Good morning, ladies and gentlemen, and welcome to Stingray Group Inc.'s Q1 2023 Results Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a Q&A session. If at any time during this call you require immediate assistance, please press star with zero for the operator. This call is being recorded on Wednesday, August 3rd, 2022. I would now like to turn the conference over to Mr. Mathieu Péloquin. Please go ahead. Thank you very much. Bon matin. Good morning, everyone. Thank you for joining us for Stingray's Conference Call for its Q1 results ended June 30th, 2022. Today, Eric Boyko, President and CEO, as well as Jean-Pierre Trahan, CFO, will be presenting Stingray's financial and operational highlights. Our press release reporting Stingray's Q1 results for fiscal 2023 was issued yesterday after the market closed. Our press release and MD&A financial statements for the quarter are available on our investor website at stingray.com and also on SEDAR. I will now provide you with 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 7th, 2022, 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. 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. Merci, Mathieu. Good morning, everyone, and welcome to our Q1 Conference Call, fiscal 2023, and also today is our AGM, so happy if you could join at our AGM at 11. Stingray's overall business continued to gain momentum in the Q1 of 2023, with revenues increasing 21.6% to CAD 78 million on the strength of InStore Audio Network acquisition, improved radio sales, following a return to more normal commercial operations. As a result, we're happy to report another strong organic growth of 9.9% year-over-year for the broadcast and commercial division. The acquisition of InStore, now Stingray Advertising, with more than 20,000 locations, is proving to be a game changer for Stingray with an organic growth of 58.5% year-over-year. We anticipate robust traction for this business in the next 12 to 18 months, particularly in Canada, where we are better positioned for retail media advertising budgets in calendar 2023. On the profitability side, we generated adjusted EBITDA growth of 8% to CAD 26.1 million in the Q1 of 2023, which is remarkable considering that we received no government subsidies related to the COVID-19 pandemic compared to the CAD 2.9 million in the same period last year. Turning to our business segments. Broadcast and commercial music revenues increased 31% to CAD 46.2 million in the Q1, again on the iHeart deal, higher subscription, and also increase in equipment and installation sales related to digital signage. Stingray is making a major push into FAST channels, with streaming hours soaring 80% year-over-year to 12 million hours in the Q1. Following the quarter end, we signed a distribution agreement with LG for a FAST channel designed for smart TVs and webOS operating system worldwide. The increase follows the additional distribution of Stingray Music, other channels, and existing distribution of Stingray Naturescape and specialty channel. Clearly, FAST channel represents a high-growth vehicle for the corporation as audience and viewing habits are rapidly evolving. On the SVOD front, our subscribers grew by 27% year-over-year to 730,000 at the end of Q1. In recent quarters, we have focused our efforts on more profitable SVOD products and B2C to B2C rather than consumer apps. For example, we're leveraging our relationship with established partners like Amazon, who have large installed customer base across countries to move the needle. In Q1 2023, we expanded our penetration within Amazon India and Australia. As a result, we are steadily progressing towards our goal of reaching 1 million subscribers within the next couple of years. Moving into our radio business, revenues improved 9.5% to CAD 32 million in the Q1 of 2023, reflecting a better market environment than last year, but still below pre-pandemic levels. This revenue increase was locally driven as the economic uncertainty and supply chain issues continue to affect national advertisers and key advertising categories like the automotive sector. We expect our radio segment to gradually recover from these short-term disruptions and continue to generate healthy cash flow. In closing, strategic growth of revenues have evolved from 31% in fiscal 2020 to 44% during the last 12 months, which demonstrates we are on the track for our long-term growth strategy. Along with Stingray Advertising, FAST channels and ad-supported growth, we are confident in our plan to secure in-car entertainment partners like the ones that we have with ZPass and Tesla. As we continue growing our high-margin digital business, we must remain prudent with our spending plans due to the uncertain macroeconomic environment. As a result, our capital allocation strategy will prioritize debt reduction without sacrificing key initiatives for growth, in return, so we expect to increase our OPEX margin. I will now turn the call over to Jean-Pierre for a financial overview. Merci, Eric. Good morning, everyone. Revenues reached CAD 78.1 million in the Q1 of 2023, up 21.6% from CAD 64.3 million in Q1 2022. The increase was mainly due to the acquisition of InStore Audio Network, growth in radio revenues based on the gradual easing of