[Foreign Language] Everyone, thank you for joining us on Stingray's conference call for the first quarter ending June 30, 2016. Today, Eric Boyko, President and Chief Executive Officer and Co-Founder; and Jean-Pierre Trahan, CFO, will be presenting Stingray's financial and operational highlights.

Our press release reporting Stingray's first quarter results was issued this morning before market opened. Our press release, MD&A and financial statement for the quarter are available on our investor website at stingray.com and on SEDAR.

I will now give you the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operation and performance are subject to risk and uncertainty, and actual results may differ materially.

These risks and uncertainties include but are not limited to the risk factors identified in Stingray's Annual Information Form dated June 16, 2016, which is available on SEDAR. The corporation specifically disclaims any intention or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Accordingly, you're advised not to place undue reliance on such forward-looking statements. Thank you.

I'll turn the call now to Eric.

Thank you, Mathieu. Good morning, everyone.

Before I provide you with key financials and operational highlights for first quarter of fiscal 2017, I want to say that later this morning, we will be hosting our first Annual Shareholder Meeting as a public company. So you're all invited to join us, but the meeting is in Montreal.

So we started fiscal 2017 on a solid note with revenues and adjusted EBITDA showing strong performance over last year. Our results reflect a combination of organic growth and the contribution of acquisitions in the international markets, which now represents 43% of total revenues.

As we indicated before, we still have synergies to capture from the acquisitions completed in fiscal 2016. And we have about $3 million of synergies to be completed by Q3, Q4.

These synergies combined with cross-selling opportunities and cost reduction will help us bring back our EBITDA margins to 35%. So we're still on trend to come back to 35% margin.

The pipeline of acquisitions. Opportunities have remained significant, and we expect to maintain the pace of acquisition program in the current fiscal year.

As our acquisition program primarily targets international market, our goal is for our international revenues to reach 75% of total revenues by 2020. We are quite pleased with our results of the quarter, which continued to show a solid performance from our international market.

Let me share some of the key highlights. First, revenues increased 23.4% to $24.5 million, and adjusted EBITDA increased 10% to $7.9 million.

The increase was primarily due to the acquisitions of iConcerts, Brava Group, Digital Media Distribution and Nümedia combined with the commercial music growth in Canada. Second, international revenues represent 43% of total revenues, an increase of 56% over last year.

As I mentioned earlier, we continue to gain momentum in international markets via acquisitions and organic growth. Third, we posted recurring revenues of $20.4 million or 87% of our revenues, representing an increase of 24% over last year.

Our goal remains for recurring revenues to represent 85% to 90% of our total revenues. Fourth, adjusted free cash flow increased to $5.9 million compared to $5.3 million last year.

The increase was mainly related to lower financial costs, lower CapEx, partially offset by higher income tax and foreign exchange loss. With regards to Stingray Music mobile app user base, we are extremely pleased by the growing level of penetration.

In July 2016, the free app has reached 1 million downloads, doubling its user base over 1 year ago. Even more interesting, every week, users spend an average of 5 hours listening to their favorite track and artists on the mobile app.

This level of engagement is far above industry average. On June 21, 2016, we announced the acquisitions of 4 of The Bell Media popular music video channels, MuchLoud, MuchRetro, MuchVibe and Juicebox for a consideration of $4 million.

Following the acquisition, the 4 channels will be reintroduced under Stingray brand. On July 7, 2016, we strengthened our presence in the Asia Pacific, quite a pivotal region, with the opening of our regional headquarter in Singapore.

This launch follows the recent acquisitions of iConcerts, a television channel that reaches more than 250 million households and DMD Music in Australia. Finally, with the good results, the Board of Directors decided to increase the quarterly dividend by 14% to $0.04 per share per quarter.

It represents a 32% increase of the annual dividends since the IPO, and it shows our intent to return cash to our shareholders. In conclusion, we are focused on driving synergies from acquisitions while maintaining an active acquisition program.

So I will let JP Trahan go over the financials.

Thank you, Eric. Good morning, everyone.

