Stingray Group Inc. (RAYA) Earnings Call Transcript

[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, I will preside at the meeting as Chairman. As was the case last year due to the impact of the COVID-19 pandemic, the Board of Directors has chosen to hold this year's general meeting of Stingray Group shareholders in a virtual setting. We sincerely hope to see you in person at next year's annual meeting. [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 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 Board members in addition to Eric Boyko and myself. We have Claudine Blondin, Karinne Bouchard, Frédéric Lavoie, Jacques Parisien, Gary Rich, François-Charles Sirois, Robert Steele and Pascal Tremblay. Also present at our Board meetings as observer is Alexandre Décary. Stingray's management team consists of Eric Boyko, Sébastien Côté, Mario Dubois, Lloyd Feldman, Valérie Héroux, Ratha Khuong, Ian Lurie, Mathieu Péloquin, David Purdy and Jean-Pierre Trahan. Now let's commence 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. 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're submitted, but will only be addressed during the question period at the end of the meeting, with the exception that questions regarding procedural matters or directly related to the motion 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. E, when you're asked to vote, you will be able to access the electronic ballot on the voting icon on 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. And to expedite the formal part of the meeting, I will move and second our motions. Okay. 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 AST Trust Company in Canada 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 8, 2021. The notice calling this meeting and the formal proxy were mailed to shareholders on or around July 5, 2021, along with the audited consolidated financial statements of the corporation for the fiscal period ended March 31, 2021 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 website as well as on the corporation's website. Our transfer agent, AST Trust Company Canada has attested to the proper mailing of the notice of this meeting, and they have been filed, 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 and 76.91% of all outstanding voting shares of the corporation are present, and therefore, a quorum of shareholders of the corporation is present and the meeting is properly called and duly constituted to the transaction of business. I received the scrutineers' report, and I direct that the formal report to 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, 2021 together with the auditor's report thereon. Copies of such documents are 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, 2021, together with the auditor's report thereon as they 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 since 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; Frédéric Lavoie; Jacques Parisien; 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 the director. And 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 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, we will proceed with voting on the 2 motions before you. As we mentioned, voting today will be conducted by electronic ballot. And now I ask that the balloting be opened to registered shareholders and duly appointed proxy holders. Okay. 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 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. [Voting]

Okay. The polls are now closed. I have also 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. And 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. 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 TXS -- TSX and filed on SEDAR. The total items of business as set out in the notice of meeting have now been dealt with. I move and second that this meeting now terminates. As there is no further business to come before the meeting, I declare the formal part of the meeting to now be concluded. Thank you for your patience and participation. Now I will turn the meeting over to Eric Boyko, the President and Chief Executive Officer of the corporation; to be followed by Jean-Pierre Trahan, Chief Financial Officer. My apologies. Jean-Pierre Trahan will present first, followed by Eric Boyko. After both presentations, there will be a question period. Please hold off on any questions until that period is done, at the conclusion of the presentations. And with that, I will now turn the floor over to Mr. Jean-Pierre Trahan.

