approving the unallocated stock options under the corporation stock option plan and the unallocated Performance Share Units under the corporation's PSU plan have been duly adopted. I hereby direct, 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. 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. And now I will turn the meeting over to Eric Boyko, the President and Chief Executive Officer of the corporation; and to Jean-Pierre Trahan, the Financial Officer. And after this, there will be a question period. Please hold off your questions until after the presentation. While I'm turning over meeting over to management, the first presenter will be the Chief Financial Officer, Jean-Pierre Trahan; followed by Eric Boyko. Jean-Pierre?

[Foreign Language]

[Foreign Language] Our core segment business, consumer and radio. So we're going to present you today with the 3 segments: business, consumer and radio. So the first one, I will start with Stingray business, so building solid momentum for growth. So Stingray Business leveraged commercial experience for more than over 140,000 locations worldwide, the most compelling value proposition with innovative digital assets include in-store audio advertising, Stingray Advertising and consumer insight, Chatter, leveraging relationship with customers to increase average revenues per location. And finally, leveraging Stingray's Business network to quickly grow Stingray Advertising and revenue-generating vector for our consumers. Stingray Advertising a solution for retail media, fast-growing category. Retail Media is a marketing to consumers at near their point of purchase online or in-store. Retail Media is one of the fastest-growing advertising trends in the U.S. retail media spending. It's increasing from $31 billion in 2021 to an anticipated $61 billion by 2024. Stingray leverages its technology, curated music services and advertising sales teams to offer a retail media solution playing digital audio ads in-store. Stingray Advertising has evolved from nascent to dominant with 30,000 accessible location in the aggregate. So let's stick with advertising network in North America. So continued expansion of this network, we did the total addressable market of 300,000 locations in Canada and the U.S. Stingray Advertising and Loblaw Media team dug to launch audio advertising in Loblaw grocery stores in Canada last week. Groundbreaking agreement with Mood Media, Vibenomics, our partners, advertising division to access each other's network for a combined 25,000-plus locations in the U.S. and streamlining program mix advertising by taking advantage of Vibenomics' advanced capabilities. Expansion to other verticals will continue in 2024, as you can imagine, pet store and large-box retailers. Finally, if we go to segment number two, consumer. So strong digital growth fueling organic growth. So [ pivoted ] product offerings to become the leading music distributor in audio and video channels to SVOD and apps. Second FAST channel and connected car, we'll talk more later. The transformation and expense of Stingray Broadcast and streaming dividends support strong organic growth in the U.S. and abroad for years to come, best-in-class assets and rate management -- rate management, programming, AI and delivery technologies allow Stingray to scale across all platforms. If we go more on the SVOD and apps. So we're tapping into a market that's expected to grow by 65% to 1.5 billion subscription by 2026. Our focus and attention on profitable SVOD, and that's a key point, profitable SVOD with the B2B2C, which means really working with other partners, and newer just B2C, which will be Apple, favor partnership acquisitions over direct paid models. So customers that include our listeners, as see on the screen, goes from cable industry, Comcast, Xfinity, Bell, CA. And after that, we go all the way to the over the top, the Roku, the Amazon, the Cilq, the Vodafone. So very happy to have a diverse number of customers. Following on the SVOD, year-to-year growth of 8.9% were partnership or for sure leverage global relationship with Amazon, Cliq and other of these partners. Planning to go the SVOD space by buying or licensing content and increasing the reach across multiple platforms and markets, for example, we'll be launching with our friends from Amazon in about another 20 countries this year. So that's always very good. Stingray Classica and Qello Concerts launched on YouTube TV and on YouTube Prime channels. And finally, very excited that we're launching a calm product or Zen Life product. So we're launching Zen Life with our friends from Amazon U.S. in the fall of 2023. So maybe that will get the management team to be very relaxed. If we go to consumer, again, FAST and AVOD, new global partnership to accelerate growth, U.S. connected TV advertising growing by 25% year-over-year to $14.6 billion. The penetrated -- the connecting market by distributing channels over 3 ad-supported streaming television, which we call FAST. So FAST is the pre -- is an advertising channel you get with all your TV sets over the time. Across Canada, United States, Europe and Latin America, reaching over 100 of millions of engaged TV viewers, leveraging biggest library of music channels in the world with over 3,000 audio channels. Them is the rules, again, if you see the progression here of the FAST, FAST is growing by 38% and we'll continue to have strong growth because a lot of our partners are really, again, expanding quickly, continue aggressive distribution expansion with multiple channels and platform launches, increased number of partnerships with third parties to sell unsold advertising inventory. Finally, we finish with our latest vector that we're very excited, which is connected cars, the next frontier in the streaming services. Stingray Karaoke with massive 100,000 songs catalog is becoming an increasingly popular default value-added service in cars globally, a sector experiencing tremendous growth. Stingray signed a global deal with BYD, the largest EV manufacturer this week. Stingray announced its partnership with Harman and CARIAD, Volkswagen Group software company to bring its popular Stingray Karaoke products to audio models around the globe. And continued development with our friends from Tesla and VinFast. Again -- and then we finish with our Stingray Radio, a leading radio operator in Canada, Stingray Radio station joins Canada #1, digital musical player for advertisers iHeartCanada, [Foreign Language] performing better than its Canadian peers. Revenues are down 0.6 compared to last year. Large clients continue to wait on the sidelines and then reset fears thinking that the government never rebuilt travel, tour and casual dining increased from the prior year. Local airtime is up 3% and digital revenue growth is up 2% for the quarter compared to prior year. We do continue to drive a strong cash flow for Stingray, yielding its strategic initiatives. So with -- finally, I'll finish with our last 5 bullet points. So our investment highlights are #1 investment hype. We're a fast-growing business segment fueling organic growth, for sure, as we always say, we're in the pivot. We're pivoting from the cable industry to the -- as you can see, these new vectors. So we're still in the pivot mode. And I think we've been one of the most advanced companies that are doing it quickly. And I think every company from Disney+ to Paramount are facing the same issues. We are exporting global music distribution and rights management. That's one of our key components. That's why we get the deals with Amazon in the cars. They want to get one deal for the world. So we have more than 400 million subscribers through multiple platforms, 101 radio licenses and 160 million apps downloads and over 200 licensing relationship. Three, strong and predictable cash flow. So that's something that a lot of us accountants would like. So long-term contract and strong B2B relationship with long-term growth. Strong -- number four, strong advantage with proprietary innovative technologies and leading content curation expertise at Stingray. So it's a -- and we always think of us as a music company, but we're also very much a technology company. And I'd say, finish -- five, track record of successful acquisitions and integration, over 46 acquisitions completed, representing outlays of approximately $849 million. So this, Mr. Chairman, is a bit of our presentation. I think that we're very happy with the year we had, very happy with our first quarter. And with this, I guess, we will finish our presentation of the day, and I will let the words to you, Mr. Chairman.

Thank you very much, Eric. Very exciting stuff. And as always, great to get an update on Stingray's ongoing activities in [ the last year]. And thank you, JP, for your presentation. We will now move into 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'll now move on to the question period. Okay. Well, it seems that the presentation has been so thorough that there are no questions. And therefore, this concludes 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. This hereby concludes this meeting. Thank you, everyone, very much.