Good morning, everyone. [Foreign Language] and thank you for joining us on Stingray's Conference Call for the First Quarter ending June 30, 2017.

Today, Eric Boyko, President and CEO 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 the market opened.

Our press release, MD&A and financial statements for the quarter are available on our investors 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 8, 2017, 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. I will now pass the call to Eric.

[Foreign Language] Good morning, everyone. Before I provide you with key financial and operational highlights for the first quarter of this year, I would like to give you a short summary of our first quarter.

I also want to say that later this morning, we are -- we'll be hosting our second Annual Shareholder Meeting at our headquarters in Old Montreal so you're all invited to join us. For the first time this quarter, revenues from outside of Canada represented more than 50% of our sales.

We are particularly pleased with our present south of the border, which now accounts for 15% of total revenues and is growing at an accelerated pace with clients such as Comcast, Amazon and AT&T. Our pipeline of acquisitions, opportunities remained significant and we expect to maintain the M&A pace in the current fiscal year.

Last Monday, or this Monday, we announced 2 acquisitions in the conference music space, SMA and SBA, which complements our existing operations in Australia with Foxtel providing us our commitment to growing our presence in the strategic Asia Pacific market. We are pleased that we've already achieved close to $29 million of acquisitions this year, that will generate close to $5 million of new EBITDA.

On the Stingray Music mobile site, we achieved an important milestone with 2 million downloads, representing a twofold increase over about a year. The app now receives 4 million visits monthly at a level of engagement with listeners is exceptional, reaching 9.2 hours a week, well above industry average.

Our mobile effort to expand the reach of the app continues with a recent launch in Singapore. We are quite pleased with our results for the quarter, which showed a solid performance for the Unites States and International market.

Let me share with you some key highlights. First, revenues increased 18.9% to $29.2 million, and adjusted EBITDA increased 16.3% to $9.2 million.

The increase in revenues was primarily due to acquisition of Yokee Music combined with a 6% organic growth, mainly from Music Broadcasting, B2C Karaoke, Apps, SVOD, which now exceeds over 100,000 paying the subscribers across North America and Europe as well as additional sales primarily related to digital signage in Commercial Music. Second, as I have indicated just now, revenues of outside of Canada represent more than 50% of our sales.

We're particularly pleased with our presence south of the border which saw a 65% growth and now accounts for 15% of our total revenues. Third, recurring revenues increased also by 16.9% to $25 million over last year, which represent 85.7% of our total revenues.

Our goal is to remain -- for our current revenues to represent between 85% to 90% of total revenues. Fourth, adjusted free cash flow increased to $7.2 million compared to $5.9 million last year.

The increase is mainly due to higher operating results and foreign exchange gain partly offset by higher capital expenditures. As a result of this strong performance and our positive outlook for the future, the board has decided to increase the dividend by 11.1% to $0.05 per share representing our fourth increase since we became a public company, which shows that we can grow the business and return cash to our shareholders.

These last few months have been quite busy as we announced new acquisition such as Israel-based Yokee Music, provider of 3 social music app, regularly ranked in the music category's top 10 in 100 countries. Our music app -- this music app has now reached over 95 million downloads in 4 years and counts 6 million monthly users.

We also announced the acquisition of a music video television channel called C Music Entertainment, a London-based multi-award-winning TV channel dedicated to Classical, Crossovers and Cinematic music videos. We are strongly committed in investing our growth plan as we announced during this quarter, the expansion of our head office and our intention to hire 400 new employees over the next 5 years, a response to growing demand for our services worldwide.

So Jean-Pierre will review the quarterly financials in more detail. [Foreign Language]

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 $29.2 million in the first quarter, an increase of 18.9% compared with revenues of $24.5 million a year ago.

The increase was primarily due to acquisition combined with growth from Music Broadcasting with B2C karaoke apps and subscription video-on-demand services in the United States, as well as additional equipment sales primary related to digital signage in Commercial Music. Recurring revenues were up 16.9% to $25 million or 85.7% of revenues from $21.4 million.

When compared with last year, recurring revenues as a percentage of total revenues slightly decreased from 87.2%. Music Broadcasting revenues increased 22% to $21.8 million, primarily due to the acquisition of Classica, Much Channels, Festival 4K for fiscal 2017, as well as Yokee Music and C Music in May 2017.

