Thank you, [indiscernible]. Thank you for joining us for Stingray's conference call for its second quarter results for fiscal 2024 ended September 30, 2023.

Today, Eric Boyko, President and CEO, Co-Founder; and Jean-Pierre, CFO, will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's second quarter results for fiscal 2024 was issued yesterday after the market closed.

Our press release, MD&A and financial statements for the quarter are available on our website at stingray.com as well 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. These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray's annual information form dated June 6, 2023, which is available on setter.

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.

Also, please be reminded that some of the financial measures discussed over the course of this conference call are non-IFRS. Please refer to Stingray's MD&A for a complete definition and reconciliation of such measures to IFRS financial measures.

Finally, let me remind you that all amounts on this call are expressed in Canadian dollars unless otherwise indicated. With that, let me turn the call over to Eric.

Good morning, everyone, and welcome to our second quarter conference call for fiscal 2024. Stingray delivered solid second quarter results with organic growth of 7.1% year-over-year in broadcast and recurring commercial music revenues, resulting in an adjusted EBITDA of $29.5 million or an increase of 9.2% compared to last year.

Our retail media and fast channels performed exceptionally well, delivering on the strength of 34.9% year-over-year revenue growth from our retail media advertising business and our fast channels along with healthy contribution of our in-car entertainment segment. Seizing multiple opportunities, we believe we will hit double-digit revenue growth for the foreseeable future.

Our retail audio advertising network in the U.S. and Canada continued to grow and strong contribution from pharmaceutical and packaged goods advertisers.

We expect to grow our retailer footprint and provide more scale to the advertising network. During the quarter, we already added PV Mark, the first hardware store chain in our Canadian retail ad network, connecting this brand with highly qualified consumers during their in-store shopping journey.

As a result, we are on track and still maintain to achieve 40% revenue growth in retail media advertising for this fiscal year. In terms of 3 ad-supported streaming TV channels, AP new stigma channels appeared on Samsung TVs in the U.S.

last month. This extended partnership is affected to quite listening hours of our audio and video products on the Samsung platform, highlighting our commitment to deliver top-tier music content to a broader audience and drive asset monetization to new heights.

Last week, we announced the debut Zenith on Visio free streaming service, Watch Creek and Samsung, which marks Stingray entry into the wellness space for fast channels in the U.S. Venla offers a rich musicalecon spanning various genres such as spot, Zen, healing and meditation.

In short, this new fashion rises dues with a unity emerged journey towards trancelity and Serenity, which we need a lot of Stingray while Stingray broadens the scope outside of its traditional entertainment. Turning to AcardEntertainment.

The beta launch of Stingray Category application and 300,000 BD car is scheduled for mid-December with an overteasystem update due late January. We're addressing a fraction of BYD's total car fleet in Europe and Latin America.

With this initial launch, we are hardly optimistic to expand our footprint with the world's leading manufacturer of new energy vehicles. Already, our team is working on version 2.0.

As for SVOD segment, revenues were slightly down in the second quarter as we continue transitioning towards the B2B-centric partners, which large install customer base. The end result is that this business is more profitable in terms of EBITDA generated and sustainable for years to come.

Finally, after completing a rigorous RFP process, we are proud to announce that we have renewed and expanded our commercial background music and digital signage service with Bank of Montreal, BMO for commercial locations in Canada and an additional period up to 5 years. In addition, Stingray will now proudly service BMO commercial locations in the United States, including Harris Bank and Bank at West branches for the same period after 5 years.

Across North America, this represents almost 2,000 locations that will receive both our commercial background music and digital signage service. Although-- altogether, revenues for our broadcasting and commercial use business increased 10.9% to $49.9 million in the second quarter of 2024, while radio revenues remained stable year-over-year at $32.7 million as we continue outperforming the industry.

I would like to add the announcement -- the announcement of a partnership agreement with Air Transat. As you know, we also service Air Canada last week that would provide passengers with enhanced entertainment experience on their flights worldwide.

To sum up, we're moving team ahead with our growth initiative to maximize revenues on a long-term basis. We're talking about moderate investment in the high-margin, high-growth sectors.

