THE WORLD- LEADING PROVIDER OF MULTIPLATFORM MUSIC PRODUCTS AND SERVICES. August 2017

Transcription

1 THE WORLD- LEADING PROVIDER OF MULTIPLATFORM MUSIC PRODUCTS AND SERVICES August 2017

2 LEGAL DISCLAIMER Forward-Looking Information This document contains forward-looking information within the meaning of applicable Canadian securities laws. This forward-looking information includes, but is not limited to, statements with respect to management s expectations regarding the future growth, results of operations, performance and business prospects of Stingray Digital Group Inc. (the Corporation ). This forward-looking information relates to, among other things, our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimations and intentions, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions. Statements with the words could, expect, may, will, anticipate, assume, intend, plan, believes, estimates, guidance, foresee, continue and similar expressions are intended to identify statements containing forward looking information, although not all forward-looking statements include such words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management s expectations, estimates and projections regarding future events. Although management believes the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are based on the opinions, assumptions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to the risk factors disclosed in the Annual Information Form for the year ended March 31, 2017 available on SEDAR. In addition, if any of the assumptions or estimates made by management prove to be incorrect, actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document. Such assumptions include, but are not limited to, the following: our ability to generate sufficient revenue while controlling our costs and expenses; our ability to manage our growth effectively; the absence of material adverse changes in our industry or the global economy; trends in our industry and markets; the absence of any changes in law, administrative policy or regulatory requirements applicable to our business, including any change to our licenses with the CRTC; minimal changes to the distribution of the pay audio services by Pay-TV providers in light of recent CRTC policy decisions; our ability to manage risks related to international expansion; our ability to maintain good business relationships with our clients, agents and partners; our ability to expand our sales and distribution infrastructure and our marketing; our ability to develop products and technologies that keep pace with the continuing changes in technology, evolving industry standards, new product introductions by competitors and changing client preferences and requirements; our ability to protect our technology and intellectual property rights; our ability to manage and integrate acquisitions; our ability to retain key personnel; and our ability to raise sufficient debt or equity financing to support our business growth. Accordingly, prospective purchasers are cautioned not to place undue reliance on such statements. All of the forward-looking information in this document is qualified by these cautionary statements. Statements containing forward-looking information contained herein are made only as of the date of this document. The Corporation expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law. IFRS and Non-IFRS Financial Measures The annual consolidated financial statements of the Corporation have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) and are stated in Canadian dollars. The Corporation believes that Adjusted EBITDA and Adjusted EBITDA margin are important measures when analyzing its operating profitability without being influenced by financing decisions, non-cash items and income taxes strategies. Comparison with peers is also easier as companies rarely have the same capital and financing structure. The Corporation believes that Adjusted net income and Adjusted net income per share are important measures as it demonstrates its core bottom-line profitability. The Corporation believes that Adjusted free cash flow is an important measure when assessing the amount of cash generated after accounting for capital expenditures and non-core charges. It demonstrates cash available to make business acquisitions, pay dividend and reduce debt. The Corporation believes that Net debt including and excluding contingent considerations and Net debt to Adjusted EBITDA are important measures when analyzing the significance of debt on the Corporation s statement of financial position. Each of these non-ifrs financial measures is not an earnings or cash flow measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Our method of calculating such financial measures may differ from the methods used by other issuers and, accordingly, our definition of these non-ifrs financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-ifrs financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows. See the reconciliation tables for all Non-IFRS measures in the Annual Report 2017 and quarterly report for the period ended June 30,

3 PRESENTATION Speakers Eric Boyko President, CEO and founder Mathieu Péloquin SVP, Marketing and Communications 3

4 DID YOU KNOW? MILLION BILLION MILLION subscribers across all services in 152 countries streamed hours monthly App downloads 78 4 THOUSANDS MILLION Commercial music and digital signage locations Monthly visits to the Stingray Music app 5X year-over-year Represent more than a third of our listeners 4

