MONTREAL – Acquisitions and international growth continue to pay off for Stingray Digital Group which saw its third quarter revenues climb by over 12%, the company said Thursday.
For the third quarter ended December 31, Stingray posted revenues of $25.9 million, an increase of 12.3% compared with revenues of $23.1 million a year ago. The company credited the growth primarily to its acquisitions of iConcerts, Digital Media Distribution (DMD) and Much Channels combined with growth for Music Videos on Demand (MVOD) in the U.S.
Recurring revenues were up 11.4% to $21.9 million over the same period last year and remained at 84.6% of total revenues for the quarter. International revenues again posted continue solid growth and represented 46.0% of total revenues, up from 40.4% last year.
Music Broadcasting revenues increased 13.4% to $19.3 million, mainly due to the acquisitions of iConcerts, DMD and Much Channels, and the new MVOD contract signed in the U.S. Commercial Music revenues rose 9.1% to $6.6 million, mainly as a result of organic growth in music and digital signage recurring revenues and the acquisition of Nümédia in Canada.
Net income fell 16.1% to $2.7 million from $3.2 million year-over-year, which the company attributed to the change in fair value of contingent considerations that occurred in Q3 2016, and increased general and administrative expenses related to legal fees, partially offset by higher operational results, a gain on foreign exchange and lower acquisitions costs.
Adjusted net income was flat at $6.2 million, however, the net result reflects a higher adjusted EBITDA combined with a gain on foreign exchange offset by a lower change in fair value of contingent considerations, and slightly higher income taxes expenses.
Adjusted EBITDA increased to $8.7 million or 33.6% of revenues, compared to $8.0 million or 34.7% of revenues a year earlier. This 8.8% increase 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.
Stingray president, CEO and co-founder Eric Boyko said that the third quarter results were in line with the company’s expectations for the quarter and also its scenario for the fiscal year.
“The increase in revenues for the third quarter mainly derived from International markets due primarily to acquisitions combined with growth for Music Videos on Demand (MVOD) in the U.S. Consequently, international revenue increased by 27.8% to reach 46.0% of total revenue”, Boyko said in a statement. "As we indicated, we expect to finish Fiscal 2017 on a high note and for the Adjusted EBITDA margin to reach 35% in the fourth quarter as we realize anticipated acquisition synergies."