We anticipate the ticket-out effect on the bottom line will be substantial given that we are leveraging many businesses with 90% and above gross margin as we keep growing our revenue base. A final word about our capital allocation.

Our #1 priority remains debt reduction as we would like to reduce our net debt to pom adjusted EBITDA to the sweet spot between 205 and 3x. We remain confident of bringing it down to close to 3 by the end of December of this quarter and closer and closer to below 2.8 at the end of the year.

During the second quarter, we were required to make a payment of $6.8 million to CRTCpotangible benefits related to past radio acquisition. This has been our ability to reduce our debt level in the quarter.

Jean-Pierre will provide more explanation about capital allocation and free cash flow over the next few quarters. So with this, very positive, very happy with the quarter, and I'll pass you to our friend JP.

Thank you, Eric. Good morning, everyone.

Revenues reached $82.5 million in the second quarter of fiscal '24, up to 6.2% from $77.6 million in Q2 2023. The increase was largely due to higher retail media advertising sales to a positive foreign exchange impact and equipment and installation sales related to digital signage.

Revenues in Canada improved 2.5% to $48.4 million in the second quarter of 2024. The growth reflects enhanced equipment and installation sales related to digital signage, increased in-store commercial revenues as well as a greater revenues from retail media advertising.

Revenues in the United States grew 17.5% year-over-year to $21.6 million in Q2 2024 on the strength of increased sales from retail media advertising. Revenues in other countries rose 3.8% to $12.5 million in the most recent quarter.

The increase can primarily be attributed to a positive foreign exchange impact. Looking at our performance by business segment, Broadcasting and Commercial Music revenues increased 10.9% to $49.8 million in the second quarter of 2024.

The growth was primarily driven by higher retail media advertising sales, enhance ENL related to digital kinase and a positive foreign exchange impact. Radio revenues, meanwhile, remained stable year-over-year at $32.7 million in Q2 2024 as higher local and digital advertising sales were offset by lower national airtime revenues.

In terms of profitability, consolidated adjusted EBITDA improved 9.2% to $29.5 million in the second quarter of 2024 from $27 million in Q2 2023. Adjusted EBITDA margin reached 35.8% in Q2 2024 compared to 34.8% in the same period in 2023.

The growth in adjusted EBITDA and adjusted EBITDA margin was mainly driven by higher revenues year-over-year Plus note, our operating expenses for the second quarter should be the run rate going forward as our cost-cutting initiatives implemented last year at full circle on an annual basis. By business segment, Broadcasting and Commercial Music adjusted EBITDA increased 17.5% to $19.9 million in the second quarter of 2024.

The year-over-year increase was mainly due to an improved gross margin on higher revenues. Adjusted EBITDA for our Radio segment declined 2.8% year-over-year to $11 million in the second quarter of 2024.

The decrease can be attributed to a slight revenue decline combined with higher music regulatory EPs. In terms of corporate adjusted EBITDA, which represent head office operating expenses less share-based compensation as well as performance and deferred share unit expenses it amounted to negative $1.4 million in the quarter.

Stingray reported a net income of $9.4 million or $0.14 per diluted share in the second quarter of 2024 compared to $3.3 million or $0.05 per diluted share in Q2 2023. The increase was mainly driven by a gain on the fair value of dilutive financial instruments, better operating result in a foreign exchange gain.

These factors were primarily offset by a higher income tax expense. Adjusted net income totaled $14.6 million or $0.21 per diluted share in Q2 2024 compared to $10.8 million or $0.15 per diluted share in the same period of 2023.

The increase can mainly be attributed to the better operating results and a greater foreign exchange gain partially offset by higher income tax expense. Turning to liquidity and capital resources.

Cash flow generated from preparing activity of $19.1 million 2024 compared to $18.4 million in '23. The year-over-year improvement was mainly due to better operating results as a positive foreign exchange impact, partially offset by a greater negative net change in non-cash operating items.

Adjusted free cash flow amounted to $15.6 million in Q2 2024 compared to $15 million in the same period of 2023. The increase was mainly related to better operating results, partially offset by higher interest expense and more income tax paid.