5 INVESTMENT HIGHLIGHTS 1 Leading Canadian Multi-Platform Media Business with a Fast Growing International Presence. 2 Unique Scale, Scope and Reach of Operations. 3 Recurring Revenue from Blue Chip Client Base. 4 Strong and Predictable Cash Flows from Long-term Contracts and Client Relationships. 5 Track Record of Successful Acquisitions and Identified Pipeline of International Opportunities. 6 Leading Content Curation Expertise. 7 Committed Management Team with a Track Record of Value Creation. 5

6 LEADING B2B MULTI-PLATFORM MUSIC AND IN-STORE MEDIA SOLUTIONS PROVIDER WORLDWIDE > $106.1 million in revenue (CAGR of 31.0%) Music Broadcasting Commercial Music > 86% of recurring revenue > $35.2 million in Adjusted EBITDA (1) (CAGR of 29.1%) 75% of Total Revenue 25% of Total Revenue > $9.0 million in Net income > Strong cash flow generation $27.4 million in Adjusted FCF (1) $19.5 million in cash flows from operating activities > Industry consolidator with 33 acquisitions Multi-platform music audio channels, karaoke, long form TV channels and music videos channels Reach of 400 million Pay-TV subscribers Custom music programming, digital signage, one-stop solution 74,000 establishments across Canada All figures for LTM ended June 30, CAGR calculated for the period from March 31, 2008 to LTM June 30, Note 1: Refer to IFRS and Non-IFRS measures on page 2 and to Supplemental information on Non-IFRS measures on page 2 and 6 of the quarterly report ended June 30,

7 CURRENT COMPANY GOALS 1 Aggressively pursue our M&A strategy, 5-25 plan. 2 Maintain 5% organic growth across broadcasting and commercial. 3 Maintaining 32% to 34% margins with acquisitions and increase of BtoC business. 4 Increase roll-out of SVOD services and mobile reach. 5 Generate new sale as the one-stop-shop for our clients Music Strategy. 7

8 PRODUCTS & SERVICES ARCHITECTURE MUSIC DELIVERED AS TV CHANNELS & VOD CONTENT ON TELEVISION, MOBILE, AND THE WEB TELEVISION CHANNELS KARAOKE AUDIO Stingray Karaoke Stingray Music Yokee Music CONCERTS & SHOWS MUSIC VIDEOS ORIGINAL CONTENT BUSINESS SERVICES Stingray PausePlay Stingray Business Stingray iconcerts Stingray Lite TV Stingray Classica Stingray Vibe Background Music Stingray DJAZZ Stingray Loud Digital Signage 4K UHD Stingray Ambiance 4K Stingray Festival 4K NatureVision TV Stingray Retro Stingray Juicebox Music Videos Stingray Pass C Music TV And more to come 4K UHD Stingray NOW 4K Television Channels Mobile Web On-Demand Catalog 8

9 MUSIC STRATEGY REACHING EVERY GENERATION Generation Z Millennials Generation X Boomers Silent Generation (15-20) (21-34) (35-49) (50-64) (65+) Digital Natives Multiplatform Sharers Connectivity Media aware Tech-savvy Tech-savvy Traditional and new media Tech-savvy: Low Traditional media Tech-savvy: Low Traditional Taylor Swift, One Direction, Shawn Mendes generation Beyonce, Coldplay, Justin Timberlake generation U2, Madonna, Prince, Nirvana generation Bob Dylan, Beatles, Woodstock generation Elvis, Ray Charles, Miles Davis, Mozart generation STINGRAY MUSIC STINGRAY MUSIC VIDEOS KARAOKE iconcerts YOKEE APPS STINGRAY MUSIC STINGRAY MUSIC VIDEOS KARAOKE iconcerts FESTIVAL 4K YOKEE APPS STINGRAY MUSIC DJAZZ CLASSICA iconcerts AMBIANCE 4K FESTIVAL 4K STINGRAY MUSIC DJAZZ CLASSICA iconcerts AMBIANCE 4K FESTIVAL 4K STINGRAY MUSIC DJAZZ CLASSICA AMBIANCE 4K FESTIVAL 4K 9

10 GLOBAL PAY-TV MARKET Canada 0.75% / 74% 11.4 million Western Europe 1.3% / 55% 99 million Central & Eastern Europe 2.3% / 62% 69 million Stingray Operations Stingray Offices Pay-TV Penetration Rate (1) Subscriber CAGR (1) Pay-TV Households (millions) (1) Amsterdam London Montréal United States 0.2% / 76% Miami Tel Aviv Asia Pacific 2.9% / 61% 100 million 502 million Latin America 4.2% / 48% 62 million Middle East & Africa 6.0% / 19% 14 million (1) Source: Management estimates. 10

