1 THE WORLD-LEADING PROVIDER OF MULTIPLATFORM MUSIC PRODUCTS AND SERVICESAugust 2016
2 agenda Welcome Speakers Board members and Executive team presentationAnnual General Meeting Report on business activities and financial results Questions Speakers François-Charles Sirois Chairman of the Board Eric Boyko President, CEO & Co-Founder Jean-Pierre Trahan Chief Financial Officer
3 François-Charles SiroisBoard members Claudine Blondin Eric Boyko L. Jacques Ménard Jacques Parisien Mark Pathy Gary S. Rich François-Charles Sirois Robert G. Steele Pascal Tremblay
4 Executive team Eric Boyko Mario Dubois Stephen Tapp Mathieu PéloquinPresident, CEO and Co-Founder Mario Dubois Senior Vice-President and Chief Technology Officer Stephen Tapp Senior Vice-President, Business Development Mathieu Péloquin Senior Vice-President, Marketing and Communications Jean-Pierre Trahan Chief Financial Officer Tom Pentefountas Senior Vice-President, International Sales, EMEA and Asia Lloyd Feldman Senior Vice-President and General Counsel Ratha Khuong General Manager, Stingray Business Inc.
5 Annual general meetingPurposes of the meeting: 1 To Receive the consolidated financial statements 2 To Elect nine (9) directors 3 To Appoint the independent auditor and authorize the directors to fix its remuneration 4 To Consider and Pass an ordinary resolution approving the Performance Share Unit (PSU) and certain conditional grants thereunder and to reserve subordinate voting shares from treasury
6 Report on business activities & financial results
7 Financial results overview – fiscal 2016$89.9 million in revenue (CAGR of 37.3%) 86% of recurring revenue $31.0 million in Adjusted EBITDA (CAGR of 35.4%) Strong cash flow generation $24.0 million in Adjusted FCF $19.0 million in cash flows from operating activities Industry consolidator with 26 acquisitions Music Broadcasting Commercial Music 74% of Total Revenue 26% of Total Revenue Multi-platform music audio channels, karaoke, long form TV channels and music videos channels Custom music programming, digital signage, one-stop solution Reach of 400 million Pay-TV subscribers 74,000 establishments across Canada All figures for year ended March 31, CAGR calculated for the LTM period ending March 31, 2008 – 2016.
8 1| Expand and diversify our client and partner baseBusiness 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 Renewed & Expanded Contract Agreements FOXTEL FREE VODAFONE DU TV (UAE) LCBO SPORTS EXPERTS VIDEOTRON MOBILE TELUS COGECO SKY (Latin America) TELEFONICA (Latin America) AT&T COMCAST
9 2| Develop new products, technologies and digital platformsBusiness strategy 2| Develop new products, technologies and digital platforms Stingray has invested over $40 M in research and development. To maintain our position as world-leading multiplatform music products and services provider, we strive to constantly be at the cutting-edge of technology. Launch of Stingray Ambiance, the first 100% 4K Ultra High Definition channel in North America Launch of Stingray Music on Sonos Launch of Stingray Music mobile app on tablet Release of 2,000 Vibes channels in the Stingray Music mobile app which has now over a million downloads Introduction of Stingray Pass, a proprietary audio-watermarking technology
10 3| Continue to pursue strategic acquisitionsBusiness strategy 3| Continue to pursue strategic acquisitions Stingray has a track record of acquiring established, dynamic, and creative companies and partnering with industry leaders to achieve its aggressive global expansion plan. Expanded foothold in Asia-Pacific Subscribers reach jumped from 110 million to 400 million households Stingray now distributed in 152 countries
11 3| Continue to pursue strategic acquisitionsBusiness strategy 3| Continue to pursue strategic acquisitions Stingray has a track record of acquiring established, dynamic, and creative companies and partnering with industry leaders to achieve its aggressive global expansion plan. Acquisitions Stingray Now the World’s Largest Digital Live Music Concerts TV Broadcaster Stingray Entered the Australian Market Stingray Diversified its Product Offering and Expanded its European Distribution New Partnership Stingray Entered into Strategic Partnership in Asia
12 Strong growth profile Operating leverage provided by acquisitions and scale of operations Business model leading to high adjusted EBITDA margins Total Revenue(1,2) Adjusted EBITDA(1,2,3) In C$ millions. Fiscal year-end March 31. All figures in millions for the year ended March 31. 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 and 2016 is prepared in accordance with IFRS. See the reconciliation tables for adjusted EBITDA for Fiscal 2015 and 2016 in the Annual Report EBITDA restated from $27.1M to $27.3M
13 High level of Recurring Revenue86%(1) of Recurring Revenues Diversified Customer Base Long-term Contracts High Contract Renewal Rates Quarterly Recurring Revenues(2,3) For the last twelve month ended June 30, 2016. 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. Recurring revenues percentage are calculated as a percentage of total revenues.
14 Quarterly results ending June 30, 2016$24.5M ▲ 23.4% from Q1 2016 Revenues $21.4M ▲ 24.1% from Q Recurring revenue $7.9 M 32.1% margin Adjusted EBITDA $5.9 M ▲ 11.4% from Q Adjusted free cash flow 43% % of international revenues $0.04 Dividend per share $2.0 M $0.04 per share Net income $2.7 M ▼ 33.5% from Q CF from operating activities Financial highlights of the quarter: Revenues increased 23.4% to $24.5M Recurring revenues of $21.4M, an increase of 24.1% Adjusted free cash flow of $5.9M, an increase of 11.4% 33% increase in the annual dividend since the IPO
15 business highlights In May 2016, the Corporation launched the Stingray Music Mobile App in the Netherlands. In May and June 2016, the Corporation announced the renewal of important long-term contracts, including NCTC and the expansion of its distribution deal with Comcast. On June 15, 2016, the Corporation acquired Festival 4K B.V., which is available to more than 7 million subscribers currently under contract, including VOO in Belgium, Free in France, and Vodafone in Spain. On June 21, 2016, the Corporation announced the acquisition of four (4) of Bell Media’s popular music video channels: MuchLoud, MuchRetro, MuchVibe and Juicebox On July 7, 2016, the Corporation strengthened its presence in the pivotal Asia-Pacific region with the opening of a regional headquarters in Singapore. On August 2, 2016, the Corporation announced an expansion of its management team with the appointment of Rick Bergan as the Head of Content Distribution for the United States.
16 Stock performance Stingray Digital Group Inc. Canadian Specialty Media2-Yr. Since Stingray IPO LTM Stingray Digital Group Inc. n/a 13.9% 2.4% Canadian Specialty Media 7.1% -6.9% -4.1% Global Specialty Media -14.5% -19.4% -21.9% LTM represents the last twelve months ended June 30, RAY.A stock price on June 30, 2016 was $6.99.
17 THANK YOU