[Foreign Language] Good morning, everyone. Thank you for joining us on Stingray's conference call for the second quarter ending September 30, 2016.

Today, Eric Boyko, President and Chief Executive Officer and Co-Founder, and Jean-Pierre Trahan, Chief Financial Officer, will be presenting Stingray's financial and operational highlights. Lloyd Feldman, our Chief Legal Officer, will also update you on current legal matters.

Our press release reporting Stingray's second quarter results was issued this morning before the 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 risks and uncertainties, 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 also 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.

And I will now pass the call to Eric.

Good morning, everyone. I will provide you with key financial and operational highlights for second quarter of fiscal 2017, and then Jean-Pierre will cover our financial results in more detail.

We are pleased with our second quarter results, which continued to show a solid performance from our international market. Let me share some of the key highlights.

First, revenues increased 15% to $24.5 million. After 6 months we are on the run rate to exceed $100 million in revenue, which represents an important milestone in the history of our young company.

Furthermore, as indicated before, we can now offer a complete suite of services, and we continue to see many opportunities to expand our multimedia content and leverage it via our $400 million Pay-TV subscriber base. The increase in revenue for the second quarter was due primarily to acquisitions, the Comcast deal in the U.S.

market, combined with our growth in commercial music in Canada. For the same period, international revenue increased by 28% and reached 43% of total revenues.

When compared to last year, organic growth represented 2%. We also have made great progress in the last quarter with the onboarding of thousands of Stingray music videos such as playlist into Comcast X1 platform to millions of TV viewers.

Initial feedback showed great usage of this type of content. Following the Comcast deal, we expect organic growth to increase up 3% to 5%.

Second, adjusted EBITDA reached $8.2 million, which represents a 33.5% margin, a notable improvement over the 32.1% reported in the first quarter of fiscal 2017. This is in line with the scenario that we communicated to you for gradual improvements throughout the year on a sequential basis.

The incremental synergies from acquisitions completed in fiscal 2016 will continue to support this gradual margin improvement. We expect our margin to improve progressively with potential synergies estimated at $3 million.

Third, we recently announced the addition of 4 new music video channels to our long-term distribution agreement with Shaw Communications. Shaw will now carry our Stingray Vibe, Stingray Juicebox, Stingray Loud and Stingray Retro channel, which were acquired from Bell in July 2016 and completely rebranded.

This is in addition to a prior agreement which included Stingray Concerts, Stingray Karaoke and Stingray Music. This is a great example of effective cross-selling.

We came through with better pricing and extended terms. Considering the rapid evolution of the Canadian TV industry, our clients such as Shaw are always looking at different ways to improve their content to keep viewers interested and engaged.

Fourth, the acquisition of the Berlin-based EuroArts catalog will reinforce our position with the classical music audience. The classical music audience is a large -- is large, estimated at over 40 million in the U.S.

market alone, and represents an interesting demographic and target audience for our clients and for us. With this transaction, we acquired 100s of exclusive concerts and documentaries and also an option to purchase future content.

Supported by a solid balance sheet, our pipeline of acquisition opportunities remains healthy, and we expect to maintain the pace of our acquisition program in the current fiscal year with international targets mainly. Our goal is for international revenues to reach 75% of total revenues by 2020.

Finally, we are focused on driving synergies to reach our adjusted EBITDA margin run rate of 35% in the fourth quarter of the current fiscal year. And Lloyd, I'll pass you quickly for a summary of the legal procedure.

Thank you, Eric. Since Music Choice filed its complaint against Stingray in June of 2016 asserting pattern infringement of certain U.S.

patents, Stingray has filed its answer asserting, among other things, defenses and counterclaims of noninfringement and invalidity. Stingray is presently preparing an amended answer and counterclaims, which will include inequitable conduct counterclaim based on Dave Del Beccaro and other investors' failure to disclose the product offered by Music Choice Europe in or about 2001 to the patent office and a misrepresentation to the patent office that they are the true inventors of the patent in suit.