11 RECURRING REVENUE FROM BLUE CHIP CLIENT BASE CANADA (Music Broadcasting and Commercial Music) USA LATAM EUROPE AFRICA AND MIDDLE EAST 11

12 RECURRING REVENUE FROM BLUE CHIP CLIENT BASE APAC 12

13 PROVEN ACQUISITION STRATEGY > $240+ million spent on acquisitions since inception > Completed 33 nd acquisition with SBA and SMA Slep-Tone Entert. Corp / SoundChoice (Karaoke Channel) Canadian Broadcast Corp. (Galaxie) MaxTrax Music Ltd. Chum Satellites Services (CTV) Marketing Senscity Inc. Concert TV Inc. Music Choice Int l Musicoola Ltd. Zoe Interactive Ltd. Executive Communication Emedia Networks Inc. Stage One Innovations Ltd. Intertain Media Inc. DMX LATAM (Mood Media) Archibald Media Group DMX Canada (Mood Media) Telefonica On the Spot Les Réseaux Urbains Viva Inc. Brava Group (HDTV, NL and DJAZZ) Digital Music Distribution iconcerts Nümedia Festival 4K Much Channels EuroArts Classica Nature Vision Yokee Music C Music SBA SMA 13

14 STINGRAY SVOD SERVICES Stingray Karaoke Stingray Classica Stingray Djazz Stingray iconcerts Launching progressively worldwide with multiple Pay TV operator and OTT providers Reach of 13K Karaoke titles +100K subscribers 100 million 5K hours of Concerts, Operas and Ballets households 14

15 B2C MOBILE APP AND DIGITAL RAMP UP Yokee Karaoke Yokee Piano Stingray Karaoke Singning Machine Karaoke Download Store Digital Advertising 95 million 10 million 6 million downloads in revenues active monthly users 20%-30% organic growth 15

16 QUARTERLY RESULTS ENDING JUNE 30, 2017 $29.2M $25.0M 18.9% from Q Revenues 16.9% from Q Recurring revenue 50.2% $0.05 % of international revenues Dividend per share $9.2 M $7.2 M 16.3% from Q % margin Adjusted EBITDA(1) 21.8% from Q Adjusted free cash flow(1) $0.3 M $(0.6) M 86.3% from Q $0.01 per share Net income 121.6% from Q Cash Flow from operating activities Financial highlights of the quarter: Revenues increased 18.9% to $29.2M Recurring revenues of $25.0M, an increase of 16.9% Adjusted free cash flow of $7.2M, an increase of 21.8% 67% increase in the annual dividend since the IPO Note 1: Refer to IFRS and Non-IFRS measures on page 2 and to Supplemental information on Non-IFRS measures on page 2 and 6 of the quarterly report for the period ended June 30,

17 SUMMARY OF QUARTERLY RESULTS Recurring Revenues (1)(2) Adjusted Net Income and Adjusted EBITDA (1) Cash Flow from Operating Activities and Adjusted Free Cash Flow (1) In C$ millions In C$ millions In C$ millions (1) Refer to IFRS and Non-IFRS measures on page 2 and to Supplemental information on Non-IFRS measures on page 2 and 6 of the quarterly report for the period ended June 30, 2017 (2) Recurring revenues include subscriptions and usage in addition to fixed fees charged to our customers on a monthly, quarterly and annual basis for continuous music services. Non-recurring revenues mainly include support, installation, equipment and one-time fees. 17

