Stingray Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to Stingray Group's first quarter 2026 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I will now turn the uber to Matthew Poliquin. Please go ahead.

Thank you. Good morning. Thank you for joining us for Stingray's conference call for the first quarter of fiscal 2026, ended June 30, 2025. Today, Eric Oiko, president, chief executive officer and co-founder and Marion Antoinette, interim chief financial officer will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's first quarter results was issued yesterday after the market closed. Our press release and DNA and financial statement for the quarter are available on our investor website at stingray.com and on Cedar Plus. I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospect may include forward-looking statements. The corporation's future operation and performance are subject to risk 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 10, 2025, which is available on Cedar Plus. 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're advised not to place undue reliance on such forward-looking statements. Also, please be advised that some of the financial measures discussed over the course of this conference call are non-IFRS, refer to Stingray's MDNA for a complete definition, and reconciliation of such measures to IFRS financial measures. Finally, let me remind you that all reminds 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 first quarter conference call of fiscal 2026. Stingray opened the fiscal year on a strong note with organic sales of 12.5 percent in broadcasts and recurring commercial music. Revenue is growing double digits for the fourth time in the last five quarters, mainly driven by continued strength in fast channel revenues. Our new premium advertising network is already delivering strong results. Launched just last quarter, launched in April, to monetize unsold fast channels at inventory, we have already sold over 20 percent of the available hours, which is giving us about 1.5 million a month or 18 million a year. We feel that we can reach 60 percent field rate, so we could triple that momentum in the next quarters coming along. We expect this momentum to accelerate as we onboard strategic DSPs, partners in the U.S. and internationally. We also recently launched six new fast channels on Watch3 Plus visual free streaming service. This expansion significantly increases Stingray's offering on the platform, providing visual customers with a wider array of curated musical experiences. Looking forward to our strategy to grow the fast channel business is straightforward and focused on three areas. First, we will deepen our partnership with established leaders like Vizio, Samsung, LG by expanding our channel portfolio on their platform and also get more backfill rights, rights to sell the unsold inventory. Second, we will secure new distribution deals. We'll achieve this by leveraging our greatest competitive advantage, our world-leading music library, to attract new TV manufacturers and other partners, like we did last week or two weeks ago by launching six channels on Roku, which we're very happy. And third, we will maximize the value of our ad inventory by using the premium advertising network to accelerate monetization across the entire fast ecosystem, which means that we will increase our field rate of 20 percent and try to bring it closer to 60 percent. So very excited on those three initiatives. On the retail media side, we delivered a solid performance in the first quarter in line with our expectation and our budget by continuing to diversify and deepen our advertiser base. As a reminder, retail media sales had increased 53 percent last year in this quarter due to large pharmaceutical orders in the same period last year. In the first quarter of 26, we will generate 40 percent revenue growth for a stingray advertising business, which combines fast channels and retail media revenues. We are targeting the same amount for Q2 and depending on the backfill rates and fill, we have a lot of potential there, so for us to see. But again, it's a new business that started in April. Turning to another part of our business, we introduced music and ambient channels to Samsung's visual experience transformation platform last month, which is called the VTX platform. It's a glass-based content management solution that enables suppliers like Stingray to create and distribute content remotely to B2B screens, including digital menus, kiosks, and signage. Stingray is the first company to offer a dedicated music application on this platform. This new revenue stream will be recognized under our subscription revenues. Finally, we experienced some project delays related to the installation and digital signage during the first quarter that has been pushed revenue condition into the current quarter. Our budget is to make $7.5 million a quarter. This quarter, we did $4.5 million, but in Q2, we expect to do $10.5, so we'll be on our budget of $15 million for the first two quarters. So just a question of timing, and that's the issue with equipment and labor. We are increasingly securing large long-term contracts with institutional players like banks, for example. The timing of installation can be affected. These timing parameters are within the Stingray program, achieving robust financial results. In the first quarter of 2016, we delivered a consolidated adjusted EBITDA of $33.7 million, or .2% of sales, on revenues of $95.6 million. I also want to recognize the outstanding performance of our radio division. The team delivered an exceptional quarter that we haven't seen in many years. Once again, odd porphyry in the market. They grew revenues by .2% and expanded adjusted EBITDA by an impressive 11%. For sure, this was helped by the elections in Canada in April, the Buy Canada promotion. A lot of retailers took advantage, so I don't think we can expect that type of growth every quarter, but I'm very happy and thank you for the radio team. In addition, earlier this week, we announced the acquisition of all the assets of Singing Machine Company, which was our first karaoke partner in 2007. With a primary goal to bolster our In-Car karaoke offering. By accompanying the renowned hardware and our extensive karaoke library and global distribution network, we will enhance the at-home and in-car karaoke experience for millions of fans. We see tremendous potential in developing new microphone technology, especially for expanding in-car entertainment market, creating exciting new opportunities for growth. From a financial standpoint, this acquisition immediately enhances our revenue base. We expect to generate 20 million in annual revenues with a target EBITDA margin of 10%. Given the timing of the acquisition, its revenue contribution for the current fiscal year will approximately be 50 million. Staying in management is very, very, I guess, aggressive in that when we think that in the next five years, every car will have karaoke and to the detriment of our parents, there will be mics in the cars and your kids will be singing while you're driving. So, good luck. In closing, Jean Charest, former Premier of Quebec and Deputy Prime Minister of Canada, has been nominated to Stingray's Board of Directors. During our annual general meeting, we will, that we will have today, Mr. Charest will stand for election. Should he be elected, Mr. Charest's wise counsel will be invaluable to Stingray's base on his distinguished career and public service, his extensive experience in public policy and international business, and his deep understanding of the Canadian landscape is important. It also sits on a number of boards of directors, including the Board of Publicist Group and the largest communication company in the world. Finally, François-Charles Serrois, co-founder of Stingray and director of Stingray since 2007, has advised our board that he will not stand for reelection on the upcoming annual meeting. We are grateful for Mr. Serrois's collaboration spirit and strategic insight, which have helped the position of Stingray for success in the involving media and technology industry. We wish him all the best in the future. Now, I will turn you to Marie-Hélène for a financial overview of our first quarter. Merci, Marie.