Music Choice Europe is an indirect subsidiary of Stingray. We're also working on our invalidity contentions, which are due to be served before the end of the month.

Trial remains scheduled for December 4, 2017. In addition to our defenses and counterclaims of noninfringement and invalidity, Stingray has filed its own complaint against Music Choice in August 2016, asserting claims for unfair competition, defamation, trade libel, tortious interference and common law unfair competition, all stemming from false misrepresentations of fact made by Music Choice with the goal of damaging Stingray's business.

Jean-Pierre, over to you.

Thank you, Lloyd. 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 second quarter, an increase of 15.1% compared with the revenues of $21.3 million a year ago.

The increase was primarily due to acquisition combined with growth in the commercial music in Canada. Recurring revenues were up 14.9% to $21.6 million or 88% of revenues from $18.9 million.

When compared with last year, recurring revenues as a percentage of total revenues remain same at 88%. Music broadcasting revenues increased 15.2% [ph] to $18 million, mainly due to the acquisition of iConcerts and digital music distribution in Australia as well as new contracts signed in the U.S.

Commercial music revenues rose 14.6% to $6.5 million, mainly as a result of organic growth in music and digital signage recurring revenues. And the acquisition of Nümedia will generate additional recurring music revenues and nonrecurring revenues related to equipment sales.

Revenues generated in Canada increased 7.2% [ph] to $14 million in the second quarter, and international revenues were up 27.7% 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 7.8% to $8.2 million from $7.6 million a year earlier. The increase was primarily due to the acquisitions realized in fiscal 2016 and 2017, partially offset by higher operating expenses related to international expansion.

The acquisitions were accretive, but additional synergies are expected over the next few quarters. Adjustments related to acquisition, legal and restructuring represent $935,000, in which $500,000 are related to the Music Choice litigation, $200,000 to the socal [ph] proceeding-related fees and $200,000 for acquisition and restructuring cost.

Adjusted EBITDA margin decreased to 32.5% from 35.8% a year ago, mainly due to cost comprising recent acquisitions. As Eric indicated, on a sequential basis, adjusted EBITDA margin increased to 32.5% in the second quarter compared to 32.1% in first quarter.

For the second quarter, net income was $1.4 million or $0.03 per diluted share compared to $9.2 million or $0.18 per diluted share for the same period of fiscal 2016. The decrease was mainly due to the one-time gain on fair value AppDirect of $7.5 million and the change in fair value of contingent considerations, both of which occurred in second quarter of last year, and increased general and administrative expenses related to legal fees, acquisition and settlements.

Adjusted net income decreased 12.8% to $5.4 million or $0.10 per diluted share, compared to $6.2 million or $0.12 per diluted share a year ago. The decrease was primarily due to the higher change in fair value contingent consideration and higher foreign-exchange gains recognized in the second quarter of last year.

Cash flow from operating activities increased to $2.6 million in the second quarter versus $0.9 million a year earlier mainly due to positive net change in working cash capital item associated with lower accounts receivable and higher trade payables paid. Adjusted free cash flow decreased to $5.2 million compared to $6.4 million for the same period a year ago.

The decrease was mainly related to higher income tax paid of $866,000 and lower foreign-exchange gain of $470,000, partially offset by higher adjusted EBITDA. Looking at our financial position, Stingray concluded the second quarter with cash and cash equivalent of $2.6 million.

Our net debt position was $38.5 million, excluding contingent consideration, resulting in a net debt to last 12-month adjusted EBITDA ratio of 1.2. As of September 30, 2016, we had $100 million revolving credit facility, of which approximately $58.9 million was unused, providing us with ample financial flexibility to pursue strategic acquisition to achieve our growth objectives.

I will now turn the call back to Eric.

Thank you, Jean-Pierre. This ends up the conference call for today.

