MONTREAL — Music service provider and broadcaster Stingray Group announced Wednesday its 2020 third quarter revenues increased 14.9% year over year, primarily driven by last year’s acquisition of Newcap Radio.
“Despite lower radio sales related to challenging market conditions in Western Canada, our radio segment continues to perform well in its other key markets such as Toronto and Ottawa,” said Eric Boyko, president, CEO and co-founder of Stingray, in the company’s news release.
The company’s overall revenues increased to $81.3 million in Q3. Looking at results by country, Stingray’s revenues in Canada increased 23.1% to $57.5 million, and in the United States by 8.4% to $9.6 million. The company’s revenues in other countries decreased in Q3 2020 by 6.4% to $14.2 million and the company attributed this to lower commercial music sales and to the termination of some low-margin contracts.
Stingray’s total broadcasting and commercial music revenues in the quarter increased 2.6% to $39.9 million, primarily due to organic growth in subscriptions, which grew to 392,000, up 10.1% year over year, the company said. Stingray’s radio revenues in the third quarter increased 32.7% to $41.4 million.
Adjusted EBITDA in Q3 2020 increased 14% to $31.0 million and adjusted EBITDA margin for Q3 2020 was 38.2% compared to 38.5% for Q3 2019.
Stingray’s net income in Q3 2020 was $8.1 million, compared to a net loss of $18.1 million in the same quarter last year. The difference was mainly due to the non-recurring CRTC tangible benefits expense of $25.3 million related to the NCC acquisition recorded in Q3 2019.
Cash flow generated from operating activities amounted to $28.8 million in the quarter, an increase of 108.8%.
As of December 31, 2019, Stingray had cash and cash equivalents of $7.3 million, a subordinated debt of $39.6 million and credit facilities of $380 million, of which approximately $48.3 million was available.
“Q3 results were in-line with our expectation… Our solid cash flow generation for the quarter and year to date, coupled with a positive business outlook, provided support for an increase in the dividend to $0.075 per share, 15.4% above the same quarter last year. Furthermore, we took advantage of a lower share price to acquire $6.1 million in shares during the quarter,” said Boyko, in the news release.
After the company’s Q3 2020 quarter ended, on February 3, 2020, Stingray and Music Choice executed and exchanged a settlement agreement which ends the two companies’ patent litigation in the United States and settles all claims connected with that litigation. The settlement amount of US$13.3 million (CAD$17.2 million) will be paid in two equal instalments: the first payment was made on the date of settlement and the second payment is to be made on or before February 15, 2021. Accordingly, an amount of $17.1 million was booked as part of the acquisition, legal, restructuring and other expenses in Q3 2020, Stingray said in its quarterly report. The company says the terms of the settlement do not impact the services it offers currently in the United States, which will continue uninterrupted.
Stingray’s full financial report for its Q3 2020 fiscal quarter can be found here.