And organic growth in the United States market primarily related to B2C Karaoke apps and subscription video-on-demand services. Commercial Music revenues rose 10.4% to $7.4 million, mainly as a result of organic growth in sales and of equipment in installation primarily related to digital signage.

Starting this quarter, revenue by geography has been segmented in 3 regions, namely: Canada, United States and International. Revenues generated in Canada increased 3.2% to $14.5 million in the first quarter.

International revenues were up 29.5% to $10.1 million, and United States revenues rose 65.1% to $4.5 million. Growth in Canada was mainly related to Commercial Music.

In the United States, this was mostly due to acquisition and organic growth. And as for International revenues, growth was due to the acquisitions.

Adjusted EBITDA was up 16.2% to $9.2 million from $7.9 million a year earlier. The increase was primarily due to acquisitions, partially offset by higher operating expenses related to International expansion.

Adjusted EBITDA margin decreased to 31.4% from 32.1% a year ago, mainly due to cost comprised in recent acquisition, additional equipment and installation sales and other product mix which present lower margins. For the first quarter, the corporation record a net income of $300,000 or $0.01 per diluted share compared to $2 million or $0.04 per diluted share last year.

The decrease was mainly due to the higher legal fees, higher amortization expense of intangible assets as well as negative change in fair value of investment in contingent considerations, partially offset by higher operating result and gain on foreign exchange. Adjusted net income increased 9.5% to $5.7 million or $0.11 per diluted share, compared with $5.2 million or $0.10 per diluted share a year ago.

The increase was a mainly due to higher adjusted EBITDA, partially offset by higher income net tax expenses. Cash flow from operating activities amounted to $600,000 in the first quarter versus $2.7 million.

The decrease was mainly due to a negative net change in the working cash capital items associated with higher accounts receivables, higher trade payables paid and higher other current assets as well as higher income tax paid. The decrease was partially offset by higher operating results.

Adjusted free cash flow increased to $7.2 million compared to $5.9 million a year ago. The increase was mainly related to higher operating results and foreign-exchange gains, partially offset by higher capital expenditures.

Looking at our financial positions, [ let me ] conclude the first quarter with cash and cash equivalent of $3.2 million. Our net debt position was $55 million, resulting in net debt to the last 12-month adjusted EBITDA ratio of 1.56%.

As of June 30, 2017, the corporation had $100 million revolving credit facility, of which approximately $41.9 million was unused, allowing it to pursue strategic acquisition program and investments to achieve its growth objectives. I will now turn the back the call to Eric.

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

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

So I'll pass it back to the operator.

I wanted to ask you related to your M&A strategy, you have been running faster than what we had initially expected or I think you guys had indicated earlier in the year. Can you talk about your goals for the rest of the year?

Have they increased based on the performance you've been able to achieve so far? And if so, can you maybe update those targets for M&A targets that you'd like to do in a specific year, i.e.

on revenue on EBITDA. And on the second question I had is related to the growth in the U.S.

Can you talk about what we've seen so far in terms of increased revenue in the U.S.? How much more should we expect to see as you ramp up your Comcast relationship?

Okay. On the first one, in the first 4 months, so I'm including Q1 and also SBA, SMA, we've already invested close to $27 million of acquisitions for roughly around $4.7 million of EBITDA after synergies.

And so we already achieved our goals for the year, our goal, as we always state, is what we call the 5-25, $25 million of acquisition to generate $5 million EBITDA. So we can say that for sure, we're going to be ahead of the plan because we already achieved it in 4 months.

You know the fact that we hired Valery Zamuner and her team, we have an official M&A team helps us. Don't forget, we have also increased the exec by 3 new roles.

Now we added [ Valery ] in sales management and in HR Sébastien Côté. So we now have a good team in place.

I think for us to reach the $200 million in sales. So that helps us in terms of M&A and growth.

Regarding the U.S, so for sure the -- every time I meet investors, they always ask me what's your first market? They always ask us, what is your first market?

It's all about the U.S. We're the only media company in the world that doesn't do 50% of their sales in the U.S.

