[Foreign Language] Good morning, everyone. Thank you for joining us on Stingray's conference call for the third quarter ending December 31, 2016.

Today, Eric Boyko, President, CEO and Cofounder; and Jean-Pierre Trahan, Chief Financial Officer, will be presenting Stingray's financial and operational highlights. Our press release reporting Stingray's third quarter results was issued this morning before the market opened.

Our press release, MD&A and financial statements for the quarter are available on our investor website at stingray.com, as well as 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 operations and performance are subject to risks and uncertainties, and actual results may differ materially. The risks and the 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 are advised not to place undue reliance on such forward-looking statements.

Thank you. And I will now pass it over to Eric.

Good morning, everyone. I will provide you with some key financial and operational highlights for the third quarter, as well as some of the developments we've seen subsequent to the quarter.

Jean-Pierre will then provide Stingray's financial results in greater detail. We are very pleased with our third quarter results, which were in line with our expectations for the quarter, and also, our scenario in terms of the improving EBITDA margin for the current fiscal year.

Let me share some of the main achievements. First, revenues increased double-digit by 12.3% to $25.9 million.

After 9 months, we are still on a runway to exceed $100 million in revenue for fiscal 2017. The increased revenues for the third quarter was due primarily to the acquisitions, combined with the growth of music videos on Demand in the U.S.

We saw a continued solid growth on the international sales where revenues reached 46% of total revenues. We are roughly nearing a 50% contribution from international revenues.

Our goal is to reach 75% international sales by 2020. When we compare it to last year, organic growth represented approximately 2.3%.

Versus Q2 2017, organic growth is closer to 5%. As anticipated, the music videos on Demand contract contributed significantly to organic growth.

We also announced an increase of 12.5% of recorded dividend to $0.045. Second part -- second point.

Adjusted EBITDA increased 8.8% to $8.7 million. This represents a EBITDA margin of 33.6%, a modest improvement over Q2, but a substantial improvement over Q1 of 32.1%.

The improvement aligns with our forecast for a gradual improvement throughout the year on a sequential basis. Carrying on, we expect a strong finish of the fourth quarter.

This scenario supported by the incremental synergies from the acquisition completed in fiscal 2016. As we said previously in the conference call, we estimate potential synergies of approximately $3 million.

Third, we are very happy with the results of the Stingray mobile app. Our app has since registered well over 1.6 million downloads worldwide.

And we have received over 3.3 million visits, an increase of x6 compared to the start of the year. Fourth point.

With the acquisition of Classica, Stingray is now the world's undisputed leading provider of classical music programming. And an estimated 10% to 15% or 40 million Americans go on major markets, attend at least 1 classical musical concerts annually.

The Classica addition should speed our growth. And we believe it will diversify our relationship with exiting providers keen on acquiring new content and new over-the-top or OTT providers.

Finally, and not the least, we are very extremely pleased to announce the appointment of Marie Ginette Lepage as Senior Vice President, Global Sales and Mobile Solution. To sum up.

We are maintaining a solid pipeline of potential acquisitions. Our aim is to keep the momentum of the acquisition program going, mainly with international targets.

At the same time, we are concentrating on unlocking synergies to reach an adjusted EBITDA margin run rate of approximately 35% in the fourth quarter of this current year. So we're happy with these results.

I will now transfer to Jean-Pierre for more details.

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 revenues increased 12.3% to $25.9 million in the third quarter compared with revenues of $22.1 million a year ago.

The increase was primarily due to the acquisition, combined with growth from Music Videos on Demand or MVOD in the U.S. Recurring revenues were up 11.4% to $21.9 million or 85% of total revenues from $19.7 million.

When compared with last year, recurring revenues as a percentage of total revenues remain the same at 85%. Music Broadcasting revenues increased 13.4% to $19.3 million, mainly due to the acquisition of iConcerts, Digital Music Distribution (sic) [ Digital Media Distribution ] and Much Channels, as well as the new MVOD contract signed in the U.S.

Commercial Music revenue rose 9.1% to $6.6 million, mainly as a result of strong sales in music and digital signage, recurring revenues and the acquisition of Nümedia in Canada last year. Revenue generated in Canada increased 1.1 -- 1.8% to $14 million in the third quarter.

And international revenues were up 27.8% to $11.9 million during the same period. Growth in Canada was mainly related to acquisition, partially offset by lower equipment sales in commercial music, whereas the increase in international revenues was mostly due to acquisition in the new MVOD contract, as mentioned before.