Thank you, Eric. Good morning, everyone. Revenues reached $95.6 million in the first quarter of fiscal 26, up .4% from $89.1 million in Q1-25. The -over-year growth was largely due to an increase in flash channels, partially offset by lower retail media advertising revenues. On the digital signage front, we saw a slight shift in project timing, with a few installations moving from the first quarter into the second. This is purely a timing variance, and we expect to recognize the associated revenue in Q2. Revenues in Canada rose .1% to $49.5 million in the first quarter of 2016. The growth can be attributed to an increase in radio revenues driven by higher airtime sales and digital sales, partially offset by a shift in timing of certain digital signage projects that reduce E&L and television sales. Revenues in the United States grew .8% -over-year to $35.2 million in Q1-26, reflecting greater fast channel sales, but partially countered by less retail media advertising revenues. Revenues in other countries decreased .5% to $10.9 million in the most recent quarter. The -over-year decline was primarily caused by lower in-store commercial revenue and reduced auto channel sales. Looking at our performance by business segment, broadcast and commercial music increased 8% to $61.4 million in the first quarter of 2016. The growth was primarily driven by greater fast channel sales, partially offset by lower retail media revenues and timing variances in E&L. For their part, radio revenues improved .2% to $34.2 million in Q1-26, mainly due to higher airtime sales and digital sales. It should be noted that we consider this increase extraordinary and are still targeting low single digit revenue growth for the full fiscal year. In terms of profitability, consolidated adjud sedibida rose .3% to $33.7 million in the first quarter of 2016. Adjud sedibida margin reached .2% compared to .9% for the same period in 2025. The growth in adjud sedibida and adjud sedibida margin was mainly driven by higher revenues, partially offset by lower growth margin due to product mix and greater operating expenses related to increased salaries. By business segment, broadcast and commercial adjud sedibida grew .5% to $24.4 million in the first quarter of 2026. The -over-year increase can be attributed to an improved growth margin on higher revenues, partially countered by an unfavorable product mix and greater operating expenses. Adjud sedibida for our radio segment rose .2% to $11 million in the first quarter of 2026. Similarly, the -over-year increase can be credited to a better growth margin on higher revenues along with over operating expenses. In terms of corporate adjud sedibida, it remained stable at an estimated $1.8 million in the first quarter. Singri reported net income of $16.8 million, or $0.24 per diluted share in the first quarter of 2026 compared to $7.3 million, or $0.11 in 2021. The increase was mostly driven by an unrealized gain in the first quarter of 2026 compared to an unrealized loss in the first quarter of 2026 on the FERS value of derivatives financial instruments along with higher operating results and a foreign exchange gain. These factors were partially upset by the higher performance and deferred share per unit expense related to an increase in the corporation share price. Adjud sedibida income totaled $21.3 million, or $0.31 per diluted share in Q1-26 compared to $13.9 million, or $0.27 in the same period in 2025. The -over-year increase was mainly due to higher operating results, a positive foreign exchange impact, and an unrealized gain in the first quarter of 2026 compared to an unrealized loss in the first quarter of 2025 on the FERS value of derivatives financial instruments. Turning to liquidity and textile resources, cash flow from operating activities totaled $19 million in Q1 compared to $10.8 million in Q1-2025. The -over-year increase can be attributed to a lower negative change in non-cash operating items, higher operating results, and a foreign exchange gain. Adjud sedbida cash flow amounted to $18.8 million in Q1-26 compared to $15.5 million last year. The increase was mainly driven by higher operating results and lower interest base. From a balance sheet standpoint, Stingray had cash on cash equivalents of $11.5 million at the end of the first quarter and a credit facility of $237.4 million. The credit facility consists of a $500 million revolving credit line, of which $160.8 million was available. Total net at the end of the first quarter of 2026 stood at $325.9 million, down $1.5 million from the end of Q4-2025 as we continue to reduce our debt level. Combined with improved adjud sedbida over the last 12 months, our leverage ratio improved to 2.24 times at the end of Q1 from 2.29 times in the previous quarter and from 2.77 in the same period last year. Based on our current outlook, we are confident in our plan to bring our leverage ratio below two times by the end of this fiscal year. A strong balance sheet is a key priority as it provides a foundation to accelerate our growth, growth organically, and to strategic acquisition. Finally, we repurchased 342,000 shares during the first quarter of our current NCID program for a total of $3.1 million. We also made dividend payments of $5.1 million to reward shareholders. This ends my presentation. I will now turn the call over to Eddie.