Thank you for your time and attention. At this point, Jean-Pierre, and I will be pleased to answer any questions you may have.

So thank you again.

Eric, do you want to talk about some of the progress you're seeing in commercial music? Because, obviously, you highlighted a number of new contracts.

There seems to be some evolving momentum there.

Yes, the commercial music, which is -- and also the digital signage, so a lot of retailers, I'd say most retailers, are going for their store 2.0, a lot of investment. And in Canada, our position is -- we're in a good position, and we expect double-digit organic growth in that space and more.

So an interesting market, lots of stickiness, and right now we have a great presence in Canada.

If I look at the music broadcasting side of the equation, obviously, there was some Comcast addition, I guess, at the close of the quarter September, which I'll circle back on in a moment. But if I do some quick math -- and I realize that you've got some commercial music stuff happening in Mexico through third parties.

But am I correct in saying the music broadcasting did grow a small amount in the period year-over-year?

Roughly around 2%.

Okay, that's what I got.

And Comcast is roughly a $3 million deal. So Comcast on $100 million in sales will give us our 5% organic growth objective.

Okay. So when you were talking about the 2% organic growth, was that organic growth in totality for the period or just on the music broadcasting side?

In totality, but mostly coming from the music broadcasting side.

Perfect. Okay, great.

And maybe just going back to Comcast, it's early days. Needless to say we're only a couple of months into the expanded new contract, but you want to just talk to how that's going?

For us, Comcast is the X1 platform. Like we mentioned in our press release, we're downloading tens of thousands of music videos and other content to that platform.

And the beauty of that -- the X1 platform, as you know, it's the same platform for Cox and the same platform for Shaw in Canada. So whatever we upload and we do with Comcast is good for all 3 cable operators.

So a very unique, interesting, and the results of the usage are very positive.

I wanted to ask you about your operational -- I mean, EBITDA margin, we saw nice improvement there. Can you talk about how much more can you improve it going forward?

And specifically the G&A line, how much of that -- you mentioned there was some one-time items in there. Can you maybe quantify what could be recurrent and what could not be recurrent?

Yes. So a lot of our savings are being -- are arriving right now, in October, November, December.

And we're confident that we're going to reach our target EBITDA margin of 35% in Q4. So the margins are improving and will continue to improve.

Examples of cost-cutting that we're doing: When we bought iConcerts, we had an office in Geneva; we had an office in Paris. So both of these offices have been closed down in October with personnel there.

And we're just, again, focusing on Amsterdam and Montreal. So that's part of our synergy.

So we're happy; we're on track. And it's something, by the way, as a management team, we measure every week.

So our CFO, Jean-Pierre, is very aggressive on us for us to maintain. And, by the way, this is a basis as a company.

We have to be able to acquire companies and scale and improve our EBITDA margin. So this is just what we are mandated.

Is that okay?

Eric, I wanted to ask you about the mobile app. You talk about increasing penetration, and I believe you've expanded into Europe.

Can you give us a bit more color on, and perhaps the metrics even, on how penetration is progressing for the mobile app and what the future entails for that part of the...

So we're approaching almost 1.2 million to 1.3 million downloads. We're very happy with that.

In Canada, we're above 10% penetration on our sub base of people that have downloaded the app. And the active usage is very high, where about 30% of our people are using the app every month, so extremely high active usage.

And the last part which is pretty good is our rating on this app is 4.3. So very high rating.

And this includes the reason that we get lower ratings is when people in the U.S. or Europe don't have access to the app and are disappointed and they rate us 0.

So if you take the people that only rate us that are able to access the app. So we're very excited about.

And also we are looking at -- because now our usage is so high, we're looking at for the first time to monetize this with advertising. So it's something that we're looking at.

And so music is something that people use 6 to 8 hours a week, so it's incredible, the stickiness of this app.

Okay. And to be clear, the advertising opportunity is on mobile only, right?

This isn't going to come back down to the TV product?