So now the success of Comcast, the success of Amazon, we are doing well with AT&T, we are doing well with other operators, so we're excited by that. The SVOD services that we've launched, we were also -- management was also very surprised.

We're much higher than budget. We'll see if it's going to maintain.

But these 100,000 subscribers that we have in SVOD, these are recurring revenues. So all I can say is these recurring revenues are increasing and the number of subscribers are increasing.

And our strategy of B2B to C -- because all these subscribers, it's not us selling directly. The bill of these SVOD service go on Comcast, they go on Amazon Prime, they go on AT&T, they go Verizon, they go with Telefónica.

So I think that strategy is working. And it's going to be a very interesting growth for the company for the next couple of years, at least.

But I was just going to have to ask you again, I guess, on your targets for acquisitions for 2018, can you maybe give us maybe...

Again, our target is always...

You've done great. I mean, you've achieved your targets for the year, I guess, in the next -- in a few months.

But what should we expect for the rest of the year? And just to follow-up on your growth, organic growth perspective, you mentioned you had 6% organic growth.

How much of that was -- if we exclude FX, how much of the growth was -- and should we expect that growth to continue to improve in the following quarter?

Again for the targets, management would say, we've already achieved our goals for this year. But we're not going to stop working.

But in terms of our goals that we gave to our shareholders and our board, we've achieved our target so we're happy about that and we'll keep the pipeline. But there's no pressure for us to do x number of acquisitions per quarter.

So there's no pressure on management and from our board on that part. But again, we're not going to stop making acquisitions.

And the pipeline, like I always mention, is very strong. We have a lot of these small tuck-ins that are very -- not very risky, 5x EBITDA, a good earn out.

So I think we won't go further on that one. Regarding the organic growth, for sure, so we achieved this quarter the 6% was 1% FX, 5% organic growth.

So 5 plus 1/6. And look, if the SVOD subscribers keep on increasing, then for sure we will be able to maintain and achieve our goal of organic growth 5%.

So I think we're right on track.

Can we talk a little about margins? I think we expected a dip in margins going into the first half of the new fiscal year.

Obviously, some additional expenses, you highlighted some 3 new executives and international expansion. Can you talk maybe about additional moving pieces and what to expect going forward in terms of objectives on the margin front?

Yes. So, for sure, the U.K.

acquisition, the B2C business runs more at about 20%, so it's not as high-margin as the B2B business, but sales are increasing very rapidly. We had very large increase in sales, almost 20% since we bought Yokee.

So we're very excited about that. So that puts a bit of pressure on the EBITDA margin.

Now, I would say that between 32% to 34% is a target for the year. And absolutely in Q1, we do -- we have a big payroll.

So in Q1, just by the increase in salaries and by adding new headcount, you got to hit there about $800,000 in OpEx just based on -- by the time we increase sales. So I think we're in line.

And if sales keep on growing very quickly as they are right now, then EBITDA margin will improve.

When we look to the acquisitions particularly the last 2, we now see the acquisition price points in the disclosures. Any information you can give us on revenues in EBITDA for SBA, SMA?

Roughly, these acquisitions we did around $10.5 million. They'll generate about $6 million in sales and my numbers are round up and about $2 million EBITDA.

So -- and by when we say the acquisitions we do, the $10.5 million and the $27 million that we did this year, it's always including earn outs. As you know, on average, earn outs, depending on the seller, 50% of the earn outs are paid.

But we always include that in our cost of acquisitions.

I've got 2, if I may. One on the commercial market and then one on mobile.

Just with SBA and SMA, Australia, I guess, I can imagine it's a very similar market to Canada and you dominate in Canada in Commercial Music, slightly different from Mexico. Can you dominate like you do in Canada in these markets, Australia and Mexico?

And what other countries out there are you targeting where you can play that dominant retail role in Commercial Music?

So for sure, Australia, good market, good rights management, very similar to Canada and the U.S. So we know and that's based now with the Foxtel deal we have.

In Australia, we'll be doing total over $10 million in sales. We're very happy for that market and good margins.

And Mexico we're also very aggressive in the Mexican in front. We have our team in Mexico City.

So, I think, we also have targets in Europe that we want to grow the Commercial business. Again, we have -- with Mood Media, Mood is our partner affiliate for the U.S.