Okay, merci, Marie. Very good presentation. I think now we're open to the questions from our fantastic analysts. So, to you guys.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-down phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any case. Once again, that is star one. Should you wish to ask a question? And your first question is from Jerome Debril from Desjardins. Your line is now open.

We will go to Monda. Thanks for taking my question. The first one is on the backfill opportunity. Thanks for this closure there. Eric, you said you can achieve 60% at some point. Does it mean the annual 18 million goes to 54 millions or maybe there are pricing considerations there and maybe on the timing to achieve that 60%?

So, for us, it's rare you do a budget and you have zero. So, we have zero for the backfill in the budget. We never really asked for the rights to sell the unsold inventory. At the end of the day, the big players, Digio, LG, Samsung, Roku sell about 40% of the inventory and the other 60%, we lose it. It's like radio. So, we started asking some of our partners that if we could start with some DSPs and partners to sell the backfill. We started that on April 1st and our current run rate is 1.5 million a month or 18 million at 20% fail rate. So, our objective, our number one objective is to triple that fail rate to 60% which will bring us to a $50 million business and it's a bit like the sausage. The more high grade sausage you sell, the better they are and the more you sell, then it's a bit of that combination and our goal and I think we're attracting a lot more supply. So, our number one objective is to convince the three other partners or the four other partners that we want to do backfill rates, rights which we are establishing right now and to get more supply. So, to be able to increase our fail rate, that will increase our supply and I must tell you something I was telling the board yesterday. The depth of the lake of the TV ads is like Lake Bakay in Russia. It's a very deep lake. At the end of the day, what we're providing and our advertisers is Olive Garden, Gecko, insurance companies, Parter Gamble, the cars, the same ads you see on ABC, CBC, NBC in the US. They want to reach households. They want to reach your home but they can't because people are watching Netflix and other systems. So, we're providing those advertisers via different DSPs access to our unique viewership. So, it's really exciting and I must say this, I don't see how deep the lake is so deep that there's a lot of potential there. So, we just started this quarter. We did an 18 million run rate. We'll see next quarter. We're improving week by week. We're also, we added ad tech people. Don't forget, Stingray Advertising which was zero three years ago. We finished last year at 80 million. So, it's a huge growth and we expect this year again to grow by 40 percent in Q1 and Q2. But the backfill rate, the supply and we're even getting supply from other partners that are asking us, can you help me sell on other channels? So, very exciting for us. I must say, at home, I've never seen growth in my life of a business segment like this and this is based on right now, we have one and a quarter employees working on the backfill. Now, we have the whole company working on it but we only have, we only added one ad count and a part-time consultant. So, we'll be adding more people, adding more technology, getting better at it and we're aggressively going to New York every week now and I'm also going to New York tomorrow meeting different DSPs and demand providers. So, a very exciting world, this programmatic system and excited what we can do over the next few quarters. So, but happy to establish our run rate right now, 1.5 million a month.

