MONTREAL – Stingray credited its recent acquisition of Newfoundland Capital Corporation Inc. (NCC) for a 101.6% jump in third quarter revenues, however, the deal also weighed down profits.
For the third quarter ended December 31, Stingray posted revenues of $70.8 million, double the $35.1 million recorded a year ago. In addition to the NCC acquisition, revenues were also powered by the company’s acquisition of DJ Matic and organic growth in SVoD and B2C apps.
SVoD reached a new high of over 356,000 subscribers in the quarter, up from 316,000 in the prior quarter. SVoD monthly revenues increased 25% to $3.2 million compared to the second quarter of fiscal 2019, and average revenue per user increased 15% to $9.07 from $7.91 in the same period last year.
Recurring revenues were up 15.9% to $33.4 million year-over-year. For the quarter, Canadian revenues increased 188.2% to $46.7 million (66.0% of total revenues) due to the acquisition of NCC, United States revenues increased 25.5% to $8.8 million (12.5% of total revenues), and revenues in Other Countries increased by 28.3% to $15.2 million (21.5% of total revenues).
Broadcasting and Commercial Music revenues increased 10.8% to $38.9 million, mainly due to the contribution from the acquisitions of DJ Matic and Novramedia and, to a lesser extent, to revenues from B2C apps and SVoD, partially offset by lower non-recurring equipment and installation sales related to digital signage. During the quarter, existing operations excluding non-recurring equipment and installation sales related to digital signage experienced organic growth of 2%, which also contributed to the increase in the segment's revenues.
Radio revenues represented $31.2 million for the third quarter of 2019 which is attributable to the contribution from the acquisition of NCC, since the company started to recognize results on October 26, 2018, the date of the closing of the transaction.
Stingray reported a net loss of $18.1 million compared to a net income of $0.7 million in the same period last year, due primarily to the non-recurring CRTC tangible benefits expense of $25.3 million related to the NCC acquisition, higher interest and acquisition expenses, partially offset by higher operating results.
Adjusted net income was $12.4 million, as higher operating results were partially offset by higher interest expenses.
“As anticipated, the transformational acquisition of NCC had a significantly positive contribution on our third quarter results,” said Stingray president, CEO and co-founder Eric Boyko, in a statement. “Going forward, we will pursue our integration of NCC by leveraging important cross-selling opportunities and generating operational synergies. Our goal remains to become the leading provider of curated SVoD music content on B2B and B2C platforms. While the company will continue to strike a balance between dividend payments and acquisitions, on a short-term basis, our capital allocation strategy will primarily focus on reducing our leverage.”
Effective February 6, John R. Steele was appointed to Stingray’s Board of Directors replacing David Purdy who resigned as a director, but remains Chief Revenue Officer. Steele, who was with NCC and its subsidiary Newcap since 1988, is president of Steele Hotels Limited which operates six locations throughout Newfoundland and Labrador.
In addition, Marie Ginette Lepage, who was named global sales and mobile solutions SVP in 2017, “will no longer serve as an executive of the corporation,” added the news release containing the financial report.
Click here for Stingray’s complete third quarter financial results.
