MONTREAL — Although its net income and cash flow are down from its Q4 2016 results, Stingray Digital Group reported on Wednesday a Q1 2017 revenue increase of 23.4% when compared to the first quarter of 2016.
Stingray attributed its first quarter revenue increase, to $24.5 million in Q1 2017 from $19.9 million in Q1 2016, to its acquisitions of iConcerts, Brava Group, Digital Media Distribution (DMD) and Nümédia, combined with commercial music growth in Canada.
The company’s Commercial Music revenues increased 15.3% to $6.7 million, mainly as a result of music and digital signage recurring revenues, the company said in a news release announcing the quarterly results. Furthermore, Stingray’s Music Broadcasting revenues rose 26.7% to $17.9 million, primarily due to its recent acquisitions and new contracts signed in Latin America and the Middle East, the company said.
Stingray’s recurring revenues increased 24.1% to $21.4 million in the first quarter of 2017 over the same quarter in 2016 and accounted for 87.2% of total revenues for the quarter. The company said its international revenues also posted solid growth.
Adjusted EBITDA for Q1 2017 rose to $7.9 million or 32.1% of revenues, compared to $7.2 million or 35.9% of revenues a year earlier, Stingray reported. The 10.2% increase in adjusted EBITDA was mainly due to the acquisitions realized in its 2016 fiscal year, which were accretive, offset by higher general and administrative expenses related to Stingray’s international expansion, the company said.
Stingray reported a net income of $2 million for the first quarter of 2017, or $0.04 per share (diluted), compared to a net loss of $1.8 million, or -$0.05 per share (diluted) for the same quarter last year. The company said the net income increase was primarily due to one-time IPO expenses and CRTC tangible benefits expenses incurred in Q1 2016, and higher Q1 2017 operating results, offset by a change in fair value of investments and higher income taxes.
Cash flow from operating activities amounted to $2.7 million in the first quarter of 2017, compared to $4.1 million in Q1 2016. Stingray said the 33.5% decrease was mainly due to higher account receivables and the timing of payments of account payables. Its adjusted free cash flow for Q1 2017 actually increased 11.4% to $5.9 million, compared to $5.3 million for the same period a year ago, the company said.
Stingray reported that, as of June 30, 2016, it had cash and cash equivalents of $3.2 million and a revolving credit facility of $100 million, of which approximately $59.5 million was unused, allowing it to pursue strategic acquisitions and achieve its growth objectives, the company said.
On August 2, 2016, Stingray increased its quarterly dividend by 14% to $0.04 per share, which will be payable on or around September 15 to holders of subordinate voting shares, variable subordinate voting shares and multiple voting shares on record as of August 31.
“The pipeline of acquisition opportunities remains significant and we expect to maintain the pace of our acquisition program in the current fiscal year. In the past 12 months, we have completed acquisitions which have significantly diversified and enhanced our portfolio of digital audio, video services and live concerts. Furthermore, acquisitions have also allowed us to establish a solid footprint in Asia. By 2020, our goal is for international revenues to reach 70% of total revenues,” Eric Boyko, president, CEO and co-founder of Stingray, said in the company’s news release.
“The music industry remains in flux but we strongly believe that we have a sustainable and profitable business model. The launch of our free mobile application combined with more than 2,000 Vibe channels available in Canada, Latin America and the Netherlands have attracted a growing and younger audience to Stingray Music. We are proud to report that the Stingray Music Mobile App has reached 1 million downloads, doubling its user base in only one year,” Boyko concluded.