From a balance sheet standpoint, Stingray had a cash and cash equivalent of $9.7 million at the end of the second quarter, subordinate debt of $25.6 million and accretive facilities of $374.6 million, of which approximately $51.5 million was available. Total net debt at the quarter end stood at $390.5 million or 3.9x pro forma adjusted EBITDA.

Net debt increased $2.5 million sequentially mainly because we paid $6.8 million in tangible benefits to the CRTC during the second quarter. This payment affected our ability to lower our debt level.

We have 2 payments totaling $8.8 million leftover for the next 24 months to complete our payment schedule related to the Path radio acquisition. Nevertheless, our net debt pro forma adjusted EBITDA ratio still improved secondly from 3.28x in Q1 2024 on the strength of increased adjusted EBITDA over the last 12 months.

As Eric mentioned earlier, our #1 capital allocation priority is to reduce our debt level and in the process, bring our financial leverage below 3x during the current year. This ends my presentation.

I will now turn the call back to Eric.

Okay. [indiscernible] this concludes our prepared remarks.

At this point, Jean-Pierre and I will be pleased to answer any questions you may have. [indiscernible]

Eric, when you say the double-digit rent growth for the foreseeable future, are you referring to just broadcasting and commercial music or consolidated revenues, total revenues.

This question, Adam, your right. It's one of the things we discussed on the Board.

So we always keep it for broadcast and commercial. But I think in the future, with the business growing much bigger than radio, we're probably going to use it constantly.

But for now, you're right, it's only for broadcast and commercial.

Okay. Just in terms of the comment about 40% retail media rent growth for fiscal 2024, I mean you were pretty clear back on the Q1 call that there was a bit of a timing issue around Q1, obviously, a resuscitation in Q2.

So are we looking for a rather meaningful ramp over the next couple of quarters? Because how do we get to that 40% for the year?

Yes. Q3, we're already at 40 almost 45 days into it, and we're going to well above 50%.

And we have a good chance to even double last year. So we're really, really heading in, in October, November, December, very strong with signed POs.

So very happy with that on the retail media side. And also the fast channels to our surprise, we launched we had one channel with Samsung that was generating about $200,000 of EBITDA.

Now we launched 20 channels. We expect those sales to [indiscernible].

So you add the fast channels, you have the video, you have Samsung, you asked retail media. Everything in the Stingray advertising bucket is growing by large money by large implants.

So I take very confident to surplus nicely the 40% for the year, and this quarter is looking just everything is looking green.

Just 2 quick questions on margin. I mean, JP alluded to the fact that you've lapped the cost-cutting savings from a year ago.

Are there more restructuring savings to be pursued? And then just related to margin as you gear up for the joint sales arrangement with Mood Media into the new year, are there particular investments that we should be thinking about that could have a bit of an effect on margin?

Yes. So not -- no real plan of cost cutting.

But one thing that we're -- I think Stingray is one of the most advanced companies in Canada in terms of using AI. So AI makes us a lot more productive, and we're able to launch many new products.

So when we talk about Zen life, we launched Holiday scale. We're just much more effective with content and delivery.

So the good news is we'll be able to expand ourselves without expanding the team and our cost -- so we're very happy about that. So -- and like we mentioned on our speech today, all -- when we talk about fast channels, fast channels have -- because the revenues are net, all these products are 90% gross margin.

So we should expect that our EBITDA margin will continue going up on the broadcast side. So we did 40% this quarter, but we can expect that with the more we sell these products, the more that will increase our margin.

In terms of no, the deal with mood is a cross-selling agreement. So far, we did $2 million of cross-sell.

So it's a good start, not a huge number. So -- and we got to get better at it.

But for sure, the relationship is -- I think we'll see more results in the future quarters. But so far, it's been limited, and there's no cost.

The beauty about this agreement is no cost. It's really a collaboration agreement.

And I think we're going to see some success in the next few quarters.?

Eric, you referred to sort of the trend you see on the slide. It is notable that subscriber component of subscription component of BCM is also sort of sequentially strengthening.

I was wondering if you can talk to those components. We know that in car is obviously ramping.