COVID-19 restriction, and return to normal commercial operation, higher subscription revenues, as well as enhanced equipment and installation sales related to digital signage. Revenues in Canada improved 12.9% year-over-year to CAD 46.6 million in the Q1 of 2023. This growth mainly reflect an increase in radio revenues due to the gradual easing of COVID-19 restrictions and return to normal commercial operations, as well as an enhanced equipment and installation sales related to digital signage. Revenues in the United States grew 94.6% to $19.1 million in Q1 2023. Year-over-year growth can be attributed to the acquisition of InStore Audio Network, higher subscription revenues. Revenues in other countries decreased 5.5% year-over-year to CAD 12.4 million in the most recent quarter due to less B2C apps and in-store commercial revenues. Looking at our performance in business segment, broadcasting and commercial music revenues rose 31.7% to CAD 46.2 million in the Q1 of 2023. The increase was primarily due to the acquisition of InStore Audio Network, higher subscription revenues, as well as enhanced equipment and installation sales related to digital signage. Radio revenues improved 9.5% year-over-year to CAD 32 million in Q1 2023. The increase can be attributed to the gradual easing of COVID-19 restrictions and return to normal commercial operations. In terms of profitability, consolidated adjusted EBITDA improved 8% to CAD 26.1 million in the Q1 of 2023 from CAD 24.2 million in Q1 2022. As Eric pointed out earlier, we are quite pleased with this financial metric given that subsidies received from Canada Emergency Wage Subsidy program were immaterial in Q1 2023 compared to CAD 2.9 million in the same period last year. The increase in adjusted EBITDA was mainly due to the acquisition of InStore Audio Network, partially offset by the CEWS program in Q1 2022. Of note, adjusted EBITDA was also up 24.1% sequentially in Q1 2023. We expect continued margin improvement through cost controls and selective strategic investment priorities. By business segment, Broadcasting and Commercial Music adjusted EBITDA increased 14.4% to CAD 16.8 million in the Q1 of 2023. The increase was mainly due to InStore Audio Network acquisition, partially offset by higher operating costs. Radio adjusted EBITDA mainly declined 2% year-over-year to CAD 10.6 million in the Q1 of 2023. The slight decrease can be attributed to the CEWS program in Q1 2022, partially offset by higher revenues in the most recent quarter related to the gradual easing of COVID-19 restrictions and the return to normal commercial operations. In terms of corporate adjusted EBITDA, we represent head office operating expenses less share-based compensation as well as performance and deferred share unit expenses, which remain relatively stable in at CAD -1.3 million in Q1 2023. Stingray reported net income of CAD 9.4 million or CAD 0.13 per share in the Q1 of 2023, compared to CAD 4.2 million or CAD 0.06 per diluted share in Q1 2022. Adjusted net income totaled CAD 13.2 million or CAD 0.19 per diluted share in Q1 2023, up from CAD 11.2 million or CAD 0.16 per diluted share in the same period of 2022. Turning to liquidity and capital resources, cash flow generated from operating activities remained stable at CAD 16.3 million in the Q1 of 2023, as higher income tax paid were largely offset by improved operating results. Adjusted free cash flow amounted to CAD 15.7 million in Q1 2023 compared to CAD 15 million in the same period of 2022. The increase was mainly related to higher operating results and lower capital expenditures, partially offset by higher income tax paid. From a balance sheet standpoint, Stingray had a cash and cash equivalent of CAD 13.8 million at the end of the Q1, subordinated debt at CAD 25.5 million, and credit facilities of CAD 358.4 million, of which approximately CAD 76.6 million was available. Total net debt at the quarter stood at CAD 370.1 million or 3.25 times pro forma adjusted EBITDA. We believe that cash flow generated from operating activities and borrowing available under our credit facilities are sufficient to meet our liquidity needs for the foreseeable future. Finally, we repurchased 345,000 shares for a total of CAD 2.2 million under our normal course of issuer bid program in the first quarter. This ends my presentation for today. I will now turn the call back to Eric. Merci, Jean-Pierre. This concludes our prepared remarks. At this point, Jean-Pierre and I are happy to answer questions. Again, sorry for my, these allergies. I'm drinking a lot of tea, but hopefully my voice will be better. Operator? Thank you. Deborah? Yeah. Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two. One moment for your first question. Your first question comes from Matthew Lee from Canaccord Genuity. Please go ahead. Hey, good morning, guys. Congrats on the good quarter. So my first question is in terms of radio. You know, it took us a little bit of a step back in terms of the recovery versus pre-COVID times. I know you pointed out supply chain is a leading factor, but I just wanna get your views as to what the recovery we should expect in 2023 is, and you know, whether we're at the pre-COVID revenue levels by the end of the year. Yes, it's a good question, and we have the same question at the board. One of our big issues for all of video is that the car business, which was 10% to 12% of our business, and one of our shareholders and board member has many car dealerships. They're still at 70% inventory, so whatever they get, it's pre-sold. It's coming back, but that's a key factor. The good news is during that period where we have a lot of new advertisers, as you know, the example of Ontario legalizing the ads for sports betting. So that's helping us. There's a lot of new economy we're seeing coming back. Don't forget that we still cut costs of roughly CAD 10million to CAD 12 million pre-pandemic. We're well-positioned with our new cost structure to come back to the same profitability than three years ago with lower sales. That's great. You know, on the advertising side, I know you've discussed CAD 60 million in advertising inventory. You know, how should we contextualize that in terms of revenue opportunity? Does that translate to revenue 1-to-1, or is that CAD 60 million before the partner share with Metro and Walmart and such? Yeah. I know the inventory we have in Canada, and it's gonna take time. It's gonna take time for us to sell it because we're just starting in Canada. In Canada, the inventory right now available is closer to 80 million. In the U.S., the inventory that we have available right now unsold is 80 million also. We have a lot of unsold inventory, but it's gonna take time to get the fill rate, to get the right CPM, the right partners. I can tell you that we have the whole company focus is on selling the current inventory. We're sitting with these muffins, so we gotta sell the muffins. We're confident. As you saw, we went from CAD 1 million in sales last year to almost CAD 8.6 million. All of it is coming from retail media. Our run rate right now is currently close to CAD 38 million. That should be increasing every quarter. We just started selling for the first time in April, May, June. It was our first time really selling ads, and we're The momentum for Canada, at least, is we should be doubling every quarter for the next few quarters because we're seeing the new ad buys. We're very excited about that. Also the big thing in Canada, we're measured by COMMB. We finally are the first company to be approved, measured with Geopath in the U.S.. That we'll be able to increase our CPM. Our CPMs in the U.S. are 10 x smaller than what we have in Canada 'cause we're not measured. That again will take a few quarters, but we're very confident. Sorry. When you say double, do you mean double in the Canadian business? You know, the CAD 2.5 million you do in Canada right now. Yeah. No, last quarter, we retail media Canada we did CAD 400,000. This quarter we should do CAD 800,000. I think you should set that type of growth in Canada over the next few quarters because we just started. Okay, thanks. That's it for me. Okay. Thanks, Matt. Thank you. Your next question comes from Adam Shine from National Bank Financial. Please go ahead. Thanks a lot. Eric, where are you in the process of growing the national sales team for Stingray Advertising, per your page nine of your slide deck? Yeah. In Canada, we have a total of I think we're six individuals. In the U.S., we're four. Right now we're adding, we just have a sales team and a recruiter. We're hiring five people in New York in the U.S. to sell to agencies. Hopefully we'll have these people by September. We're going aggressively with recruiters, which I must say in the U.S. are very expensive. Maybe I should start a recruiting business in the U.S., we really wanna be in place. Now that we're measured, we can sell to agencies like we do in Canada. In Canada, our CPM is very high. We're getting a great CPM, and I can't give all the numbers. In the U.S., there's a lot of improvements. If we can double or triple our CPM in the U.S. I think we're in the right direction, and we're excited to see what the next few quarters will be able to deliver to you guys. Okay. When we look over at the digital signage business, that you know you guys were exploring stateside over the past, let's call it, you know, year and a half, can you talk about how that effort is going, or is that now being sort of more de-emphasized with a greater focus on this Stingray Advertising opportunity? Absolutely. Right now, 100% of our focus in the U.S.. In Canada, we control. The word control is maybe no. We have a big monopoly on all food. Every grocery in Canada we have, every pharmacy we have, we have all the Walmarts, we have BMI, we have RONA, SAQ, LCBO. All the stores that we can sell ads that are prominent, we already do the music, Giant Tiger, Best Buy. That's our focus. Now our goal in the U.S. is to get those type of people, so we can do the music and the ads. Okay. Just turning to the radio business, are you seeing any improvement post the Q1 in terms of trend, or is it going the other way just because of some of the, you know, macro headlines? Yeah. So far, in terms of budget, we hit 102% of our budget in Q1, so we're very happy. Right now we're pacing at 96% of Q2. Again, Q1 and Q2 are looking very good. It's again and one of the reasons that we're looking at OpEX savings, and we started the process, a pretty