MONTREAL – Despite a drop in quarterly profits, Stingray Digital Group credited acquisitions and international growth for a 15.1% jump in second quarter revenues, the company said Thursday.
For the second quarter ended September 30, Stingray generated revenues of $24.5 million, up from $21.3 million a year ago, which is said was primarily due to the acquisitions of iConcerts and Digital Media Distribution (DMD) in Fiscal 2016 combined with growth in commercial music in Canada.
Recurring revenues were up 14.9% to $21.6 million over the same period last year and remained at 88% of total revenues for the quarter. International revenues again posted continue solid growth and represented 42.7% of total revenues, up from 38.5% last year.
Music Broadcasting revenues increased 15.3% to $18.0 million, mainly due to the acquisitions of iConcerts and DMD, and new contracts signed in the U.S. Commercial music revenues rose 14.6% to $6.5 million, mainly as a result of organic growth in music and digital signage recurring revenues and the acquisition of Nümédia, which generated additional recurring music revenues and non-recurring revenues related to equipment sales.
Net income fell 84.8% to $1.4 million from $9.2 million year-over-year, which the company attributed to the one-time gain on fair value of AppDirect of $7.5 million and the change in fair value of contingent considerations, both of which occurred in the second quarter of last year, plus increased general and administrative expenses related to legal fees, acquisitions and settlements.
Adjusted net income dropped 12.8% to $5.4 million from $6.2 million in the same period last year, primarily due to the higher change in fair value of contingent considerations and higher foreign exchange gain recognised in the second quarter of Fiscal 2016.
Adjusted EBITDA increased to $8.2 million or 33.5% of revenues, compared to $7.6 million or 35.8% of revenues a year earlier. The 7.8% increase in adjusted EBITDA was primarily due to the acquisitions realized in Fiscal 2016 and 2017, partially offset by higher operating expenses related to international expansion. The decrease in EBITDA margin was mainly related to recent acquisitions from which future synergies are expected in upcoming quarters.
“We are pleased with our second quarter results which include a 15.1% increase in revenue and Adjusted EBITDA of $8.2 million. For the quarter, Adjusted EBITDA margin reached 33.5%, a notable improvement over the 32.1% reported in the first quarter of Fiscal 2017 and in line with our current scenario for a gradual improvement throughout the year on a sequential basis”, said Stingray president, CEO and co-founder Eric Boyko, in a statement. “As indicated before, incremental synergies from acquisitions completed in Fiscal 2016 will support the gradual margin improvement.”
Boyko added that Stingray sees “many opportunities to expand its multimedia content” and that he expects to “maintain the pace of our acquisition program” for the remainder of the current fiscal year.