Adjusted EBITDA was up 8.8% to $8.7 million from $8 million a year earlier. The increase was primarily due to the acquisition realized in fiscal 2016 and 2017, partially offset by higher operating expenses related to international expansion.

The acquisition were accretive to, but additional synergies are expected over the next few quarters. Adjustments related to acquisition, legal and restructuring represented $740,000, in which approximately $450,000 were related to Music Choice litigation and approximately $200,000 for acquisition and restructuring costs.

Adjusted EBITDA margin was 33.6% compared to 34.7% a year ago, mainly due to the costs related to recent acquisitions. On a sequential basis, adjusted EBITDA margin slightly increased to 32.6% in the third quarter compared to 32.5% in the second quarter.

These results are in line with our current scenario for gradual improvement throughout the year on a sequential basis. For the third quarter, net income was $2.7 million or $0.05 per diluted share compared to $3.2 million or $0.06 per diluted share from the same period in fiscal 2016.

The decrease was mainly due to the change in fair value of contingent considerations that occurred in Q3 2016, and increased general and admin expenses related to legal fees, partially offset by higher operational results, gain on foreign exchange and lower acquisition costs. Adjusted net income remains the same at $6.2 million or $0.12 per diluted share.

However, the net result reflect a higher adjusted EBITDA combined with the gain of foreign exchange, offset by a lower change in fair value of contingent considerations and slightly higher income tax expenses. Cash flow from operating activities decreased to $5.6 million in the third quarter versus $6.2 million a year earlier, mainly due to negative net change in non-cash working capital items associated with higher account payables and accrued liabilities paid in Q3 2017, partially offset by higher trade and other receivable collected and higher foreign exchange gain.

Adjusted free cash increased to $6.9 million compared to $6 million for the same period a year ago. The increase was mainly related to higher adjusted EBITDA, foreign exchange gain, lower income tax paid, partially offset by higher capital expenditures.

Looking at our financial position. Stingray conclude the third quarter with a cash and cash equivalent of $3 million.

Our net debt position was $42.3 million, excluding contingent consideration, resulting in a net debt last 12-month adjusted EBITDA ratio of 1.31. As of December 31, 2016, Stingray had $100 million revolving credit facility, in which approximately $53.7 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.

Okay. Thank you, Jean-Pierre.

This sums up our 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 I will go back to you, Mrs.

Operator.

Maybe, Eric, let's start with the organic growth. You said that 2.3%, which is a touch better than the 2Q number.

But I think FX would have had less of an impact in the period. So maybe if you can talk about a couple of other items.

One, were there lower nonrecurring revenues that maybe were a little bit greater than 2Q on a sequential basis? Additionally, can you speak to evolving traction with the Comcast ramp in that mandate?

And so -- again, so our numbers on organic growth is always complicated because it's -- we have FX in almost 40 countries. So when the U.S.

dollar goes up, the pesos goes down, even the Australian dollar moves differently. So it's always difficult for us, and we don't hedge any of the dollars except for hedging on our receivables in euros and hedging our receivables in U.S.

dollars. But and so that's the first part of the question.

In terms of -- yes, in terms of nonrecurring equipment, last year, we had big sales with Sports Experts in Q3. So we did 2 big stores, $1 million, almost $2 million contracts.

These contracts did not renew this year, so I'm sure we have been an effect there. But we're pleased with the fact that the organic growth, Q3 compared to Q2 this year, is up 4.91%.

Okay. Sorry.

Can you repeat the 4.9%?

The organic growth increase between Q3 and Q2 is 4.91%. So we have a strong Q3.

Okay. If we can jump maybe to the M&A pipeline, obviously, it continues to evolve.

Classica being the last transaction. I think you're tracking to the lower end of your EBITDA of $5 million to $10 million from M&A sort of contribution.

I think you're including all synergies, somewhere around $5 million. Can you just speak to evolving progress, and whether we should be seeing some further tuck-ins just to close out the year?

So a very good point. So, so far, our incremental EBITDA that we bought is -- with synergies is closer to $3 million.

We've always told the market 5 25, we want to buy $5 million of EBITDA for $25 million, so we have the last quarter to get that last $2 million. But I would agree with you that we're running a bit low on the lower side than the higher side.

And it's one of management's priorities to increase the flow. The issue we have is not the number of potential companies to buy.