But any kind of indication as to how the SVOD and the legacy piece have trended as we continue to see the subscription line within CAM Cash commercial.

Yes. So all of the advertising segment, like I mentioned for Adam, we feel very comfortable with our 40% goal for this year.

And I think right now, we're very well positioned with the actual sales that we have, so that we're happy. For SVOD, we're making the pivot from B2C to B2B, the B2C market with the end of COVID, I would say that most of our competitors are calling us to try to do a strategic deal.

It's been very difficult. So we did the pivot.

But every time we lose a subscriber at $15 because we affect gross and then we pay Apple 30%, we replaced it with a subscriber at $5 with Amazon or Comcast. So for sure, the pivot doesn't help us in the transition.

But the investment on the B2B side is minimal compared to on the B2C side, we were spending more multiple millions of dollars in the user acquisition. So I think it's the right move we did, but the pivot will affect not our subscribers, but the sales for the next few quarters.

The good news is with Amazon, we're going to be launching another 10 to 20 countries. And also, we're adding the ZenLife product as SVOD.

So that will also be a new product, a bit like we're doing in the past. So I think we'll continue to see the growth, and we still maintain our goal to reach 1 million subscribers, but it's going to be most probably almost -- most of it will be B2B.

Great. And just a quick follow-up on the margins.

On the retail media side, I know that there's kind of a mix there of some rev share agreements as well as some fixed cost agreements. Can you give us an idea of what the dynamics are?

I mean, what kind of margin impact we should expect as retail media ramps up at the pace that you're referring to?

I think we should expect the same margins roughly that we have in the commercial business. So margins of about 40%.

So in your guidance or in your report, that's what you should measure. And the margins, again, on the fast channels are much higher because if we do a $1 of sales, we only include the net revenues after the red share with the Samsung and LG.

So on the fast channels, the margins are much higher, more like 90%.

I was late hopping on. But just on the ad market, Eric, as you kind of look into Q4.

Obviously, your businesses, you're quite bullish on. Just wondering if when there's anything kind of macro-wise seeping in, in terms of weakness as we get to the kind of seasonally stronger holiday season?

And then secondly, just on the in-car entertainment ramp-up. Last quarter, you talked a lot about kind of where you see this segment in this business heading.

What should we kind of look for in calendar 2024 in terms of how this particular revenue stream ramps up?

Okay. So yes, for the fashion like I mentioned, Adam, we expect this quarter to be above 60%.

So we're having a great quarter of signing IOs. So we're very excited.

All of our segment, Retail Media Canada, retail in the U.S. and the fast channel we're growing at like these high, high double digits.

So we're very happy about this quarter. So no impact.

For the car business, we're launching BYD in December. So that's a big one.

BYD, we're launching 400,000 cars, do 4 million cars a year. And how many cars were going to be, we don't know.

We're also looking to do mics for them. It's a big agreement.

We went to visit BYD at their plant in China, while very impressive. It's like -- it's just a very impressive company.

So that's our first 2 big. And CES is coming along.

And I can tell you that we're speaking and we did the -- we went to Korea, Japan and China. We've been California maybe 6x.

So every big car manufacturer in the world, Toyota, Mitsubishi, Subaru, Volkswagen, Audi, friends at Volvo, every Honda--- every car manufacturer in the world we're in discussion. We're looking at different applications.

It's going to be interesting because all these deals are deals from 8 to 15 years. So it's going to be an interesting, but tough to see if we're going to be in every car.

But for BYD, that should be material for next year. We get a revenue per car.

So we'll see the impact of that. And hopefully, we'll have more car launches in 2024.

So exciting times, but we've got to show the pudding.

And just like I'm clear, in terms of like Stingray services being installed here, I know it's Stingray Karaoke. Are there other services that are being installed or certainly you're thinking of kind of broadening kind of the service portfolio?

Just how are you thinking along those lines?

Very good question. So a, we're providing Karaoke.

We're also looking to provide music a bit like -- it's like having X-Series in every car in the world. So a lot of discussion about that.

And the other one that every car manufacturer wants that we own is our comradio unit. So you can having a conradio app in your car while you drive.