Before I begin, let me remind you that all amounts are expressed in Canadian dollars unless otherwise indicated. Stingray generated revenues of $24.5 million in the first quarter, an increase of 23.4% compared with revenues of $19.9 million a year ago.

The increase was primarily due to acquisition combined with commercial music growth in Canada. Recurring revenues were up 24.1% to $21.4 million or 87% of revenues from $17.2 million.

When compared with last year, recurring revenues as a percentage of total revenue were stable. Music broadcasting revenues increased 26.7% to $17.9 million primarily due to the acquisition of iConcerts, Brava Group and Digital Music Distribution as well as new contracts signed in Latin America and the Middle East.

Commercial music revenues rose 15.2% to $6.7 million, mainly as a result of music and digital signage recurring revenues and the acquisition of Nümedia. The acquisition also contributed additional nonrecurring revenues related to equipment sales.

Revenues generated in Canada increased 6.8% to $14.1 million in the first quarter, and international revenues were up 56% to $10.5 million during the same period. Growth in Canada was mainly related to commercial music, and the increase in international revenues was mostly due to acquisition and new contracts, as mentioned before.

Adjusted EBITDA was up 10.2% to $7.9 million from $7.2 million a year earlier. The increase was primarily due to the acquisition realized in fiscal 2016, offset by higher general and administrative expenses related to the corporation international expansion.

The acquisition was accretive, but additional synergies will be realized over the next few quarters, as Eric indicated. Adjusted EBITDA margins decreased to 32.2% from 35.9% a year ago, mainly due to cost comprised in recent acquisitions.

We expect our margin to improve progressively with potential synergies. For the first quarter, the corporation recorded net income of $2 million or $0.04 per diluted share compared to a net loss of $1.8 million or $0.05 per diluted share for the same period in fiscal 2016.

The increase was mainly due to onetime IPO expenses and CRTC tangible benefit expenses in Q1 2016 and higher Q1 2017 operating results offset by a change in fair value of investment and higher income taxes. Adjusted net income increased 8.9% to $5.2 million, or $0.10 per diluted share, compared with $4.8 million or $0.12 per diluted share a year ago.

The increase was mainly due to recent acquisition, partially offset by higher income tax expenses. Cash flow from operating activities amounted $2.7 million in the first quarter versus $4.1 million.

The decrease was mainly due to the negative net change in working cash capital items associated with higher account receivables related to equipment and labor, nonrecurring sales, and timing of payment of trade payables, partially offset by higher operating results and lower interest paid. Adjusted free cash flow increased to $5.9 million compared to $5.3 million for the same period a year ago.

The increase was mainly related to lower interest paid and lower capital expenditures, partially offset by income tax paid and foreign exchange loss. Looking at our financial positions, Stingray concluded the first quarter with a cash and cash equivalent of $3.2 million.

Our net debt position was $37.2 million, excluding contingent considerations, resulting in a net debt to last 12 month adjusted EBITDA ratio of 1.18. As of June 30, 2016, the corporation had $100 million revolving credit facility, of which approximately $59.5 million was unused, allowing it to pursue strategic acquisition to achieve its growth objectives.

I'll now turn the call back to Eric.

Good. So happy to be on the call today, and happy to answer your questions.

And happy to see if any of you can be at our 11:00 meeting at the -- our GM. So questions, everybody.

So, good, solid Q1. Eric, revenues declined sequentially, I guess, as we'd expected due to FX and the lower nonrecurring revenues.

Besides M&A, which you certainly highlighted, anything worth noting in terms of other moving pieces in the Q1 and maybe you can speak for organic growth.

For sure, on the FX part of the hit on sales was about $600,000. And also, what also hit our numbers is, we have a contract with Air Canada, which is we do shared services and marketing.

And accounting-wise, we have to put a revenue, which also was offset by a contract of $600,000. So that explains the $1.2 million -- the onetime difference.

So the Air Canada deal that we have, part of it is we get paid revenues and another part of it is we get marketing in their magazine, and those have to be included in revenues in Q4.