So we have -- we're the franchisee in Canada, the franchisee or the franchisor, in the U.S. But we expect good growth in Australia, Europe and Mexico.

Okay. Just a follow-on, on that lot, if I may.

When you look at retail brands, like [ ZAR ] or whatever, that have retail presence in multiple countries around the world, do you get a benefit of that? Are you seeing a higher strategic relationship with some of these international brands?

So the international brands, for sure, and the big brands are all investing heavily in the store experience, so Stingray benefits on that both on the music side and digital signage. So it's -- I think at our AGM today we're going to show the shareholders the project we did for Sports Experts.

It's a pretty impressive project of what the stores are investing for customer experience.

The second question on mobile. I've noticed on my mobile app some advertising coming through.

Do you have a sense or can you give us some metrics on what kind of monthly ARPU pick up you are getting from advertising or CPMs?

This year, we've projected to have $0.5 million in advertising revenues so it's our first entry in advertising. We're right on target, so we're happy with that.

So it's not material. No, it's not very material and we don't expect much EBITDA from it.

For sure, our goal is to see how much advertising revenue can we generate per user. And right now, we're on trend to generate about $0.30 to $0.35 per user of advertising and that gives us flexibility in terms of strategy worldwide on how we can deploy our mobile app.

30% to 35%, is that more than your wholesale rate?

$0.30 to $0.35.

Cents per month, yes.

Per active user.

Okay, oh, per active user. That's a very helpful.

Sounds like a good revenue stream.

For this year, immaterial. For 2018, '19, then it could be a nice vector for us.

And for sure, advertising is something that management is looking not only in the mobile, but we also with the music video channels in Canada. We want to monetize those and we're a specialty channel, JAZZ, iConcert worldwide.

So we officially created a B2C team that generates $10 million of sales and that team is responsible for advertising.

First, I wanted to ask on the SVOD services. Now that you have a few extra months under your belt, do you have any sense of the profile of these?

Is the churn higher than typical, or can you talk about the churn numbers at all?

Yes, it's tough because we just started. We just started, as you know, with Comcast in April.

We just started with Amazon in June and July. So all the numbers are fresh.

All I can say is that these numbers are way above our budget and our initial forecast. The growth is very impressive, and it's a brand-new market for us.

And I can -- many other operators, cable operators around the world will be launching SVOD services. So I can tell you that the whole U.S market is going to be following what Amazon and Comcast are doing.

So we've many more deals in the pipeline. And Stingray has the unique ability -- don't forget, we have 4 services.

So we have Karaoke, Classica, JAZZ and iConcerts. So the market, the individuals are ready to face USD 7 or CAD 10 for a service like a Netflix of Karaoke, the Netflix of JAZZ, the Netflix of Classica.

So I think Stingray is very well-positioned and this goes directly in our strategy of cross-selling. So all the content that we buy in Europe, all the content that we do for Karaoke, we cross-sell those on the SVOD platforms.

So these, for us, the SVOD revenues generate about 80% EBITDA margin. So this is a very good line for us because they're all paid for.

So we're very excited about that avenue. And it's every week, every week is a surprise.

So it's going to be interesting what's going to happen in Q2.

Okay. And then maybe on just the traditional pay audio side.

You'd previously talked about some opportunities south of the border and contract coming up. Any progress to mention then on that front?

No. Our revenue growth is good in Europe.

In Latin America, we are good also. We're getting some good cross-selling.

The Festival 4K channel is ahead of plan. So the 4K channels.

We'll be announcing a lot of new channel launches in Canada. So again, not material, not big numbers, but we'll be launching some -- we'll be launching 2 to 6 new channels in Canada.

So we're improving on our diversity of products and more in the bundle approach. So we're doing well on the linear side also.

Okay. And then on that front, I mean, organic growth has been very impressive, but on a per operator basis, how can we think about organic growth, whether we're talking about organic growth achieved with Telus or Shaw or Bell or what have you?

The organic growth in Canada like we've always mentioned since the IPO, now we -- for the -- on the broadcast side, which is about $25 million a year, that one is very stable, almost 0%, 2% growth. So we don't see much growth, but we're not losing any subscribers which was one of the questions during the IPO.