-- maybe will be needed here in Montreal with the traffic and the way people drive. But I think there's a lot of demand, and we'll be launching ComRadio with BYD as an example.

So I think we have these 3 products, and we're also offering -- as you know, we have a trivial division. So we're also launching trivia, audio trivia in cars.

So it's really a nice bundle of products that will be included when your car is connected. So at the end of the day, the cars will become your next cable operator, if I can say.

So interesting -- and 99% of the listenership in cars is done while you drive. So it's that -- I think Netflix realized quickly, when you park your car and you charge your electric car, you're not going to stay in your car and watch Netflix.

You're going to go get a coffee, you're going to buy sell something or walk a dog, people don't stay in their car while it's charging. So -- and we have a chance as an audio company to be able there when you drive your car, and that's why the Karaoke app on Tesla is such a success because it's in car driving.

First, I'm glad to hear you're maintaining the 40% guidance. Wondering if in retail media, what are the kind of next steps operationally that you're implementing?

You see that while you've established a better sales force. Maybe you can provide an update on where we are in terms of audience measurement.

So what's next in operational terms.

The big issue that we have in retail media in both in U.S. and Canada is we're selling roughly 10% to 20% of our inventory.

So we really need to increase the sales function. We've hired a lot of new people, hiring salespeople takes time.

So it's for sure the training. So we have a lot of capacity to sell more both in the U.S.

and Canada and the agreement with move really helps us on that. But we have to be more aggressive on the sales side.

I think everybody realizes that. Second thing in Canada, we're looking to finalize the last 2 big risers that were in final stage and the 2 last pharmacies that we don't have.

So our goal will be in Canada that by the end of the year in March, we would have every pharmacy and every grocery store in Canada connected to a retail media, giving us that network effect. So those are the 2 things we need to have right now.

And the third one is we have to eventualize this market. People are used to buying radio.

People who used to they're buying TV, people are used to buying out of home. So we're not in one of those buckets.

So we're in a bucket that's out of home, but in stores. So I think it's working well.

A lot of new advertisers with us, but we have still a lot of work to do.

And the second one is on the third quarter outlook for next quarter. I was looking at my model, it looks like a tough comp.

It was a very good quarter last year at this time. Can you remind us if there was anything special last year in the -- for the year-on-year terms for next quarter?

Yes. No, this quarter, again, it looks all green compared to last year, very positive.

I think the consensus that we have in the market is fair and we feel very comfortable. Also, we -- not only on the fast channels but retail media, but the Tesla and all of our customers are -- everything looks good and also a strong quarter in E&L, a lot of deployment.

So I think we'll be very comfortable to meet your consensus or even try to exceed them.

I also missed the front end of the call. So apologies if I double up with anything.

But... Eric, you mentioned getting more aggressive on the retail media sales front.

Is there any -- would there be any desire to sacrifice any margin in order to cut price to sell more? Or is that not necessarily.

It's really just a matter of body.

So like I said, the retail media margins right now are roughly the same than our broadcast division around 40% EBITDA margin. And for us right now, it's hiring the right people, but the sales are so huge.

The tickets we get in the U.S. would be anywhere from USD 1 billion to USD 3 million a ticket.

So if you get the right person with the right advertiser, it just it's -- but it's -- again, it's getting -- it is a new market, not many people have experienced retail media selling -- so you get certain individuals and they're not used to this market. So there's a lot of work to train, eventualise, and that is our biggest challenge.

We want to do tuck-ins on that, but we have -- we're only selling 10% of the inventory right now. So we could do 10x more sales if we would sell all our spots.

So in radio, they say, if you don't sell it, you lose it because you can't get that minute. So radio guys do a good job.

And we have to get to that level one day with Retail Media.

So it sounds as if pricing is not the road back there. It's really just sourcing the demand for fill that...

Sourcing the demand and -- again, the buckets is TV, radio, out of home and you have the in-store co-op budget, how do we fit in in those. And so we really have to eventualize this new opportunity.

We're getting a lot more sales. The radio team is selling a lot of retail media.

So we call it from wheels to store. So you'll hear have in your car.