18 STRONG GROWTH PROFILE Operating leverage provided by acquisitions and scale of operations Business model leading to high adjusted EBITDA margins Total Revenue (1,2) Adjusted EBITDA (1,2,3) Net income (net loss) (1,2) 7.1 $ CAGR: 31.0% 17.4 $ 48.9 $ 45.4 $ 31.8 $ 36.2 $ 60.0 $ 71.0 $ 89.9 $ $ $ 2.7 $ CAGR: 29.1% 13.0 $13.3 $ 10.2 $ 19.6 $20.0 $ 27.1 $ 24.2 $ 33.9 $ 35.2 $ 31.0 $ $2.7 $5.6 $8.7 $6.6 $13.9 $10.7 $ TTM TTM ($1.8)($1.6) ($1.2) TTM ($3.4) (1) All figures in $C millions. (2) Financial information presented for years ended March 31, 2008, 2009, 2010, 2011 and 2012 is prepared in accordance with Canadian Generally Accepted Accounting Principles applicable at such times. Financial information for Fiscal 2013, Fiscal 2014, Fiscal 2015, 2016, 2017 and 2018 is prepared in accordance with IFRS. (3) See the reconciliation tables for adjusted EBITDA for Fiscal 2015, 2016 and 2017 in the Annual Reports reports 2016 and EBITDA restated from $27.1M to $27.3M 18

19 HIGH LEVEL OF RECURRING REVENUE 86% (1) of Recurring Revenues Diversified Customer Base Quarterly Recurring Revenues (2,3) Long-term Contracts 25.0 $ High Contract Renewal Rates 18.8 $ 19.7 $ 21.5 $ 21.4 $ 21.6 $ 21.9 $ 22.7 $ 88% 85% 84% 87% 88% 85% 86% 86% T2E16 T3E16 T4E16 T1E17 T2E17 T3E17 T4E17 T1E18 (1) For the year ended March 31, (2) Recurring revenues include subscriptions and usage in addition to fixed fees charged to our customers on a monthly, quarterly or annual basis for continuous music services. Non-recurring revenues mainly include support, installation, equipment and one-time fees. (3) Recurring revenues percentage are calculated as a percentage of total revenues. 19

20 BUSINESS STRATEGY 1 Expand and diversify our client and partner base Stingray s continued global success is due in great part to leveraging our clients trust and providing them with the highest level of service. This year, we continued to grow and strengthen our customer base and the distribution of our services. New Clients COMCAST VOO VODAFONE T-MOBILE SINGTEL FARMACIA AMAZON Renewed & Expanded Contract Agreements SHAW ZIGGO HOT MEGACABLE TELEVISA FOXTEL 20

21 BUSINESS STRATEGY 2 Develop new products, technologies and digital platforms Stingray invests over $10 M in research and development each year. To maintain our position as the world-leading multiplatform music products and services provider, we strive to constantly be at the cutting-edge of technology. Re-introduced Stingray Vibe, Retro, Loud and Juicebox in the Canadian market Launching a 3 rd 4K channel Stingray NOW4K in August, a 4K music video channel Launching Festival 4k and Stingray Classica in North America Introduce second generation of UBIQUICAST allowing multi-product distribution Launch of SB3, allowing simultaneous distribution of digital display and HD music Release of 2,500 Vibes channels in the Stingray Music mobile app which has now over 2 million downloads 21

22 BUSINESS STRATEGY 3 Continue to pursue strategic acquisitions Stingray has a track record of acquiring established, dynamic, and creative companies and partnering with industry leaders to achieve its aggressive global expansion plan. Subscribers reach jumped from 110 million to 400 million households, in more than 156 countries International revenue to grow to 75% by 2020 Significant pipeline of acquisitions across all international markets 22

23 BUSINESS STRATEGY 3 Continue to pursue strategic acquisitions Stingray has a track record of acquiring established, dynamic, and creative companies and partnering with industry leaders to achieve its aggressive global expansion plan. Acquisitions Stingray Now the World s Largest Digital Live Music Concerts TV Broadcaster Stingray Diversified its Product Offering and Expanded its European Distribution Stingray Now World-Leading Provider of Classical Music Content on Television Expansion of Stingray Business in International Markets 23

24 CAPITAL MARKETS INFORMATION Share Price (July 31, 2017) $7.95 Shares Outstanding Subordinate Voting Shares Variable Subordinate Voting Shares Multiple Voting Shares Total Shares Outstanding Market Capitalization Add: Net Debt (June 30, 2017) Enterprise Value 34.4M 0.6M 16.3M 51.3M $408.0M $55.0M $463.0M 24

25 THANK YOU