Stingray Group Aktie

Good morning, ladies and gentlemen, and welcome to the Stingray Group Q1 2027 Results Conference Call. [Operator Instructions] Also note that this call is being recorded on Monday, August 10, 2026. And I would like to turn the conference over to Mathieu Peloquin. Please go ahead.

Good morning, everyone. Thank you for joining us for Stingray's Conference Call for the First Quarter of fiscal 2027 ended June 30, 2026. Today, Eric Boyko, President, CEO and Co-Founder; as well as Marie-Helene Fournier, Interim CFO, will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's first quarter results was issued today before the market opened.

Our press release, MD&A and financial statements for the quarter are available on our investor website at stingray.com and on SEDAR+. Today, the corporation also filed its 2026 annual report, including audited annual consolidated financial statements and MD&A for the year ended March 31, 2026. The 2026 annual report is available on SEDAR+ and on the Investor Relation section of Stingray's website.

I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operation and performance are subject to risks 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 August 7, 2026, which is also available on SEDAR+. 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 MD&A for a complete definition and a reconciliation of such measures to IFRS financial measures. Finally, let me remind you that all amounts on this call are expressed in Canadian dollars, unless otherwise indicated. With that, let me turn the call over to Eric.

Okay. Good morning, Mathieu. Good morning, everyone. Welcome to our first quarter results conference call for fiscal 2027. Stingray opened fiscal 2027, where it left off in 2026, only on a larger scale, driven by robust revenue contribution from Tunein acquisition and FAST channel segment, we generated overall growth of 65.2% and organic growth of 27.5% year-over-year in the first quarter.

The integration of Tunein has been seamless, creating a spillover effect on our entire advertising business with revenue synergies reaching a run rate of $45 million, 9 months post transaction. On the FAST channel side, Stingray's premium ad network continued to outperform with revenue rising nearly 70% in the first quarter, driven by our reselling of TV manufacturers, unsold inventory, including audio ads for some of our major OEM partners.

Our unique ability to sell ads, both on platform and off platform places Stingray in a strong competitive position as we have demonstrated to our partners that we can help them enhance monetization of their FAST channels. Looking ahead, we remain confident that our TuneIn and FAST channel business will contribute to another year of double-digit organic revenue growth in 2027.

That said, the margin on these strategic assets are modestly lower than our corporate average, which is why we are maintaining our optimistic outlook for the adjusted EBITDA margin for fiscal '25. In terms of retail media, we are excited about the opportunity to bring programmatic advertising capabilities to our in-store business. We are actively working to enable a market solution for a new audience-based multiplier model where one ad reaches a broader audience than one-on-one basis.

We see this evolution in the business model as a key catalyst for Stingray, and we expect to make progress on this front during the current fiscal year. Finally, our in-car entertainment segment continued to gain traction, building on the earlier Nissan partnership announcement last Friday, last February, we continue to deploy new features to our cars, in Karaoke and audio services and to increase our footprint with existing car manufacturers.

We remain optimistic, including new partnerships in the coming months. Altogether, Broadcast and Commercial Music or streaming division revenues more than doubled to $126 million in the first quarter of 2027, mainly due to higher advertising revenues from the TuneIn acquisition and greater FAST channel sales. Radio revenues, which were adversely affected by reduced betting and government ads year-over-year in Q1 declined 6.5% to $32 million in the first quarter, but has showed great signs of recovery early in the second quarter.

We expect radio sales to improve in the second quarter, and we're pacing and to be above 5%. Before handing the call over to Marie-Helene for our financial review of the quarter, I would like to say a few words about our capital allocation and our leverage ratio. Some analysis will notice that our net debt EBITDA to pro forma adjusted EBITDA increased to 2.5x in Q1 2027, but this is largely due because we make a strategic decision to repurchase 1 million shares from La Caisse de depot for $15.5 million, the acquisition of RadioLine and Westport and because of customary timing difference in collection of advertising revenues.

