MONTREAL — Stingray Digital Group reported an 18.9% increase in revenue for the first quarter of its 2018 fiscal year, achieving $29.2 million in revenues compared to $24.5 million in the same quarter last year.
However, the company’s net income decreased to $0.3 million or $0.01 per share (diluted), compared to $2.0 million or $0.04 per share (diluted) in Q1 2017, representing a 86.3% decrease year over year. After adjustments, Stingray’s adjusted net income was reported to be up 9.5% to $5.7 million or $0.11 per share (diluted), compared to $5.2 million or $0.10 per share (diluted) in the same quarter last year.
“We are pleased to report solid first quarter results with revenue growth of 18.9% supported by 29.5% and 65.1% growth in the international and U.S. markets, respectively. Growth continues to be fuelled by a combination of acquisitions and organic growth of 6%. Adjusted EBITDA increased by 16.3%, to $9.2 million,” said Eric Boyko, president, CEO and co-founder of Stingray, in a press release announcing the company’s financial results.
Boyko said Stingray has pursued a multifaceted diversification strategy to strengthen its position as a multiplatform music provider and to expand its global reach. In fact, for the first time this quarter, revenues from outside Canada represented more than 50% of the company’s total revenue, Boyko said.
“The success of our multiplatform music, capacity to leverage and curate our content and our efforts to expand brand awareness cannot be better exemplified than by the Stingray Music mobile app. Recently, we achieved an important milestone with two million downloads, representing a two-fold increase over about a year. Over the past 12 months, the app registered 3.3 million monthly visitors and the level of engagement with listeners is exceptional, reaching 9.2 hours a week, well above the industry average. Our global efforts to expand the reach of the app continue with a recent launch in Singapore,” Boyko said.
“On the strength of the first quarter, we continue to look forward to a solid year. As we rapidly expand our business, the revenue mix is somewhat changing our margin profile. Clearly, the emphasis remains on generating high margins and significant free cash flow,” Boyko added.
Stingray’s cash flow from operating activities amounted to a deficit of $(0.6) million in the first quarter of 2018, versus $2.7 million a year earlier, representing a decrease of 121.6%. However, the company’s adjusted free cash flow increased to $7.2 million, up 21.8% from $5.9 million for the same period a year ago.
As of June 30, 2017, Stingray had cash and cash equivalents of $3.2 million and a revolving credit facility of $100.0 million, of which approximately $41.9 million was unused, allowing the company to pursue strategic acquisitions and achieve its growth objectives, Stingray said in its press release.
Stingray attributed its overall revenue increase primarily to the acquisitions of Israel-based Yokee Music and Classica, combined with growth from its Music Broadcasting business with business-to-consumer (B2C) Karaoke apps and subscription video-on-demand (SVOD) services in the United States, as well as additional equipment sales primarily related to digital signage in Commercial Music.
The company’s Music Broadcasting revenues increased 22% to $21.8 million, mainly due to the acquisitions of Classica, Much channels and Festival 4K in fiscal 2017, as well as Yokee Music and U.K.-based C Music in May 2017, plus organic growth in the U.S. market, primarily related to the aforementioned B2C Karaoke apps and SVOD services, Stingray said.
Commercial Music revenues rose 10.4% to $7.4 million, mainly as a result of organic growth in sales of equipment and installation primarily related to digital signage.
Finally, on August 1, Stingray increased its quarterly dividend by 11.1% to $0.05 per subordinate voting share, variable subordinate voting share and multiple voting share. The dividend will be payable on or around September 15, 2017, to holders of the aforementioned shares on record as of August 31, 2017.
To access Stingray’s full financial results for Q1 2018, click here.