The issue is for management, and that's where you saw the addition of management net. We need to increase the management team to be able to travel more to do more deals.

So that's one of the goals that Stingray's team to be able to be bigger, so we can do more deals. So while we're ingesting Classica, we have another person needs to be out hunting.

Just as a point of clarification though, Eric. I thought if you added Classica to the equation, plus any synergies, you'd actually get closer to $5 million, because I thought you were already running at $3 million before that.

I'd say we're between $3 million and $4 million depending on how we look at synergies. And the other part we get look in, with 4K, we're doing -- we're signing a lot of deals on 4K.

And so on 4K, do we put them as synergies or do we put them as incremental sales organic growth.

Got it, okay. And maybe one last question...

[indiscernible]

Absolutely. And one last one question maybe just for JP.

In regards to the $11.6 million of contingent considerations, let's call them earn-outs, can you give us a sense as to how they flow? You are concluding F '17, so call it 4Q '17 and then '18 and '19, and I'll assume the differential thereafter.

Maybe you can give it by the end of the call.

Yes. Of course, we have another list of earn-outs that they are due next year and in 2 years, but we evaluate this amount every quarter.

And of course, the next ones could be DMD.

But -- and historically, we pay the earn-outs between 50% to 75%.

Same thing, Adam.

Historically, that's how we pay the earn-outs.

At a rate of 50% to 75%.

50% to 75%. [indiscernible] 50% in the past, but I'm just...

I want to go back to a question Adam was asking on the Comcast ramp up. How much of the ramp up is baked into the organic growth rate you gave?

And when I look at Q4, the organic growth, you expected to improve, right? I mean, can you provide maybe some indication as to the improvement, sequential improvement in organic growth?

And in terms of margin improvement, you are looking for margins to continue to improve. Can you maybe detail a little bit how much cost we should remove from G&A in Q4?

So 2 parts. Regarding the organic growth, like we mentioned, the organic growth between Q3 2013 and Q2 2017 was at 4.91.

For sure, Comcast helps. Comcast is about $0.5 million in sales per quarter, so it's a great new customer.

But again, a lot of it is with FX, the FX worldwide, so it's -- it was not as easy to be able to measure all the different organic growth per region. And regarding the second part, for sure, the synergies are coming in Q4.

We have officially closed down Geneva and Paris in December, so we had many employees. Those were employees that were hired through the iConcert acquisition, so those synergies are done.

So that's why in Q4, we should be able to see our EBITDA margin going back to closer to 35% or above 35%. So a lot of the synergies were done in Q3, but we're only going to see the savings in Q4.

Right. So the material improvement in EBITDA margin.

Should those margins continue into 2018, or are they dependent on acquisitions as well?

Absolutely. I think, as a company, our margin will be at 35%, and we want to maintain that way.

And in the future, if you look at our peers in the market, most international media company are able to achieve 40% EBITDA margins. So over time, over the next 3, 4, 5 years, we should see our margin continue to increase.

And we have supplier contracts that will end in the coming months, so and like lease or distribution in IT, so they're very identified [ph], so we expect no surprises.

Okay. And when I look into 2018, Eric, you have an organic growth platform and you have the M&A side.

I wanted to ask you your focus. You've recently bought more content.

The impact on -- in the past, historically, you've tended to more -- acquire more subscribers, more clients. You've tended recently to buy more content.

Is the strategy has evolved or just base because you had a nice opportunity in front of you and you executed on it, or should we expect more content going forward rather than subscribers?

Yes. So in the case of the catalog or the music in terms of classical space, the classical space is underserved, and the pricing is very good.

So the investments we're making are very low in terms -- we're not investing $50 million, $60 million. Buying Jay-Z concerts or buying Bono and all these shows, Led Zeppelin, then you're competing directly against the labels, and that one is not the same market.

The other also main advantage of us owning the catalog or doing these deals is now we have the content available for all platforms worldwide rights-free. So we can do a deal with Amazon.

We can do a deal with the mobile. We can do a deal with Roku.

We can do a deal with any over-the-top player on any platform, on any device for all the world, except Japan, sorry, expect Japan. It's always complicated in Japan.

So we have an incredible product to cross-promote with our 400 million subscribers. So it's very rare when you meet up, they say that we have a product that has the rights for the world.

So we're very excited about that content, and it gives us a big leverage.

And how about the subscriber acquisitions in Europe and Latin America?

Yes. With this one, I think the deal we did with the Classica added 12 million subscribers.