Yes, we would start on mobile because it's the most simplest to start. But, again, we are always looking in the future.

We have so many video channels now and all the music channels that we have with Shaw and the concert TV and classical. So we do a bit of sponsorship on the TV channels in Europe, and it's something that we would look into more on the sponsorship side to do also in Canada and USA.

So it's something that will be for us all incremental EBITDA and revenues because right now we've never done advertising. So it will be a plus, plus, plus.

Fantastic. And in the past, on the mobile front, I believe you talked about looking at opportunities with mobile-only service providers, i.e., not tied to TV subscription services.

What -- has your thinking changed on that front? Has there been any progress made?

No, we're still aggressively pursuing the mobile over-the-top offer. We have many discussions with customers in Canada, in the U.S., the Caribbean and Latin America.

So it's for sure -- on the mobile side, any deal is huge because the number of mobile subscribers are so big. So it's something that we keep on looking at and negotiating.

And for us, it would be a game changer, as I've mentioned before.

Okay, great. And I just want to clarify, if I may, the earlier comments on organic growth going from 3% to 5%.

Is this for the overall business that you're looking at? Or is this for broadcasting only?

No, just to clarify that point, we're at 2% right now, we're 1.96%, and we are -- our goal is to achieve 5% with Comcast, but it's for the overall business. So just to -- we did not differentiate between the 2 businesses.

Just a couple of things. Can we just maybe circle back to Maher's question about any nonrecurring items that might be in G&A that we should think about for near-term modeling?

And then on other stuff, Lloyd, can you give us -- thank you for your comments on lawsuit, but, I guess, should we just assume this thing is going to proceed to trial? I think you said December of next year.

Could you just confirm that? And should we assume a run rate of about $500,000 a quarter until then?

Just any color you can give on that. And finally, one clarification point, Eric, your 35% margin target, are you talking calendar Q4 or fiscal Q4?

So I'll answer 1 and 3. So for the third question, it's our Q4, so January, February, March, or Q1 calendar, next year.

So that's our target, and we're very -- we're one target. Regarding the first question, we should expect the G&A to drop about $2 million because we're doing all these cost cutting in Europe and around the world.

Like I said, cost cutting is really the synergies that are being implemented. So it's not -- we're increasing the number of people in Montreal, but we're decreasing the people in our different divisions.

So you should expect about a $0.5 million per quarter of decrease in G&A. And for question 2, I leave to Lloyd.

You are correct in terms of the timing, the defense of the patent suit or the patent suit in principle that was brought against us is scheduled to go to court in December of 2017. Do keep in mind there are 2 lawsuits there.

There is the claim made against us, which Stingray is defending, and then there was the claim that Stingray has brought as a counterclaim against Music Choice. In that second suit, no time has been issued, no date for trial.

But the guess is December 2017 or January 2018 in terms of timing. In terms of how the trial will progress, and without giving away too much of our strategy, I do not believe that this will go to trial at the end.

I actually think it will be resolved either through a review by the patent office in the United States because I think it is quite clear -- it's certainly clear to Stingray -- that the patents in question are not valid. So I think that there will be -- we will avoid a lawsuit before the courts, and it will probably be settled before the patent office.

And in terms of cost, again, it's -- I think $500,000 a quarter is a bit high, but I also do not believe that the legal fees will continue to be generated at the same rate because right now what you're seeing is the point in the trial where proceedings are being filed, so there is intense work being done and the legal fees will actually decline and be less as we move forward, certainly as we go into the patent office portion of the proceeding.

I wanted to first ask about the organic growth. I was a little surprised that it bounced around so much from quarter-to-quarter, given the recurring base.

Wondering if you might be able to just provide a little color there.

No, for us it's pretty much the same organic growth that we had last quarter. In terms of recurring revenues are pretty stable.

So I'd say non-eventful. So in the last quarter, we're running around 2%.