So the skinny bundle in Canada has had no effect or no material effect on us so far. And I think the number that's in the market, is that, there's only [ 102 ] skinny basic subscribers in Canada out of 11.5 million households.

So very material. So no effect.

But again, we're able to launch new services in Canada, including the launch in Classica, launch in Festival 4K and launching music video channels then we'll have a group with the new channels.

Okay. Last one for me is just you highlighted your hiring plans.

Obviously, that underpins some very impressive growth. But my concern is that, I would have expected better operating leverage, unless you guys are just going to grow the top line like gangbusters.

So can you maybe just kind of frame your hiring plans out of the new office in Montréal?

So for us, this is the 5-year plan. The new expansion, the new that we did is good for 2022.

Since we started the company here, if you go on the fourth floor where we have 120 engineers, it smells like a hockey room. So for the first time in the company, we're going to have space.

So I think it's good for the staff and the team. For us, the extra rent is going to be about $50,000 a month, but we paid $400,000 a month, even close to $500,000 in satellite fees that we're slowly cutting down.

So the cost of the rent is less than the cost of 1 satellite. So everything is relative.

And we expect no -- with the B2C per share margin is 32%, 34% but if we're able to maintain our growth for sales, the exec team is full. I think I said, we're good up to $200 million of sales and our top management team is full.

So we're in a good position to increase our margin.

Eric, should we read anything into the Australian acquisitions with respect to your appetite for more commercial services, or was that just opportunistic and they came available?

No, no. For us, we've developed after 4 or 5 years, we have a special box that we're able to deploy for Australia, [ SB3 ], and that we can deploy for Mexico.

So these box can now be customized locally. So that gives us the chance to really expand internationally without producing everything here in Montréal.

So for sure, there's, I think there's nice opportunities for us in Europe, for our companies to buy there. Australia, we've always been interested in buying the Mood assets in Australia, but now that Mood is owned by Apollo, we'll have to see if they're selling some of the divisions.

But we're well-positioned to grow the commercial business worldwide with these new boxes.

Is this -- are you pushing this more as a strategic thrust versus broadcasting, or is this...

We're always maintaining 25-75, 75% broadcast, 25% commercial. For sure, if the SVOD growth keeps on growing like it's growing right now, then the broadcasting side is going to overtake the commercial side.

Like I said, the SVOD model for us is a bit of a surprise and the fantastic news. Every 100,000 subs generates roughly between $4 million of $5 million of new EBITDA.

So we know if we can double that. It's all incremental EBITDA.

So it's going to be interesting what's going to happen in the future with all these launches worldwide.

Are you able to share with us any launches that you've locked down? I mean, I gather you have Comcast and Amazon now.

Should we expect Cox or some of the Charter or any of the other big platforms?

I think all of the big platforms. So I think Verizon and AT&T and DISH and Charter, all of the platforms that have more than 10 million subscribers Telefonica, [ LGI ] are all going to be launching SVOD services worldwide and also the mobile operator who's in Asia.

So I think it's a trend going forward. We mentioned what we feel the market's going to be in the next 5 years.

So the niche SVOD services, the micro SVOD services like we have at Stingray, we feel we're well-positioned. We're surprised the appetite of people to pay USD 7 for these SVOD services, but I think that is niche worldwide.

And so I can't commit to names right away, but for sure, they'll be many launches this year with many different operators.

Last one for me. Can you talk about discussions with mobile operators worldwide?

How is that progressing along? Are you getting any closer to locking in distribution of the app?

So good question. We had a good -- we discussed this with our board yesterday.

We have many discussions where we're meeting all the companies around the world. All the big names we're meeting with them.

So for them, the mobile app for the mobile operators, it's all about the strategy. What is going to be their music strategy?

So the discussions are longer than selling content to a cable company. So it's going to be interesting.

For sure, we would want to have more launches and more exciting deals, but I think we're in the right direction and we're testing different strategies of not only including it, but also maybe part of it could be built by the mobile operator. So we're looking at different strategy with them.

So it's interesting, but it's taking longer than what we expected.

Okay. So thank you for joining us on this conference this morning.

Again, if you can make it to our AGM, we're excited to host you at our headquarters. Looking forward to speaking to you again.

So thank you, everybody.