The share buyback will likely push our target of bringing our leverage Radio under 2.0 by the end of fiscal 2027 instead of the year-end calendar of 2026. Nevertheless, we believe it is directly aligning with our commitment to actively manage Stingray's capital assets and maximize value for our shareholders. In closing, our balance sheet remains healthy, providing us with the flexibility to invest in organic growth and pursue strategic acquisitions. With this, I will now turn the call over to Marie-Helene for our financial review.

Thanks, Eric. Good morning, everyone. Before reviewing our first quarter results, I am pleased to share that this morning, Stingray filed its 2026 annual report. The audited results are consistent with the preliminary figures previously reported, except for a $13.8 million reclassification related to the gross net presentation of advertising revenues, mainly arising from the TuneIn acquisition.

This reclassification had no impact on adjusted EBITDA, net income or cash flow, but resulted in a favorable improvement to our adjusted EBITDA margin from 30.8% to 34.3%. No other material changes or restatements were made to the previously disclosed figures. We are glad to have this chapter behind us and to move forward. Turning now to our first quarter 2027 results.

Revenues reached $158 million in the first quarter of fiscal 2027, up 65.2% from $95.6 million in Q1 2026. The year-over-year growth was mainly driven by higher advertising revenues from the recent TuneIn acquisition, along with greater FAST channel sales. Revenues in Canada decreased 1.7% to $48.7 million in the first quarter 2027.

The year-over-year decline can be attributed to lower radio revenue. Revenues in the U.S. grew 180% to $98.4 million in Q1 '27, primarily due to higher advertising revenues from the TuneIn acquisition, improved FAST channel sales as well as increased equipment and installation sales related to digital signage and the acquisition of Singing Machine. Revenues in other countries remained stable at $10.9 million in the most recent quarter with greater FAST channel sales largely offset by a decline in subscription revenue.

Looking at our performance by business segment, Broadcasting and Commercial Music revenues increased 105.2% to $126 million in the first quarter of 2027. The growth mainly reflects higher advertising revenues from the TuneIn acquisition, greater FAST channel sales as well as increased equipment and installation sales related to digital signage. For their part, Radio revenues decreased 6.5% to $32 million in Q1 2027, largely due to local -- to lower local and national airtime revenues and partially offset by increased digital sales.

In terms of profitability, consolidated adjusted EBITDA improved 49.3% to $50.3 million in the first quarter of 2027. Adjusted EBITDA margin reached 31.8% in Q1 compared to 35.2% in the same period last year. The increase in adjusted EBITDA can be attributed to the TuneIn acquisition. The decline in adjusted EBITDA margin was largely due to lower gross margin on sales related to TuneIn and Singing Machine, combined with shift in product mix. By business segment, Broadcasting and Commercial Music adjusted EBITDA grew 75.7% to $42.9 million in Q1, primarily driven by the TuneIn acquisition.

Adjusted EBITDA for our Radio business dropped by 15% year-over-year to $9.4 million in the first quarter of 2027. The decrease was mainly due to lower revenues, along with changes in sales mix impacting gross margins. In terms of corporate adjusted EBITDA, it amounted to a negative $2.1 million in the first quarter compared to a negative $1.8 million in the same period of last year.

The reported net income of $6.6 million or $0.10 per diluted share in the first quarter of 2027 compared to $16.8 million or $0.24 per diluted share in Q1 2026. The year-over-year decline was primarily due to higher acquisition costs, increased amortization of intangible assets and unrealized loss on the fair value of derivative financial instruments in the most recent quarter compared to a gain in the prior year quarter.

These factors were partially offset by improved operating results. Adjusted net income totaled $27.9 million or $0.40 per diluted share in Q1 2027 compared to $21.3 million or $0.31 per diluted share in the same period in 2026. The increase was due to higher operating results, partially offset by unfavorable variations in foreign exchange and fair value of derivative financial instruments as well as greater interest expense.

Turning to liquidity and capital resources. Cash flow from operating activities amounted to $4.8 million in Q1 2027 compared to $19 million last year. The decline was mainly due to higher negative change in noncash operating items related to the timing of accounts receivable collection and advertising and greater acquisition costs. These factors were partially offset by improved operating results.