Half of their sales were in Europe. The other half of the sales were in Asia.

Very strong in Korea. So I think we're going to go to the Winter Olympics this year to go visit our customers.

But on the most impressive -- the deal with Classica, one of the main motivation of the seller who is an individual was for us to be able to demonetize and bring classical content to the Americas, to Canada, U.S. and Latin America.

And it's never been done. And this is where we see the biggest growth, to bring this channel, a linear channel, SVOD channels and over-the-top channels to the Americas.

And there's never been a product here, so we're very excited by that and there's a lot of demand.

All right. And finally, on the dividend, I saw nice, nice increase in here in the dividend.

What's your view in terms of distribution ratios? How do you look at the dividend compared to free cash flow?

Is there a metric we need to keep track of in order to better understand where the dividend is going in the future?

Yes. So roughly at $0.045.

It's going to be $0.18 per year. That's $9 million of cash.

We estimate our free cash flow to be between $28 million to $30 million, so roughly in the 30% range where we want to be. So for sure, we're -- as a management team, we're aggressive in our increase in free cash flow.

We are very motivated about free cash flow. And when we achieve these metrics, we are able to increase our dividends.

Sorry, you said the adjusted free cash flow for 2018 should be between...

This quarter, we did almost $7 million, so we're close toward between $28 million to $30 million. So our free cash flow, it will be increasing.

And also, our free cash flow percentage to EBITDA will also be increasing. The more the EBITDA increases.

The interest rate is the same. The interest rate, we'll pay 3% on $30 million, so roughly $1 million.

The CapEx is going to be around $2 million, $2.5 million, a bit higher this year because of leasehold improvements. And then income tax will be stable at below $2 million.

So the more we increase the EBITDA, the more that the free cash to EBITDA will increase.

Is it fair to say that the free cash flow growth for 2018 should be close to the increase in the dividend rate that you announced, i.e. about 10%?

No. We don't give any forward-looking -- we don't give any forward guidance.

But as you know, we're a recurring business. So whatever we did in Q3, that business will be -- if you look at recurring revenues, if recurring revenues are increasing double-digit, then you can expect our sales to grow double-digit.

Then you can expect our EBITDA to grow the same way and the free cash flow. So if I was a shareholder, I'd look very closely at the KPI of recurring revenues.

I am a shareholder, so I am looking at it.

JP, could you talk -- just go back to your comment about, you pay between 50% and 75% of earn-outs. Does that mean that the way you set the earn-outs, it's rare for some -- an entity to meet those targets?

Or are you talking about 50% to 75% within a certain timeframe?

When we do deals with targets, the sales targets are very -- sometime, are very high to achieve, so that's why we pay less.

I understand, okay. Eric, can you talk a little bit about your conversations with mobile carriers around the world?

I mean we saw Sprint make an investment in Tidal. Rodgers has re-upped Spotify.

How are those -- are you confident you can close a deal with a big carrier? And is there any comments you could have there?

And is there any update you can provide us with respect to the lawsuit in Texas?

Okay. So regarding -- for sure -- no, we had many discussions with Sprint, so we were surprised, but impressed to see how much money Sprint is investing in music.

We are approaching all of our cable operators and mobile operators with our music strategy, the importance of music, the stickiness of music, and how much a lot of the operators are investing in sports and have under-invested in music. So for us, the Sprint news was good news in terms of showing to the market what they feel is important.

And we're speaking to multiple mobile operators in many places. We're also looking at the prepaid market.

A lot of the mobile market, I know, in Latin America, and in Europe and Africa is prepaid, so a lot of discussions. And I think everybody agrees that people that listen to music decreases the churn on the mobile subs, so it's all about deposit.

But again, the mobile deals are big deals. And the big question is, how we -- if ever -- when we do mobile deal is, how are they going to promote it?

How people going to know that they have Stingray music included? So that's going well.

And also, we have a lot of good discussions with the over-the-top players, not only mobile, but as you know, now in the U.S., DirecTV now is launching -- they launched a TV service, Sling. A lot of operators and a lot of talks about launching over-the-top TV subscription.

So we are having a good discussions with all these people. Because we're one of the few companies that has the rights on all platforms.

So that was for the first question. Regarding the lawsuit, the lawsuit's going ahead.

We're spending roughly $400,000 a quarter on the lawsuit. We are looking to deposit next couple of weeks.

