Advertising revenue from Stingray’s radio stations has yet to recover the ground lost during the pandemic, while car dealerships are struggling with tight inventory.
The revenues of the hundred stations of the Montreal company reached 32 million, up 9.5% compared to last year. But they are still nearly 25% below their pre-pandemic threshold.
Tight inventory means car dealerships, which accounted for “10% to 12%” of advertising revenue, no longer need to advertise to attract customers, said Eric Boyko, president, co-founder and chief Stingray management on a conference call on Wednesday to discuss the latest quarterly results. “Everything dealers receive is already sold. »
Shareholders will have to be patient before the recovery of the radio segment is realized, believes Matthew Lee, analyst at Canaccord Genuity. “We believe it will still take time for a full recovery as the return continues. »
However, the company has managed to attract new advertisers, says Boyko. The relaxation of sports betting regulations in Ontario has created a new source of advertisers.
“We have also reduced our costs from 10 million to 12 million,” adds the entrepreneur. Our new cost structure allows us to have a profitability comparable to that of three years ago with lower revenues. »
The company met its advertising revenue targets for the first quarter and is on track for the second quarter, Boyko said. However, he acknowledged that a slowdown was possible for the second half of the year (October to the end of March).
The manager also provided an update on the company’s steps to improve its advertising offer, particularly in the segment of music distribution in business (music broadcast in businesses). He pointed out that this segment was less influenced by the state of the economy.
We have a lot of inventory to sell, but it will take time to get the right price, the right partners.
“The good news for in-store ads is that the economy won’t change the plans of a company that wants to advertise a special on tacos on Tuesdays. »
Last May, Stingray added grocer Metro to its network. The company will have exclusive responsibility for the digital audio advertisements broadcast in the retailer’s grocery stores in Ontario and Quebec, as well as in its pharmacies, including the Jean Coutu brand. Last week, Stingray also partnered with Geopath to launch location-based outdoor audio advertising assessment in the United States.
Boyko said the company had $80 million worth of unsold ad space in Canada and $80 million in the United States as well. “We have a lot of stocks to sell, but it will take time to get the right price, the right partners. »
In the first quarter (ended June 30), the company recorded net income of 9.4 million, compared to 4.2 million in the same period last year. Adjusted earnings per share were 19¢, in line with analysts’ expectations. Revenues, for their part, rose by 21.6% to 78.1 million.
The company attributed the increase to the acquisition of InStore Audio Network, the easing of sanitary measures, the increase in the number of subscribers and the increase in sales of installation services and related equipment. on the digital display.
While Stingray’s margins disappointed in the previous quarter, Scott Fletcher of CIBC World Markets said he was “encouraged” to see margins stand at 33.4%, compared to 33.1% in the same period. last year.