With Comcast, we're going to be hitting 5%. So that's what we expect.

What -- maybe I'm mistaken, but I thought last quarter was closer to 5%, and then you were hoping to get closer to 8% with Comcast?

Again, it's 5% to 8%. And, again, our organic growth includes the FX factor.

So we're not trying to take the FX factor out. So depending on how the euro, peso, U.S.

dollar and even the Australian dollar moves, it affects that number. So, again, in Q3 with the dollar being stronger, our organic growth will increase.

But, again, we're talking about between 5% to 8%, so in the same range.

Yes, in this quarter, Comcast is only 1 month.

Yes.

Okay. And then, I guess, more strategically, the streaming deal you guys did in the last month or so.

I was hoping you might be able to give some more color on A, that deal, and B, the cost related to that deal. Would the streaming implications mean that the cost of that is less on your end?

Yes. That deal is a very small deal with CloudTV.

And we're looking -- we're having many discussions with a lot of over-the-top products, including Amazon and Netflix and different providers. So now that we have so much content -- before we only had music, but we have all the concerts.

We also have all the classical content that we own. So all the classical content that we bought, we're able to deliver on any platform, including Amazon, Netflix, over-the-top, VOD, trains, planes, automobiles.

So it's interesting. It's interesting that we're becoming a content player.

So this is just the first deal of many things that Stingray will be doing to leverage our content that we own and we can distribute. And also we have worldwide rights on it, so it's an interesting model.

My line got cut off, sorry. I had to dive back in.

I thought you didn't like our answer.

No, no. I had 2 remaining questions quickly.

The first one is you talked in the past about that there were several contract renewals at U.S. operators in the U.S.

Can you talk about any of these contracts have come up and -- or there was any kind of success? And the second question is on the M&A.

We saw you buy more content recently. What's the strategy going forward?

Is it more going back to buying subscribers? Or you're still thinking of buying more content?

Okay. So again, in the U.S., for sure it's one of our -- it's one of management's number one goal, and number one in terms of potential with the U.S.

market. So, as you know, last quarter, we hired another person, Rick Bergan, to help our U.S.

team. We're very aggressive, a lot of meetings, but it's a work in progress.

It's a work in progress to increase the penetration in the U.S. So that's good.

In terms of acquisition, we're very happy with this content deal. The content deal we did last -- this one, that we're buying this content at about 4, 5x EBITDA and with the potential of incremental sales around the world.

So we're very excited about content deals. We want to do more of those.

We love the classical space. Why?

Because classical is almost 100% margin EBITDA because all of it is public domain. So we love that space.

It's a niche space, and we're excited to continue that growth. But at the same time, we're looking for more distribution.

So you can expect more content and more distribution in this niche market. And our M&A pipeline, again, is well governed.

And one thing I think the market will see and you can see, management here is very conservative at the pricing of what we buy and we're very -- in terms of our EBITDA margin, we wanted to make sure every deal is incremental EBITDA. So we're taking our time to do the right deal at the right price, and we're happy about this, about the rigor of the management team.

Okay. And just to go back on the U.S.

market, over the next year, how many large contracts from what you know are coming up for renewal?

So there's -- in the U.S., there's thursteenknow [ph]. We mentioned 4, there's Altice, which is Cablevision, and Suddenlink.

There DISH. There's DirecTV.

Time Warner also is in the next year. So, for sure, the issue with these deals is every one of those deals are huge.

So it's not something that you can find over 1 meeting. And also for us there is the potential with the music videos, potential with concerts, classical, which is also that we're going to penetrate in the U.S.

and, again, we're talking like the over-the-top players, Amazon, Netflix and different distributors. So the U.S.

market is the number one market in the world. So we're very focused on it.

Okay. So thank you very much for joining us this morning.

And we're happy with, again, a very stable second quarter in line with the management team's forecast, in line with our goals and excited to deliver a good Q3 and Q4 for the markets. So thank you, everybody.