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 this meeting as Chairman. [Foreign Language] The meeting will consist of 2 parts. The first of which I will conduct will be the legal part. After this, there will be a presentation by Jean-Pierre Trahan, the Chief Financial Officer of Stingray; and Eric Boyko, the President and Chief Executive 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 being: Claudine Blondin; Karinne Bouchard; Mélanie Dunn; Ian Lurie; Gary Rich; François-Charles Sirois; Frédéric Lavoie; Robert Steele; and Pascal Tremblay. Stingray's management team consists of Eric Boyko, Mario DuBois, Lloyd Feldman, Marie-Helene Fournier, Valérie Héroux, Steve Jones, Ratha Khuong, Mathieu Péloquin, David Purdy and Jean-Pierre Trahan. Now let's begin with the legal portion of the meeting. As this meeting is held virtually via live webcast, it's helpful to set out a few rules for the orderly conduct of this part of the meeting. Firstly, 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 questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. For the purpose 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're asked to vote, you will be able to access the electronic ballot in 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 purpose 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 25, 2024. The notice calling this meeting and the form of proxy were mailed to shareholders on or around July 8, 2024, along with the audited consolidated financial statements of the corporation for the fiscal period ended March 31, 2024, and related MD&A to the shareholders of the corporation who requested such documents. Unless there's 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 plus 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 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 67.56% 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've received the scrutineer's report, and I direct that their formal report via 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, 2024. 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, 2024, 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 and to 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; Ian Lurie, Gary Rich, François-Charles Sirois, Robert Steele, Pascal Tremblay and myself, Mark Pathy, have been nominated as directors of 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 final item of business for the meeting is the appointment of KPMG LLP, Chartered Professional 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 now move on a second that KPMG LLP, Chartered Professional Accountants be appointed as auditor of Stingray Group until the close of the next annual meeting at the directors be authorized to fix the remuneration. 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 appointed proxy holders. The polls are now open. 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 selecting the for or withhold button 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, voting pages will disappear, and your votes will automatically be submitted. We'll now take a 1-minute pause while we wait for voting. [Voting]

Okay. Great. It looks like all the vote are in. I've been advised that the advised by the scrutineers of 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 the remuneration. I hereby 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. I now 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 Jean-Pierre Trahan, the Chief Financial Officer and Eric Boyko, the President and Chief Executive Officer of the corporation. And after this, there will be a question period. Please hold off on all your questions until after the presentation. Thank you.

[Foreign Language]

