MONTREAL — Stingray Digital Group saw a 16% increase in revenues in the first quarter of its 2019 fiscal year, primarily due to strong growth in revenues in the United States and other countries where it has expanded its business during the last 12 months.
Overall, Stingray’s revenues increased 16.1% to $34.5 million in the first quarter of 2019, compared to $29.7 million in the first quarter of last year. However, Stingray’s Canadian revenues actually decreased 6.2% to $13.7 million (representing 39.6% of its total revenues) in the first quarter of 2019, due to less equipment and installation sales related to digital signage, the company said in a news release announcing its Q1 2019 results.
In comparison, the company’s US revenues increased by 74% to $8.2 million (23.7% of total revenues), and its revenues in other countries increased 21.1% to $12.6 million (36.7% of total revenues).
Stingray said its overall increase in revenues was primarily due to organic growth of subscription video-on-demand (SVOD), combined with its acquisition of Qello Concerts in January, as well as Satellite Music Australia (SMA) and SBA Music a year ago. In particular, growth in SVOD and the Qello Concerts acquisition contributed to Stingray’s music broadcasting revenues increasing 16.5% to $26.0 million in the first quarter of 2019, while the acquisitions of SMA and SBA helped the company increase its commercial music revenues by 15% to $8.5 million in Q1 2019, Stingray said.
More recently, during the first quarter of its 2019 fiscal year, Stingray announced on May 2 it was acquiring Newfoundland Capital Corporation, owner of Newcap Radio, in a deal valued at approximately $505 million. The acquisition is still subject to regulatory approval and has not been completed.
In addition, after Q1 2019 ended, on August 3 the company announced it had made an unsolicited offer of US$120 million to purchase New York-based Music Choice, a general partnership that produces music programming and content for digital cable TV, mobile phone and cable modem users. The offer has not yet been accepted and remains open until August 31, Stingray said.
Also after the first quarter of 2019 ended, Stingray announced August 1 it has acquired Toronto-based Novramedia, a leader in the design, development and implementation of digital media solutions.
Returning to Stingray’s Q1 2019 financial results, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of 2019 increased 21.9% to $11.2 million (or 32.4% of revenues), compared to $9.2 million (or 30.9% of revenues) a year earlier.
Stingray reported a net income of $1.3 million for the first quarter, or $0.02 per share (diluted), compared to $0.3 million or $0.01 per share (diluted) for the same period of last year. This increase was mainly attributable to higher operating results and positive change in fair value of investments, partially offset by negative change in fair value of contingent consideration and higher depreciation of property and equipment, Stingray said. Adjusted net income was $5.9 million, or $0.10 per share (diluted), compared to $5.7 million or $0.11 per share (diluted) a year ago.
Stingray said its cash flow generated from operating activities increased to $6.9 million in the first quarter of 2019 from $0.6 million of cash used for operating activities a year earlier. Adjusted free cash flow decreased to $6.2 million, from $7.2 million for the same period a year ago. The company said this decrease was mainly related to higher capital expenditures due to non-recurring leasehold improvements and foreign exchange loss, partially offset by higher adjusted EBITDA.
As of June 30, 2018, Stingray had cash and cash equivalents of $4.3 million and a revolving credit facility of $100 million, of which approximately $52.1 million was unused, the company said.
“We are pleased with our results for the quarter in light of organic growth of 7% and the expansion of our adjusted EBITDA margin which translated into adjusted EBITDA growth of 22% year-over-year. Furthermore, revenues from outside of Canada reached 60% for the quarter fuelled by very solid growth in the U.S., reflecting the contribution of SVOD and the acquisition of Qello Concerts, as well as continued growth in other countries,” said Eric Boyko, president, CEO and co-founder of Stingray, in the news release.
“At the end of June, we moved another step closer to our transformative acquisition of Newfoundland Capital Corporation (NCC). The Competition Bureau of Canada issued a favourable Advanced Ruling Certificate pursuant to section 102 of the Competition Act, the shareholders of NCC voted in favour of the transaction and we now anticipate a favourable decision by the Canadian Radio-Television and Telecommunications Commission (CRTC) in the coming months. Once completed, Stingray will become Canada’s largest public independent media company. Furthermore, NCC will provide robust free cash flow generation which is expected to support Stingray’s ambitious growth strategy and dividend policy,” Boyko concluded.
To access Stingray’s full financial statement for its Q1 2019 fiscal quarter, click here.