Adjusted free cash flow totaled $32.5 million in the first quarter of '27 compared to $18.8 million in the same period of last year. The improvement can be attributed to enhanced operating results and partially offset by higher interest paid. From a balance sheet standpoint, Stingray had cash and cash equivalents of $21.9 million at the end of the first quarter and credit facilities of $569.5 million.

Net debt at the end of the first quarter of 2027 totaled $547.6 million compared to $524.1 million in Q4 2026. As a result, our leverage ratio increased to 2.53x in Q1 2027. The increase in net debt primarily reflects the repurchase of 1.1 million shares during the quarter for $17.1 million, the settlement of long-term incentive compensation earned by our team in fiscal 2026, the RadioLine and Westport acquisitions and a timing difference in the collection of advertising revenue.

This ends my presentation. I will now turn the call over to Eric.

Okay. This concludes our prepared remarks. At this point, Marie-Helene and I will be pleased to answer your questions.

[Operator Instructions]

First, we will hear from Stephanie Price at CIBC.

It's Sam Schmidt on for Stephanie Price. I wanted to ask around the Q4 revenue restatement. How should we think about the revenue growth rate at TuneIn going forward and the gross versus net accounting? And does this impact the TuneIn revenue synergies target?

No. This revenue recognition is with the new rules and the new accounting rules and the fact that we're doing these programmatic sales, which are instant sales are very complex. So it was only impact for last year. We don't see any impact for this year, no impact for TuneIn revenues. It's really a reclass. It's a reclass that for us of $13 million on revenues of close to $500 million. So no impact on that.

Okay. That's helpful. And then could we also get an update on the run rate cost synergies with TuneIn. I believe last quarter, they were tracking at around $12 million. And are you still comfortable with the adjusted EBITDA synergy target that you've discussed in the past? And then I'll pass the line.

Yes. Right now, in terms of cost synergies, they're pretty much the same than last quarter. We haven't moved it. But for us, the most important number is the positive synergies. The fact that we hit $45 million this quarter, and we see that number growing month by month, we're easily going to beat our targets that we set ourselves for March '27. So we told the market USD 20 million to USD 40 million. Right now, we're sitting close to USD 35 million, but we'll easily beat the USD 40 million over the next few quarters because the synergies are growing on a daily basis on the positive synergy side.

Next question will be from Adam Shine at National Bank.

So maybe just building on Stephanie's first question, just to be very clear, Eric, we are not to extrapolate $13.8 million times 4 in the context of reducing F '27 current consensus estimates, let's say, right? Those still hold?

Yes. Please. Absolutely. Like I said, it was really reclassification of -- it's all about gross and net, and it's all about programmatic sales and how the contracts written. So it's a lot of detail. And now as you know, we have the auditors of the auditors. So you have the CPAP that audits the accounting firms. So accounting is getting complex.

The second point of clarification is just on the margin. I don't think you mentioned a specific margin number, but you have talked previously, I think, even going back to the prior call of trying to get to around 35% for F '27. Is that still the target?

Yes. Our target is still to go there. The 3 things right now that affected us in this quarter. Our gross margin on what we call the backfill. Our gross profit is low. We're working -- sales increasing fast. We're adjusting every day and that we're getting better and getting better margin on the backfill. But the backfill is not huge.

We are doing, Adam, USD [ 200,000 ] USD 100,000 a day. So our run rate is $100 million that we are selling on Vizio, LG and Samsung's platform. Last year, we didn't even do $20 million. So that's where we're getting a lot of our growth. But the margin on that product because we're selling growth and the rev share is lower right now and we're getting better at it every day.

The second thing that affected this quarter is Singing Machine. Singing Machine, we don't ship in Q1. So we have negative EBITDA, and then we'll have a positive EBITDA in Q2 that makes the big switch. So for sure, the Singing machine, because we sell to retailers, it affects our margin for this quarter.

Okay. No, that's helpful. I think going back to the prior quarter, you talked about trying to infuse some of the TuneIn programmatic advertising capabilities across the platform. You were starting, of course, with initial traction around FAST. And then ultimately, I think over the next 6 to 12 months, you're looking to do stuff within retail media and even the traditional radio business. So is that still tracking on plan? Anything you can share on those coming initiatives?