[Foreign Language] This is Jean-Pierre. Thank you, everybody. I'll go more in market and divisional results. So we always talk about the pivot. So the pivot is real. In our case, it's pivoting from the OTT industry, cable to the new platforms, Amazon, Roku, LG, Samsung. So our growth is coming with the SVOD, the apps and the FAST channels, which are growing at a faster pace than the cable industry. So we're very excited about the switch we did. Also based on AI technology and delivery, which were very strong. Finally, the pivot also is coming forward with a strong organic sales in the U.S., U.S. will be growing in the next 3, 4, 5 years, just by the fact that we weren't as present as other media companies. So if you go step-by-step with the -- our SVOD, we hit last quarter of 572,000 subscribers, up 31%. And again, based on our partners, Amazon, Comcast, all the TV distributors, and also on our different apps, I'm very confident to achieve our 1 million subscribers at an ARPU of $8. So the SVOD business that did not exist 3, 4 years ago, will become a $100 million business, and that's growing well, and we expect it to do well also this year. Next streaming subscription, SVOD and apps. As you can see, a lot of different products, a lot of different companies we work with, all big names. Very happy with the Amazon channels. We're also launching Canada, Mexico, Brazil, India, Australia and the Nordics, so continuing international growth. And also different platforms, including car companies like Tesla, different cable operators. So you can really see the diversification of Stingray around the world. Again, in broadcast and streaming, new partnership, giving us exclusive content by Qello. Qello is the Netflix of concerts, so very happy. Also strong catalog that we own in Karaoke. We're the largest owner of Western karaoke in the world, concerts, Naturescape and also now new acquisition, Wellness. So those are mostly driven by organic sales and also by new acquisition. So if you -- in terms of acquisition, happy to talk to you about Calm Radio. Calm Radio, Canadian-based company in Toronto, one of the first to be in this type of space. Calm Radio adds over 30,000 subs for Stingray subscribers. Most important is a strong catalog of 700 hours of classical and relaxation music. And for us, a lot of cross-sell with our Stingray music app, our pay audio and TV, hotel rooms, speakers manufacturers, cars and transportation. And we will continue to invest in this space. We, at Stingray, do like, we lean back on music and that type of catalog. So finally, for our broadcast and streaming, we continue with our FAST channels. The FAST channels are the free TV channels that you have on your -- most of the times, your TV manufacturers, your Samsung, LG, other than XUMO, Peacock. And those are continuing to grow. We had a growth of 125% in the first quarter, and we expect that to grow around the world. So very excited to be one of the first players in that space, with all these different manufacturers and over-the-top platform like Pluto and Peacock. Again, you can see on this page, the growth of this platform, which is still new, up 148% over last year in terms of hours. And again, how do we make money? We are able to monetize these channels by selling ads with our partners, and we're getting right now between around $0.25 an hour of revenues which is comparable to what you get on TV cable channel. So we estimate the growth here to continue and accelerate with the launch of new platforms and new products. Finally, if we go to what we call Stingray business or our commercial services. So that business, again, is -- with COVID, was a bit on standby. But happy that we're planning and we launched a rollout of ClubCom. We have also OTF Live and many in Boston markets, many different brands in the U.S. We want a lot to be in the U.S. because we had more or less of a partnership agreement with Zoom Media. Starting January 1, we're allowed to be in the U.S. And we're expanding with Tesla locations, Subway APAC and also many customers in Europe. So I think that one, we're going to see a lot of growth this year with the opening of the markets and the fact that there's been -- most stores cannot invest. Also very strong partners in the financial sector with BMO and Scotia. So this, again, will be a strong unit for Stingray for the next couple of years. And in-store digital audio advertising, as you can -- aware, in over 100,000 locations, so we have the opportunity to reach the customer directly in the store. You're at the grocery store, you go to the pharmacy lane or go to Proctor & Gamble with different customers to really direct you to a promotion right there. The reason why we can do this now and not before is all of our boxes are connected. So it is like we have a mini-cable industry and we own access to every store. A unique situation, and I think we're going to see in the next few quarters some deployment. And I think we have a large opportunity for Canada, but also for the rest of the world. Also, we bought about 2 years ago, 1.5 years ago, our friends at Chatter. Chatter is what we call AI-driven insight. The beauty, it is really -- the text, it's really AI. And a lot of customers came on board, doing a lot of what we call pilots. You can see the names here from Couche-Tard, to Staples, to Rogers, to Pink, Fanatics, and also when we did a pilot with Nike. So lots of great opportunities. It's a great SaaS platform. And when we approach a commercial business, we offer them music, digital signage, AI. So we have a unique combination of products that I think that makes us one of the best in the world. Finally, Stingray Radio. Digital sales are up 100% year-over-year. So we're really able to monetize the air radio and the digital sales. Recovery phase in line, with all the business reopening. We expect to be back to 2 years ago. So we're -- that was one of our goals. Numbers are coming in good on a weekly basis, and we continue to say that we have the best management team in Canada. I think that because Stingray is agile, smaller, and very focused it makes us one of the best radio operators in Canada and very proud of our team. So thank you for the Radio team. So company goals. I think if we're still applying the 5-5. What's the 5-5? 5%, we want to do by acquisition, 5% increase in sales organic. So #1 is really -- it talks about our M&A. We will continue to -- we do about $300 million. So $15 million of new sales will come from M&A. SVOD, like have we seen, apps, ad-based products, business services, Stingray business. So we have a lot of nice tuck-ins to come in, and that's one of our goals. This was a bit on hold during COVID. Second thing is working on the organics. So organic is, we'll continue to grow our advertising model, mainly through the FAST channels. So I think that's coming forward. I think we've shown that growth in Q1. For sure, also point 3, commercial services. When we say Commercial in Stingray business, U.S., plus you add our digital signage, plus you add the insight offering and in-store audio advertising. The SVOD, which we talked about before, SVOD will continue to grow, our partners are growing worldwide. The space is growing. So I think we will see a lot of growth coming there. And finally, we continue to -- with our over 120 engineers, develop the best-in-class video apps, web-based solutions and mobile app. So our goals to deliver 5% organic, 5% through acquisition based on base sales of $300 million. So we're confident that we can achieve those goals this year, post COVID. We are very happy to be back in business, like we said on our investor call. And thank you very much for being here today. Thank you for our Chairman, for all of our employees, for our colleagues for this meeting. And if it's okay, I'll pass it back to you, Mr. Chairman.

Thank you very much, Eric, and thank you, Jean-Pierre. Very interesting presentation. I ask that anyone who would like to ask a question please do so in writing by using instant messaging feature on the virtual interface. We will answer as many question as time permits. [Operator Instructions] We will now give attendees a moment to take in their questions. As that's happening, I'll say that for each question we answer, we will summarize the question and we will read out the name of the person who asked us that question. And if applicable, the entity such person represents. We'd like to remind you that questions which were already answered or that are redundant or repetitive may not be published or answered. Okay. Seems we're light on questions today. This concludes the question period and also concludes this year's Annual General 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. Thank you very much.