important OpEX saving plan that we explained to the board yesterday, is to really see what's gonna happen in Q3 and Q4. For radio, it is more volatile. The good news is for retail media, there is zero impact. When an announcer wants to make an ad to announce a Taco Tuesday, they wanna keep those ads. We don't see an impact on retail media or Stingray Advertising. Again, we're being defensive for Q3 and Q4. Okay. Thank you very much. Thank you. Your next question comes from Drew McReynolds from RBC. Please go ahead. Yeah. Thanks very much. Good morning. Eric, just to clarify that 96% that you just mentioned, what's the context there? I missed that. 96%? Radio pacing. Our radio budget. So far our pacing is on our budget, so we're very happy. Same thing for Q3 and Q4. Our pacing, that's the way we do it in the radio side. We're pacing to be on budget, and this year we had a good increase in our budget. Don't wanna give you a forecast, but we had good numbers, so we're following our plans. Okay. No, thanks for that. I think last quarter you were targeting double digit organic growth in the broadcasting and recurring commercial music, all of that combined. Obviously, a lot of this will depend on the ad market as we go through the fiscal year, but just wondering where you think you are benchmarked against that at the moment. Yeah. I think we can be confident that we'll stay double digits. Our advertising numbers, unless we get cancellations, are still very strong. With the help of the retail advertising, which is all organic, because, you know, when you have zero last year, we're gonna continue seeing an increase in organic sales. Very confident to deliver the 10%. Okay. Super. Just on the Stingray Advertising, in your presentation, you do talk about a total addressable market of about 300,000 locations. Obviously, you're at 20,000. Any sense of just how kinda the roadmap looks in terms of that penetration over time? The qualified market in Canada, like people that really like, for example, a corner store, we could sell ads, but you only stay 1 minute 20 seconds in the corner store. We'd have to do an ad every two minutes. It's not as much viable. I would say the market that we can attend here in Canada is about 20,000 locations. In the U.S., probably closer to 200,000. For now, our number one focus is we already have all the stores in Canada connected. Every grocery, pharmacy, big store, pet store, all those type of customers you can imagine that are our clients are being met, and we're in negotiation, some have contracts to convert them to the advertising model. In the U.S. Okay. In the U.S. right now, our big one is, as you know, we're approaching all the big guys. We're approaching all the big, the Kroger, the Walgreens, and all the other, so very aggressive plan to meet all the different companies to grow a network there, to again, to be able to sell our ads. Okay, super. One last one from me. Just in terms of the full fiscal year, you mentioned in your press release, you expect margins to continue to trend well through the year. Presumably that consolidated, you know, 33% to 35% margin range is still intact. That's kind of the first question. Second, just maybe for you, Jean-Pierre, on the CapEx for the full year, just what should we pencil in? Thank you. Yeah. For the margin, I agree with you. I expect our margin to be at 35%. With the cost saving, there's also help there. The only negative part is, don't forget that in retail media, we do have a split with the retailers, so that decreases our gross margin. On the CapEx side, I think it's gonna be lower for the future to come because, you know, we're you know, radio, we did the main station last year. On our side here, I think we're, you know, the office is great and, you know, we all the staff is okay with the spending license, so we're gonna be fine. Below between two and four or less. Yeah. I think you'll see our CapEx also going down with more and more software, less equipment, less servers. We don't expect any surprise there. For sure. Again, with the operational savings, it also helps lowering your CapEx. Got it. Okay. Thank you very much. Thanks, Drew. Your next question comes from Scott Fletcher from CIBC. Please go ahead. Good morning. I just wanted to ask a follow-up on the cost savings on the radio side. Could you help us maybe contextualize a little bit that in terms of what you expect the margins look like for the rest of the year, maybe? Yeah. I think, you know, before the pandemic in Q1 of 2020, radio was running at 18.3 a quarter. This quarter we finished at 15.7. It's a CAD 2.6 million. It's a CAD 10 million, CAD 10 million a year in cost savings. That's gonna be there to stay. Okay. That's helpful. that's the CAD 10 million that we told you told the market two years ago that we feel would stay in radio. Okay, great. Thanks. I think I wanted to ask a follow-up question on Geopath. You touched on it slightly and said that that's an area where you can really see CPMs improve in the U.S. Is that all it's going to take in terms of getting CPMs close to the Canadian side? Or is there more partnerships and more work you need to do in the U.S. market to sort of enable that lift? You see our CPM in the U.S. is running around $2. In