Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stingray Group Inc (STGYF, Financial) reported a robust 12.8% increase in revenues for Q1 2025, reaching $89.1 million, driven by strong growth in FAST channel and retail media advertising revenues.
- Retail media revenues grew by more than 55%, while FAST channels revenue soared into the triple-digit range, contributing to a remarkable organic growth of 17.1% year over year in broadcast and recurring commercial music revenues.
- The company achieved a significant milestone with a run rate of 55 million listening hours per quarter on FAST channels, leveraging partnerships with major brands like Samsung, LG, and Vizio.
- Stingray Group Inc (STGYF) acquired The Coda Collection, enhancing its portfolio of music streaming services and solidifying its leadership in concert streaming on the Amazon platform.
- The company released its first sustainability report, reflecting its commitment to transparency and responsibility, structured around social prosperity, responsible business, and environmental engagement.
Negative Points
- Revenues in other countries decreased by 4.2% year over year to $12.1 million, primarily due to reduced subscription and audio channel revenues.
- The adjusted EBITDA margin declined from 35.8% to 34.9% due to the revenue mix and lower margins for retail media advertising.
- Net income decreased to $7.2 million or $0.11 per share in Q1 2025, compared to $14.1 million or $0.20 per share in Q1 2024, mainly due to an unrealized loss on the fair value of derivative financial instruments.
- Cash flow from operating activities decreased to $10.8 million in Q1 2025 from $24.3 million in Q1 2024, impacted by higher negative changes in non-cash operating items and greater income taxes paid.
- The company faces challenges in evangelizing the retail media market, requiring significant effort to attract new customers despite a high customer retention rate.
Q & A Highlights
Q: Can you elaborate on what's driving growth in retail media? Are you getting better utilization of available inventory and improvements in pricing?
A: Retail media growth is primarily about evangelizing the market. We expect about 20% growth this year, with 90-95% customer retention. It's not about inventory or pricing, but about acquiring new customers. - Eric Boyko, President, CEO, and Director
Q: Are you looking to take additional costs, or are you focusing on top-line growth to drive EBITDA?
A: Retail media involves a revenue share with partners, affecting gross profit margins. We aim to maintain an EBITDA margin between 40% and 42%, finishing the year closer to 42%. - Eric Boyko, President, CEO, and Director
Q: Can you provide an update on the outlook for advertising growth and any macro headwinds affecting radio?
A: We expect to double FAST channels and grow retail media by 20%, aiming for 40% advertising growth this year. Radio sales teams are focusing on digital products, and we anticipate being positive in radio sales despite market challenges. - Eric Boyko, President, CEO, and Director
Q: What proportion of retail media growth is from repeat customers versus new customers?
A: 95% of our customers are repeat, but most growth comes from new customers. We need to continue evangelizing the market for retail media. - Eric Boyko, President, CEO, and Director
Q: What is the fixed-floating mix within your credit facilities, given expectations of interest rate changes?
A: The Board has directed us to maintain a 50% fixed rate. The subordinated debt is fixed, and we have swaps for the balance, allowing 50% to benefit from potential rate reductions. - Jean-Pierre Trahan, CFO
Q: How is the partnership with Mood Media in retail media progressing?
A: The partnership is beneficial as both companies work to evangelize the market. We've maintained our retailers and achieved about $8 million in cross-selling on each other's platforms. - Eric Boyko, President, CEO, and Director
Q: What are the current focuses of your tech team?
A: We are developing applications for cars, working with 10 to 20 manufacturers. We expect to announce new partnerships before the end of the year, focusing on karaoke and music applications in vehicles. - Eric Boyko, President, CEO, and Director
Q: Can you discuss the categories that are performing well in retail media and those that are challenging?
A: Pharma is a significant customer, especially in the US, due to the immediate impact of ads. Growth is also driven by consumer goods companies like Procter & Gamble. Retailers are increasingly accepting non-endemic ads, expanding our market potential. - Eric Boyko, President, CEO, and Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