And then when you get to the store, you'll hear the same ad knowing that the person was in the car and is going to Metro or Loblaws. So working very hard together to get that connection.

So we'll get a buy for radio and then they will get a buy for retail media. But again, it's a new strategy.

And like I said, we're having a great incredible growth this year, but we'll need to be more -- again, more strategy and more salespeople and more customers, and it's all about execution.

Okay. That's really helpful.

And then you've mentioned in the past that there's good recurring, the nature of this retail media is are quite recurring. Is that -- are you still seeing that like the existing customers are...

Yes... 95% of our customers, are recurring.

So it's a very -- so that will be -- the Holy Grail our goal is to be -- we get to the size that we can start doing the TV group does. We do up-fronts.

So in the U.S., we are doing upfront for next year. So in the U.S., we now with the big pharmas that will give us an upfront in November, December for the whole year.

So in the U.S., with some pharmacies and all that, our fill rate is much higher. So we have -- we're able to do upfront because in the U.S., our fill rate goes much higher with certain vectors.

So that's exciting. So that will be the holy goal that we start doing.

Just 2 for me. How should we think about the E&L line equipment and labor line?

I mean, is that going to drive directly off installations. So is there a sort of quarterly run rate you can give us or kind of direct us to?

And the second question, just on debt reduction. You mentioned you had a tangible benefits payment in the quarter and I think you said there's another $8 million over the next 24 months.

Is there -- how should -- like when should we think about those payments dropping? And is there anything else, any other contingent considerations, any other one-offs in terms of payments we should think about as we try and project your debt reduction schedule.

Okay. Thanks.

And by the way, Tim, I want to say thank you for BMO for this great agreement. I was for us.

It was good for us to be involved with a local bank. So just...

I had a lot to do with it. Let me tell you.

No, no. I even got a nice e-mail from your CEO.

So I was very impressed by that. Now, with the BMO deal, we're looking at anywhere $500,000 a month of recurring.

These are round numbers or -- so $6 million a year for 5 years. You got $30 million of recurring.

And on the E&L side, anywhere between $5 million to $15 million a year in E&L. It depends -- that one is -- you got 2,000 location and every location that we do signage in is about 50,000 locations.

Again, these numbers are around. So it's a very nice agreement for us.

So we're happy with that. That will sure impact the E&L for the next few years.

I must say that lately, E&L for us, it's not a big margin EBITDA business. And it's really it's not really recurring.

So that's why we never use it in our organic sales because it goes up and down. But for sure, we can expect E&L to at least grow by at least $10 million a year more.

So we were at 18% last year. So I think we'll be running between $25 million to $30 million a year in the future.

But very happy with the recurring part of the content that we provide on signage -- so in terms of debt reduction, first of all, we have STC, we have a payment of roughly $4 million in August, '24, $4 million in August '25. That's the last payment that we have to pay for the radio acquisition.

So we're happy with that. We -- all of it is paid off.

And there's no -- there's really no more. As you can see, there's no more real we don't have any earn-outs -- that's very minimal.

So I would put in my models almost 0 earn-out coming out or less than 2 million net very material. -- all of the ICE deal that we bought for $60 million was paid off last quarter.

So we paid that deal in less than 2 years. So we're happy with that.

And the debt EBITDA, like I mentioned before, will be close to 3 in December and will be well below 3 by March. We are reimbursing a lot of debt in Q3 Q4 and with strong EBITDA, strong margin.

And the customers we have -- they pay in 30 days. So we're not worried about Samsung and Tesla and BMO and all these and all our customers paying.

So we're in a good position to really -- and next year, we expect to be well below 2.5 at the end of next year. So our debt EBITDA ratio was really coming down fast.

Thank you, Tim, again for the deal.

Okay. On behalf of the entire Stingray team.

Thank you very much for joining us today on the conference call. I know you guys have a busy day.

I know it's a lot of traffic out there. So we look forward to speaking with you again following the lease of our third quarter results in February, and we're excited for that Board meeting already in advance.

So thank you for every analyst to take your time and speak to us today. We appreciate your devotion and attention.

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