Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stingray Group Inc (STGYF, Financial) reported a 22.2% increase in revenues for its broadcasting and commercial music business, reaching CAD 60.9 million.
- The company achieved a 15.6% organic growth excluding radio, marking four consecutive quarters of double-digit revenue increases.
- Advertising revenues rose by 66% year over year, driven by Stingray's fast channels and retail media segments.
- Stingray's partnership with Vizio and other TV manufacturers significantly contributed to revenue growth in the fast channel segment.
- The company expanded its in-car entertainment offerings, launching karaoke in Ford and Neo vehicles, and introduced new video channels for BMW Group vehicles.
Negative Points
- Revenues in other countries decreased by 5.9% year over year, primarily due to reduced business-to-customer subscriptions and lower audio channel revenues.
- Stingray reported a decrease in net income to CAD 5.8 million from CAD 9.4 million in the previous year, impacted by an unrealized loss in financial instruments and negative foreign exchange effects.
- The radio segment's revenues remained flat year over year, with digital advertising sales offset by lower national airtime revenues.
- Corporate EBITDA was negative CAD 2 million in the second quarter due to higher compensation expenses.
- The company faces challenges in the US market for in-store audio, requiring significant efforts to educate the market and secure major clients.
Q & A Highlights
Q: Can you share a little bit with us in terms of maybe quantifying those new contracts in retail media?
A: Eric Boyko, President, CEO, and Director, explained that the addition of Canadian retailers like Sobi and Shoppers Drug Mart expands their national presence, allowing access to all national brands. This strategic move is expected to enhance their Canadian market reach significantly.
Q: You talk in the press release about maintaining an EBITDA margin of 35%. Are you pointing to some margin compression in the second half of the year?
A: Eric Boyko clarified that the 35% is a minimum target, not indicative of margin compression. The company is comfortable with its current EBITDA margins, which are tracking above 35%.
Q: Can you talk about the broader positioning you hope to achieve in the in-car entertainment segment?
A: Eric Boyko highlighted that car manufacturers are looking to monetize their media centers, and Stingray is well-positioned to provide audio solutions like music and karaoke. The company aims to be a key player in the in-car entertainment space, with potential for significant growth over the next decade.
Q: Can you provide a breakdown between the contribution from fast and retail media?
A: Eric Boyko noted that fast channels have a high EBITDA margin due to net revenue recognition, while retail media shares revenue with retailers. The company is seeing strong growth in both areas, with fast channels expected to continue growing significantly.
Q: How sustainable is the fast channel business overall?
A: Eric Boyko stated that Stingray is currently the number one broadcaster on all fast platforms, with plans to add more channels and platforms. The company expects continued growth in fast channels for the next 8 to 16 quarters, driven by increasing audience and monetization opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