[Foreign Language] Thank you, JP. So I'll do a quick follow-up on the market and divisional update. So I think this -- I like this slide because it really shows all of our B2B partnerships. So we have 6 segments. We have a lot of partners in the fast channels. We have the retail media, which are our retailers. We have retail media, which are the advertisers like Pfizer. We have our in-car business right now with Tesla, BYD, Audi and a lot more companies that will join us in this year. And we have our SVOD CPS customers around the world. And finally, we have our business commercial customers. So we really can see the diversity of Stingray's B2B business. In terms of Stingray business, that's where we do commercial music and videos and stores. Again, we signed our largest agreement ever with BMO with over 1,900 locations, and we're happy to announce in Q1 that we have a deal with VXT. VXT being the platform of Samsung for all commercial location. We expect to be in tens of thousands of locations with this transaction. We're happy to be leveraging our relationship with customers and to be able to also start doing the advertising, which we'll talk more in the next slide and also being able to leverage our customers to do both audio and video in the future. So very nice growth in this sector. If we go to the next page, which is Stingray advertising. You can see we have a very large growth. We had a 40% growth last year. So right now, our market is -- we have access to 30,000 locations in North America, U.S. and Canada, out of 300,000 locations. We're very happy with this footprint. And the way we want to increase our revenues is in 4 ways. So first of all, to be able to increase our pricing, increase their CPM, so with more time, we're getting better at it. Also, most important, improve our fill rate. We have a lot of inventory. We have a lot of people visiting us, so increasing our fill rate and also to be able to increase the number of ads, which is a number of different new customers and advertising. And finally, we also would like, and I think we talked about this on our call today, we'd like to expand our network, mostly in Canada and the U.S. So here you get to see a good vision of who our retailers are. So I think it's pretty impressive, 30,000 locations. And what's most impressive is we reach over 925 million monthly shopping visits. Almost 1 billion people a month come in our stores or our partner stores. So we have an incredible network. And our biggest challenge is to how do we vitalize this. People are used to radio, people use the TV, people use out-of-home, but the retail media is a new segment. Now, the FAST channels, very exciting like we sit to the market today. We expect to double our sales this year. And we grew last year in Q1 from 16 million hours to 55 million hours per quarter, so incredible growth of almost 300% or 232.9%. So very happy and a lot of new partners. This segment is growing. So we're in the right position and most fast providers, Samsung, LG, Vizio, Roku, Pluto. They all want our channels and the audio channels. So we're very excited for the future about this segment. We've also had good news. We've launched Qello, TikTok, Classic Rock and greater hits with Roku. We work on the Roku platform. So we launched with them in June, great new partner. And also we've launched Zen Life, now available on Vizio, Watch free, Samsung and Holiday Escape is on Samsung, LG, Plex and Google TV. So I think what's important here is we're launching new channels, that's one vector and more platforms. And we feel that the cable industry or the good old MSO industry will also be going into the faster fast channel direction. Now going to cars. So cars price is very exciting. Now we have the luxury to launch with Tesla. And now we're freshly with our friend at Audi, we're with CARIAD. We've launched them with many partners. And like I said on the call, we are doing multiple apps or multiple OEMs in the next -- right now that we're working on. And hopefully, in the next calendar year, we'll be able to announce some great new partnership. But I think Stingray is the best positioned company in the world in terms of providing music, Karaoke and com radio for every car manufacturer. And yes, like I said, Tesla announced that they're also adding mics, BYD will be adding mics, Toyota want mice. So you'll be able to say Karaoke with a microphone in your car. So very good news for their kids, they'd be bad news for the parents. On Stingray Radio. So Stingray Radio for us has been -- it's a challenging market. I think radio was down about 5%, generally, but we've been able to make a big pivot from just selling radio to also -- so radio sales are up 1.3%, driven by a 31% increase in digital revenue. So for us, is are we able to get the radio team and our friends and partners to also be able to sell retail media. And if we're able to achieve this pivot, then we're going to be seen as a unique USP unique selling proposition that will make us very different from all the other radio players in Canada. And we continue also to gain market share, and we have a very focused and strong management team. So we're able to meet the market. So again, radio is for us, continue to provide strong cash flow and fueling all of our strategic initiatives. So we're lucky to report Mr. Chairman that all 4 segments seems to be humming along. We're doing well. The team seems to be happy, our HR scores are high. So with this we're happy about the business. Finally, most important point, the most important but very excited because it's new. We've officially launched our first ESG or sustainability report. And we wanted to start with only like 5 or 6 slides. Finally, we finish with like 30 slides. So the team worked very hard. Please go to our website, and I think in the press release, I think our focus, our 3 pillars are simple social prosperity. Second is a responsible business. And third is environmental engagement, we will not provide any goals and numbers this year. But next year, once we're ready and we have more experience, I think our strategy will be to provide numbers to the market. But generally speaking, after doing this report, the first time, we were very happy with what we've already achieved, and we feel that the Stingray bi-culture and the radio team also were very much involved in the communities. We provide a lot of diversity and just a few of the numbers. Last year, we gave 1 million of donations. The radio team raised an extra $8.5 million for different causes including the fires in Alberta last week. And the radio team got together and we raised almost $0.25 million in a few days to help the fires in Alberta. We gave away 7.5 million hours of free time and we supported over 250 different causes. So very happy of what we're doing currently and want to engage more and do more for the future. And again, thank you for the team working on this. I think we're moving in the right direction. So with this in mind, Mr. Chairman, I've got nothing else to report. And I think that very happy with the year. And hopefully, this year will be even better and stronger.

Well, thank you very much, JP and Eric. I now 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. When asking your question, please state your name, the entity you represent, if any, and confirm whether you are a shareholder, a duly appointed proxyholder or a guest. Please limit your questions to topics relating to today's subject matter and keep your questions short and to the point. We will now give attendees a moment to take your questions. For each question we answer, we'll summarize the question, read it out loud with the name of the person who asked the question and if applicable, the entity such person represents. We would like to remind you that questions which were already answered or that are redundant or competitive may not be published or answered. So fire away with your questions? Okay. Well, I guess everyone did a very thorough job, and we don't seem to have any questions or any questions actually. So this concludes the question period. And it 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 all their hard work and dedication and a great year. Thank you very much.