The management of Stingray maintains that the pivot is finally achieved and that it has managed to reposition the activities of the Montreal supplier of music services.
Stingray is less and less exposed to the business segment of cable television audio channels and other cable products. This segment now accounts for 10% of the company’s revenue, whereas it generated a large portion of revenue just five years ago.
Stingray’s stock jumped on the stock market on Wednesday after reporting a quarterly financial performance that beat expectations.
Stingray co-founder and CEO Eric Boyko says the company just generated “unprecedented” revenue and “record” adjusted operating profit for the months of October, November and December.
Revenues increased by 19% to 89 million, i.e. 5% more than anticipated by analysts, while adjusted operating profit rose by 10%, to 34.5 million, or 10% higher than expert consensus.
This performance is mainly attributable to the acquisition of InStore Audio Network (ISAN) and cost rationalization, explains Éric Boyko.
“It now looks increasingly likely that Stingray can achieve an adjusted EBIT margin of around 35% for fiscal year 2023, which could help meet high expectations,” commented analyst Adam Shine, National Bank Financial.
Stingray has dedicated new sales resources to the US retail media market (groceries, drugstores, etc.) over the past six months. This market is growing rapidly and remains largely immune to the economic slowdown, says Éric Boyko.
Behind the rationalization
Workforce reductions notably help to improve results. Stingray has reduced its workforce by 15% since last May. About a hundred employees have left the company in recent months, mainly employees outside Quebec, which brings the overall workforce down to approximately 700 employees today.
Management also says that it has reduced expenses related to certain projects and products to concentrate its efforts, in particular on audio advertising and online subscriptions. streaming.
These cost reduction measures, partially offset by investments qualified as strategic, ultimately generate net savings of 12 million on an annual basis.
Despite the current uncertain economic context, Éric Boyko says he is encouraged for the future. He says he sees positively the growth possibilities for the current quarter, that is to say for the months of January, February and March.
“We will focus on debt reduction while maintaining investments in key strategic areas. Strong customer demand at the recent Consumer Electronics Show (CES) in Las Vegas reinforced our confidence that we were right to focus on the commercial space media markets, FAST channels [chaînes télé gratuites soutenues par la publicité de Stingray]in-car entertainment and video-on-demand by business-to-business subscription,” says Éric Boyko.
Stingray’s stock, which has been hovering between $4 and $8 for the past year, rose 8% on Wednesday to close the session at $5.84 on the Toronto Stock Exchange.
The five analysts who officially follow Stingray’s activities all recommend buying the stock.