That's excellent to hear. Eric, the second one for me is on the capital allocation. I think Marie-Helen mentioned that you're targeting to be at two times by the end of fiscal year. At the same time, I'm thinking about the M&A comments you made on the last earnings call, talking about the potential of a very large deal. If you can provide maybe an update on this and maybe on the likelihood this happens, how you think about it with the target leverage at the end of the year?

Yeah, I know with our friend Donald Trump and all the tariffs and the uncertainty, it really put all of the big deals on standby. The dollar's moving, there's a lot of uncertainty and you can imagine including us, management, our board, everybody's more on the conservative side. Agreed. We feel our debt of a doubt will be below two by December and will be well below two by March. So, the cash is really coming in strong even this quarter. So, good news. So, now our focus is more like small tuck-ins. So, we did a nice tuck-in this week, 20 million of revenues. That's still 5% revenue increase. Again, a very affordable price. And then we have two more tuck-ins. Our tuck-ins are concentrated on two segments right now, or three segments. The tuck-ins are focused on cars like was the singing machine for the mics. And also, you'll see some other acquisition in that segment. And the second one is to expand our retail media network in the US. So, very focused on it, very good tuck-ins. And right now to be straightforward, we have so much potential with the backfill and to get more supply on the fast channels. Right now, our focus is on that. It's not big capital allocation, but management focus for the whole management team at every senior position is based on how can we expand that fill rate from 20 to 60 and to double, triple our supply in the next 12 months. So, with this incredible potential. All these TV ads. Thank you.

Thank you. And your next question is from from Panacore Genuity. Your line is now open.

Good morning. Thanks for taking my questions. I'll start with a couple of housekeeping questions on the acquisition. Can you just sort of talk to what the full cost is when you can, I'm not sure if there's any sort of debt that sort of you're assuming with the acquisition. Maybe just clarify that and the seasonality of the revenues.

Very good. So, this acquisition was less than one million. So, it was really an asset deal. We're taking over the inventory. We have a few liabilities owed to vendors. Our biggest customer is Walmart. Very happy. Walmart also owns Vizio. We'll be coming very close to Walmart. They do 20 million of sales, 19 million of a hardware, one million of software. On our side, we generate another four million of software sales with singing machine. So, the deal was not only to get that two million and on 20 million, we'll do 10 percent EBITDA margins. So, not big margins, but we're also protecting and securing the four million that we do because we provide the software on every karaoke machine. And I'll be happy to ship you one because they're really good machines. But I think, you know, it's securing the four million and most important, we have now four car companies, including BYD, including Tesla, including some companies like Ford that want to, that have ordered mics in cars. And I was making a joke, but I believe that in the next five years, every car will come with karaoke and you will have in your console, in the middle, you will have two mics. And we also launched scoring. We have scoring right now with BYD. So, people are able to score themselves. So, fantastic for us, fantastic for the car manufacturers, not too good for the car manufacturers. So, thank you very much.

And I'll hand it over to Eric. Thanks, Eric. And then just moving on to retail media. I mean, obviously, you built that business up very nicely over recent years. You're obviously starting to comp against the difficult quarters. You know, recognizing sort of the size of the longer term opportunity, how should we think of sort of the path forward from here? Are there any sort of near term limiting factors that sort of sort of perhaps suppressing your growth as you look to expand from here on?

Yeah. So, retail media, we expect double digit growth. We already have in Q2, we've already reached double digit growth for this quarter. So, and we still have two months to go. But at the end of the day, the difference between the fast channels and retail media is the fast channel, you're selling a -to-one, which the market is very used to. Retail media is -to-many, which is a very different model and different approach. So, I think our network is incredible. We will expand our network in the US, but it's not as easy to propose growth as we are achieving in the fast channels. So, expect double digit growth. And we need again to evangelize the market. And audio in stores is still something that is new. And that advertising are slowly understanding and explaining and we're gaining. But it's not the same growth than this connected TV, for sure.

Thanks. And just a follow up from me on that before I hand off. On the video side of things, have you, I know there was sort of a pilot program in Quebec. Are you thinking of expanding that? What's been sort of the feedback from there? Thank you.

Yeah, very interesting. So, a lot of retailers, we, a lot of retailers have their screens, are asking us to sell on their screens. So, in Canada, we're getting very much involved to offering both audio and video. And we have a unique technology that we call it the takeover. So, you go in a metro or you go in a La Blas and we'll do an audio ad and all the screens will also show the Colgate product. So, we take over the store. It's very effective for advertisers. We're the only company that's able to do the video and audio and match it because we provide audio in Canada to 95% of major retailers. We know we do have a strong distribution. So, I think it's going to be a very good prospect for us. Video is a huge market. You know, video is 20 times the size of audio. So, we're excited to be in that space. And this happened, we've been asked by our retailers. So, very good comment there. Appreciate that comment about that potential. Thank you. Thank you.