Got it. And so when we look at organic growth, which was about 4%, I guess, in 2016.

I'm calculating 6% to 7% in the Q1 but maybe I'm a touch high.

Organic growth in Q1 is closer to 5%. But don't forget, we're launching Comcast in September.

And Comcast by itself is going to be roughly a 3% bump in organic growth. So by September, by Q2, Q3, we're going to be closer to 8%.

Perfect. And you've just announced a key U.S.

hire, speaking of Comcast. Are there a number of missing pieces still to the puzzle in terms of key sales or managers to drive growth outside of Canada that you still need to fill?

When we talk to investors, we always say our #1 option is the U.S. Because we have 6 million subs out of 102 million subs.

So for us, to have 2 people, 1 covering the West Coast, 1 covering the East Coast, and Rick was an easy choice, a competitor for close to 15 years. Knows the customers, knows the states.

And I think it's a big sign of confidence that Rick, who was at Music Choice and at Comcast, is coming to join Stingray. So I think that the market and the customers feel that we're like -- and we have positive energy at Stingray and winning direction.

Perfect. And maybe 2 last questions just related to timing.

Obviously, we're in the doldrums of summer, and maybe the CRTC isn't moving too quickly. But when should we expect the purchase of the Bell channels to close?

It should have been expected last week. So it should be any day now because it's a very small transaction.

So it's really because of territory [ph]. I think we want -- maybe it's summertime, but it should have been last week.

It should have taken 4 weeks. So we're already like 1.5 weeks behind.

So we made some calls, and we're excited because we want to move on, on those channels and, again, to be able to increase ourselves to other key operators in Canada.

And let me ask just one last timing question. I guess, on the last call, the 4Q, nearly 2 months ago, you talked about your legal brief vis-à-vis the response to the Music Choice complaint coming within 60 days or less.

So is that something to expect over the next couple of days as well?

Yes, on the legal side, we have until the end of August so in the next 2 weeks. But since what changed in the last call which is a big surprise for us, is that both acquisitions -- so we bought Music Choice Europe, which was a division of Music Choice USA, in 2011.

And when we dig into our papers of that acquisition, we found a lot of prior art prior to the patents. So that division was using the same technology before the patents alleged by Music Choice USA.

And the same thing, when we bought Max Trax, which was owned by Corus out West, Max Trax was also using prior art. So that gives us a lot of extra confidence because our own companies were using the technology before.

Guys, is it fair to say that the broadcasting revenues in Canada was flat year-on-year by my estimates?

Were, what you're meaning? Flat?

Yes, no. Again, you got to take away $600,000 of revenues of the Air Canada deal.

Yes, if I take it out -- if I correct for it, it's about -- it comes out to maybe 0, 1%, something like that.

No, we expect the revenues in Canada to be flat. We are above [ph] the market.

We've -- music -- the commercial music up 5%, 10% and broadcasting in Canada flat.

Flat for me, for us, I mean, that's what the business has and as much or as it is, it's a good base to build your M&A strategy on. Just wanted to make sure it's still flat.

And one point that we -- as management we've seen, since the pick-and-pay April, May, June, we've seen a slight increase of subscribers, very slight. We got -- I'm not saying it's material, but we've seen no impact on subscriber drop since the pick and pay.

We've seen on the other side a slight increase.

This is actually where I was going with my question is since that started, we have not seen, as you mentioned, an impact yet on revenues related to this CRTC regulation change, right?

Exactly.

Okay. Now in terms of EBITDA margins, you guys are looking for improvements to come.

Can you maybe discuss how quickly you think you can get back to 34%, 35% margins as you improve the synergies, get synergies out of your acquisitions, et cetera?

At the end of the year, by the end of December, our $3 million of synergies will be approved. $3 million of synergies is roughly 3% of EBITDA margin.

So EBITDA margin should go from 32% back to 35%.

All the synergies are -- identified on the list, it's not a guess to achieve.

Okay, great. Now in terms of the Comcast deal, can you talk a little bit about the ramp-up in revenues?