Canada, we're able to get up to CAD 20, so there's a big gap. The reason for that is one is measured, and we can guarantee the agency that the audio ad was done, and it's also we did it at Tuesday at 4 o'clock. That's the advantage we have, is we can really deliver, and we can also deliver an ad in just 18 Walmarts, or I just want the locations in Toronto. We're able to really have a lot of flexibility, and every time we do something that is more precise, we charge more. That's the big advantage. Our goal is to bring this to the U.S., to bring this level of expertise, and to be really the dominant player in the audio ads and source. Okay, thanks. I'll ask one last one on the debt reduction. Is there a target number that you're targeting for leverage, either as sort of a leverage number or whether and then on the paying down side as a percentage of free cash flow? Absolutely. I think, you know, at the last board, and even now with the markets coming, our focus is on repaying the debt. You know, the NCIB, unless the stock really moves and there's a big down, so our sole focus is gonna be paying back the debt. Our goal is to be, we'll be below 3% by the end of this year, so by the end of March. And I, you know, we'd like to be, our goal is to be by 2.5% this time this year. Okay, great. Thank you. Our goal before was 3%, now our goal is 2.5%. Another point, unless there's an amazing acquisition, we have so much inventory to sell currently. We have so much organic sales that our focus is really so how do we, like I was telling you before, sell all our muffins. Unless there's a real nice tuck-in at a very good price, we don't expect any big acquisition this year. Thank you. Your next question comes from Tim Casey from BMO. Please go ahead. Thanks. Eric, can we just go back to the path to optimizing Stingray Advertising in the U.S.? You talk about how you're measured in Canada, and you can, you know, provide geotargeting and whatnot and, you know, upsell opportunities effectively. In the U.S. right now, can we just go back. So are you measured and if you're not, how long will it take you to be measured? Good point. Once we're measured, we need to install our boxes and the and our partner is Hivestack. What we're doing right now is re-changing all the boxes of the people that we of our current customers, and so we have to deliver both. I expect by September, I had the same question. By September, we'll be able to deliver the first measured ads in the U.S. That is just a function of you switching out technology. All other requirements in terms of affiliations you have to do with the measurement agencies and whatnot, that's all locked and loaded, ready to go. Yeah. It's just a matter of the tech. What's interesting is with Geopath, the way it works is that they measure each store. We do about 1,000 stores a month, so we start with that. It's gonna take about, for every store to be measured, they do up to 1,000 to 2,000. I think that's eight months for all of our location to be rated. Rated, I don't know why you say that word, but to be. There's time to deploy. While we're deploying, there's a lot of stores to sell. We don't need to wait until all. There's. Let's just go back. By September, you're not going to be able to fully maximize this, going back to what. No, no. We're not gonna be available in all 16,000 stores. To be honest, we don't have the sales team to sell to agencies to all those stores right now. Then we have to execute that plan. On the technology side, we're done. It's more of the execution and getting the sales team. The cadence in terms of adding stores is we should think of about as roughly 1,000 a month. 1,000 to 2,000 a month that will be able to sell targeted ads. Right. It's really by this time next year that you'll have the same scale in the U.S. as you do in Canada. Is that? Yeah. the right way to think about it? Exactly. The U.S. has 15,000 stores, in Canada it's 4,000. Tim? Yeah. Tim? Yeah. Uh, my Okay. Did I answer your question, Tim, or? Oh, my God. Operator, did we lose the line? Hello? Tim, I can hear you, but can you hear me? Sorry. Yeah. I don't know. You cut out there for a while, but. Okay. Sorry about that. I still don't understand. I don't understand the cadence of the stores in the U.S. relative to what. It just seems it's gonna take a while to get scale in the U.S., is what I'm trying to confirm. Yeah. During this time, we still keep on selling ads at different CPM. I'm happy to go on the technology side and Tim, and to take time with you to explain a bit of the difference. All your questions are. You're right on in terms of the right questions. Right. Okay. All right. I'll leave it there. Thank you. Thanks, Tim. Thanks. At this time, we have no further questions. Please proceed with closing remarks. All right. Thank you everybody for joining the call. Appreciate the analysts. I always say, I know you guys work very hard. I like your reports. It's great to have you guys as partners. We have an AGM at 11. It's gonna be virtual. Hopefully next year we can have a live AGM and invite all our friends. Thank you everybody for your time again today. Merci. Ladies and gentlemen, this concludes your Conference Call for today. 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