Thank you. Once again, ladies and gentlemen, that is star one should you wish to ask a question. And your next question is from Sam Schmidt from CIBC. Your line is now open.

Hi there. You mentioned a new platform that will be recorded in subscription revenues. Can you comment on magnitude of that and how should we think about the growth rate and subscriptions going forward? Thank you.

Yeah, this is Sam. So, Samsung launched a big initiative. They put billions of dollars in it, their VXP platform. So, they want every commercial TV will come with apps included or content. You will subscribe to that content. It's a new project. So, for every Samsung TV sold in the world, we'll have Stingray Music and Stingray Ambience. They're only offering and also Loop Heart, which we also bought. So, we have three of the four products. It's just starting at Samsung. Samsung's a big company. So, for us, we're happy to be their three out of four partners for that. So, every commercial TV, every corner store, every restaurant that buys a Samsung TV, we'll have that included and they could add music or add ambience as a S-Bot service. But we're just launching and they're also just launching. But I can tell you that they put billions of dollars in this project with the billing and everything. So, exciting for us to be again chosen by one of our

partners. That's great. Thank you very much. And then one more for me just on fast. Can you unpack drivers between increased demand, listening hours or adding new partners and channels as we look over 2026?

Yeah. So, you know, for us, it's like I tell the board, it's not a very good. The first thing is we need to increase the fill rate. So, we need to sell more. So, we need to increase our fill rate from 20 to 60. The more we increase our fill rate, the more people will give us supply. So, the goal is to get more supply. The way to get more supply is to get more backfill rights, which we want to do because right now we only have backfill rights on one partner out of five. So, we are in the stage of getting the rights for the other four partners. And then after that, it's launching more channel and getting more supply and also start selling some of our peers that we can also be effective at. So, we're very excited about that. So, it's increasing sales and getting more supply. Good old basic of business, but very exciting because we don't need much manpower. It's a very automatic, programmatic system that should connect with different DSPs. So, you don't need 200 or 300 salespeople. So, that's why we're so excited by it.

That's great. Thank you very much. I'll pass one.

Okay. Merci. Thank you.

Thank you. And your next question is from Jerome Debril from StagerDON. Your line is now open.

Hey, sorry, I'm back. Just want a clarification. You're talking about the backfill going from 18 to 50. This is just for the current platforms you're in, right? It's just for increasing the backfill from 20 to 60%. So, should we understand that this could be applicable to other fast platforms as well?

Absolutely. So, we were never really in the advertising space. When we went public in 2015, 90% of our sales were CPS. We were doing zero advertising and we even voted, and I remember that we don't want to be an advertising company. So, we were happy to be a CPS and based on cable. So, just shows you the strength of the pivot. Now, we're doing 80 million of advertising. Radio does 130. So, 50% of our sales is advertising and that will grow to 80%. So, I agree with you, Jerome. A, with the current inventory, if we increase the fill rate from 20 to 60 and we just started, like I tell the team, we're three months old. So, we're really babies right now, but we're learning fast. That will triple from 18 to 50. And then our goal right now is to get more supply. So, we're aggressively meeting our suppliers. We're going to go to two days at the US Open. A lot of our suppliers are based in New York. They like tennis. So, we're working very hard to get those rights and we feel that we'll be able to add two or three new partners, not necessarily the same size, by the end of the year. So, I think every partner is happy that we are helping them make more money. Also, for the backfill, it's not the same margins than we do because in this case, we have to pay them their rev share. So, the margin is lower because in this case, we sell and then we re-give money to VZO, LG, Samsung, or Roku. So, not the same EBITDA margin than when they sell it because we get the net. So, that we can go more offline and give you some details on that, Jerome. But very good question. So, yeah, our goal now is to get more supply and get backfill rights with our other three partners.

Merci. Thank

you.

There are no further questions at this time. Please proceed with the closing remarks.

All right. So, thank you very much for being on the Q1 call. Thank you again for the all-Stingray management team, for all the great work we've done. Another good start of the year. I'm very happy. Looking positive, strong pipeline. And we also want to make a little advertising. We have our AGM today at 11 o'clock. So, very excited to present our AGM. I do say I missed the good old days of being in person. Maybe next year I'll convince our chief legal officer. It's virtual. But happy that you can join our AGM and to present you our results and a bit of our strategy for the years coming forward. Excited for fiscal 26 and have a great day.

Merci. Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.