How we should be looking to see revenue starting to trickle in? Is it -- are you opening buckets one-by-one?

Or it's going to be all in one shot starting in September...?

Our goal right now is to launch in September. So the goal will be to launch in Q2.

And the Comcast deal represents about 3% organic growth.

And it all comes in, in 1...?

It should be coming [ph] between now and September.

Okay. And in terms of ...

[indiscernible] one shot.

One shot. Okay.

And in terms of M&A, can you talk a little bit about multiples in the sector, have they changed prior since your latest transactions? What are you seeing out there in terms of movements from players?

So the 2 last deals that we've done, and what we're seeing is we're seeing, again, small tuck-ins that generate between $1 million to $2 million EBITDA. But we're, right now, the types of deals we're doing, we're buying between 4x to 5x EBITDA before synergies.

So the market is very good for small tuck-ins, and we're very confident to be bringing this -- to bring our $5 million to $10 million new EBITDA very early in the season. So we're right on track.

Okay. In terms of the Music Choice litigation.

Now can you talk -- can you discuss what are the next scheduled legal representations that are on the plate right now, apart from the one that you just mentioned in August. What kind of time line do we have to look for here?

By the end of August, if you will, we'll do our counter defense. We also feel as if -- like I mentioned in the call last time, it's anticompetitive, and we feel it's a tortious intervention for us to stop selling to customers.

So that's -- we still see if management overstretched themself on this dossier. So we're very positive, and even see this as an opportunity.

Okay. Last question from me.

The dividend increase, 14%. Can you talk a little bit about how you arrived at that percentage increase?

What kind of distribution ratios are you targeting? Any kind of forward looking in terms of what should we expect in the years to come?

So our dividend policy, they work on 25% to 30% of free cash flow. Dividends of $0.16 per year.

That's $8 million, so roughly in line to where we want to be right now. We're -- based on expected cash flow, we're going to be about 27% dividend to free cash flow.

27%, 28%, so we're in our range.

Could you talk a little bit about how you expect to grow the profile of those Much channels you've acquired? It would seem to me that they're kind of maxed out.

What do you think you can do with those in Canada or internationally? And second, since your last call, I mean, the Brexit vote has come down.

There's been a lot of concern about slowing growth in some parts of the world. Have you seen any impact on either your businesses or the M&A potential, given the implications of Brexit?

Yes, so regarding Canada and the Much channels, so our biggest advantage is regulations. As you know, in Canada, the integrated have to do one-to-one for every channel they carry.

So there is some integrated companies in Canada need to have independent channels, and now we have 4 new channels to offer them. So for sure, so we have that main have advantage.

And also the rebranding. So we're very confident that we'll be able to presell those channels to other big integrated companies in Canada.

And second thing for us is to be able to resell those channels worldwide. A lot of times, when an operator in the United States or Latin America will say what channels do you have running?

Matt, what channels -- for us, we can now say we have 4 channels running in Canada with many operators. So that's the advantage of the Much -- and with the Much channels, it only increased sales by from -- $800,000 by $200,000, our EBITDA multiple goes from 4.5 to below 3.

So it's a very easy one to integrate quickly. And also that one has no employees, as you can imagine.

So very high EBITDA margin. Regarding Brexit for us, Brexit, we don't have sales in the U.K.

It's 1 or 2 countries, we're not very much involved. But all of our office -- our international head office is in U.K., so the fact that the pound goes down helps us out.

But for sure, it affected a bit the euro. We saw this quarter, the FX impact was a bit higher than we expected because we always look at the U.S.

dollars. But now we've got to look at the euro.

We have to look at the Swiss franc, and we also have to look at the Australian dollar because we do $5 million in Australia, and we don't know why, but the Australian dollar went from 0.98 to 0.92 in last quarter. So it's not a big difference, but that's another $200,000, $300,000.

So that's one thing we need to have management -- we have to position ourself against all the world currencies.

Okay. Thank you very much for joining us this morning on this conference call.

We look forward to seeing you either at our annual shareholders meeting or, again, speaking with you at the release of our second quarter results. Have a great day.