And that a legal guy, we were looking to deposit it to the patent office saying that they're null and void. And then we expect the patent office in the next 3 months to tell us if yes or no, they're going to be reviewing those patents.

And if they do, 73% of the time, that they review patents, the patents are refused or revoked or whatever the legal word. So on our side, things are progressing well.

I'd say the management team, for sure, Lloyd is very much involved in that dossier. But I was telling our board yesterday, the good news for the management team, we're spending -- I am spending 0% of my time on that dossiers.

It's running along. For sure, we feel unhappy with the cash flow that's costing us, but now it is what it is.

First, I wanted to ask a little bit more about the margins. And more recently, we have seen kind of the music programming expense been around 35% of revs.

As you guys do more of these content deals, where can we expect that to settle out over time?

Yes. So our margins are going to go up, because, for example, on the classical side, the rights that we pay because are almost much smaller, even lower than 10%.

For the main reason is that most of these songs are a public domain because the author has been dead more than 50 years. So we like the classical space for that reason.

So that will help us in the next quarter next year. The more we sell classical content, the more that our margin will increase, our gross margin.

Okay. But just because it always hover around 30% to 35%?

I know you guys don't give guidance, but can we expect that in 2018 to move lower to 32% and 33%, somewhere in that ballpark?

We'll look at it. And today -- when we did the IPO, we put a lot of stuff in, because we didn't want all of our suppliers to start knowing exactly.

So the number is -- there is satellite costs and there's a lot of stuff that we put in that, that could -- cable TV fixed costs and operating costs so. But absolutely, I will -- we should expect it to go down, but I can't right now give you a number.

[indiscernible] I'll look at it and try to give you maybe when we talk after.[indiscernible] I got a figure in my mind.

I also wanted to ask, you already talked a little bit about cross-selling of acquisitions you've done. And I noticed in today's press release, you talked about the Bell channels helping you internationally.

I just want to get some more color around that, and how you guys are doing with those cross-selling opportunities?

So our #1 goal in terms of our sales teams now -- if you look -- when we did the IPO, all we had was the Karaoke channel and we had the audio channels. Since the IPO, we added 4 long-form contents, so jazz, concerts, Classica/Brava, we're going to merge two of them.

We added 4 -- then we added 3 4K channels, Festival 4K, Ambiance 4K, and so we got -- and also got 8 music video channels. So we've never been in the position to really cross-sell all of our products.

And a good example in the U.S. is while we're continue fighting with Music Choice on the pay audio side, on the audio channels, we are leveraging, for sure, all of the other assets that we have.

Then a good example is the deal with Comcast. So we are very confident in the U.S.

to be able to bring a lot of these different products. And the cross -- famous cross-selling, everybody -- every company says that, but the cross-selling is part of our #1 goal to achieve 5% organic growth and to maintain 5% organic growth.

And on that last point. 5% organic growth, with Comcast fully baked in, is that still kind of the target for Q4?

Absolutely. Again, depending on FX.

For us, the peso, we have a lot of sales in the pesos. The pesos really change rapidly after the elections, but the U.S.

dollar went up, and that -- so there is -- we don't hedge our currencies on the sell side, and we're trying to figure it out. So for sure, when the U.S.

dollar goes up, it's positive. But then we have some negative with the pesos and some negative with the Swiss franc, and then we do euros and then pounds.

So we're like the United Nations, Stingray. It's great to be in 152 countries, but it's difficult to -- and since the margins are high, there is no advantage for us to start hedging ourselves because we give more money to the banks than we would be savings.

Okay. Well, maybe negating out the currency factor, what kind of outlook are you looking just for the Canadian business organically, both in [indiscernible] 2018?

Canadian business, we've always said, we expect 0% organic growth for flat business for the TV side, so that's about $25 million. We want to achieve 5% to 10% organic growth on the business side.

We like the business segment, the retail stores. And internationally, we want to be able to achieve more than 10%, so that, overall, we have a 5% organic growth.

And we had our sales team here in January, and we've never been so positioned to achieve cross-selling and to achieve a lot of organic sales. So we're very excited.

And so we'll see how that translates over the next 12 to 18 months.

Okay. So no questions.

Okay. So thank you for your time, for joining us today.

I'm excited about, and we're happy with our Q3 numbers. Our next board call is going to be our year-end, so our next board call will be June 8 or June 9.

So I guess we will have the chance to meet you all in person. And thank you for your time and being here today, and see everybody soon.

Thank you.