The first initiative that we're still the only one in the world to do. So we're the only company in the world that's doing audio ads on a CTV. So instead of having a video ad, you get a still image and you get an audio ad. And that really opens up the inventory that we can sell. And now we had one platform that agreed to it.

And right now, in Q2, we already have our top 3 platforms agreeing to do audio ads. So that's really unique because we're the only one selling that product. So there's no competition. We're not bidding anybody else like we are in the video space. So very happy about that. Also, what's exciting is we hit in June, we hit our programmatic sales, TuneIn and Stingray together.

We hit a high of $550,000 a day. So you do a run rate of that, that's $260 million a year. So we're really doing well. And the last part for the next few months that is exciting. So we have new platforms coming on board that we can do backfill. The platforms that have agreed to do audio ads, very exciting for us.

And the third thing that's most exciting, we're learning this from the advertising market, but the football season is starting college football, mid-August, then the NFL is starting. And with the football season and the sports season, everybody in our space, everybody that works in programmatic sales. We expect to have August, September, October and hit the record in November with the U.S. Thanksgiving.

So we see the next 2 quarters very strong because we finished Q1 so strong in June. It gives you a good momentum for the next 6 months. I mean, for us to achieve 27% organic sales is pretty incredible. And we're confident with the margin also will be improving. So we are very, very good momentum for Q2 and Q3 right now.

Question will be from David McFadgen at ATB Cormark.

A couple of questions. So first of all, just a clarification. On that 27.5% organic growth, is that a pro forma number? Or is that what you did last year and then you add in the TuneIn revenue?

No, no. It's really adding our revenue last year plus TuneIn's revenue and then the organic growth is on top of that.

Okay. So it seems like it's a pro forma number. And then -- so you talked about selling inventory from some -- or for some OEM partners. Can you tell us which OEM partners you were representing in the quarter?

Yes. So for us, we've always said this, we are partners with about maybe 25 OEM platforms on the TV side here. So -- but our top 3 -- the top 3 that we work with in the U.S. and it's public information, the top 3 in the U.S. is Vizio, it's LG and it's Samsung. So our goal for us is to do more backfill with them, sell more audio ads and be better partners. So we're very excited. Most of our programmatic sales still come from the U.S. right now. Europe is starting. Latin America is starting. Canada is doing well, but most of it is from the U.S.A.

Okay. And when you look at the backfill or the premium ad network, is the revenue growing because you're just representing more inventory? Or are you just getting better sell-through rate? Or is it both?

It's really -- it's all of the above. Vizio right now is selling 1 million new TVs a month. So they'll be adding 12 million TVs. So for sure, the TV manufacturers are selling new models and the TV only last 4 years. So it's much different than selling cars. And then after that, we're getting much better at selling more ads, which at the end, makes our partners more money.

So we become a big customer of them because we generate a lot of revenues. And then after that, these partners because we're doing well, are giving us more inventory. And most importantly, they're giving us guaranteed inventory. So it's really a virtual circle of positive.

And that's why the premium ad network, we were doing 25,000 a day in Q4. And then after we grew from 25,000 a day to 200,000 a day. So you can see the growth. So we don't know right now, we can't predict where is that going to stop. But now the momentum is very strong in Q2 and in Q3, and we'll be happy in November to update you of how we're doing on those sales on our CTV partners.

Okay. And then lastly, maybe you could give us a read on just the FAST advertising market because you talked to some other players in the FAST business, and they saying the market is kind of tough, but clearly, you're outperforming the market. So maybe you could just give us an update on just the general market for FAST advertising.

Okay. Like I said, in our case, because we're having access to more inventory and also because we're the only ones selling the audio ads, the audio ads have been a great success. So we're taking really the synergies. TuneIn is probably the best audio ad seller in terms of programmatic. And now we're telling our customers, you can also have an ad on a TV, on a connected TV. So I think that in our case, as we mentioned, the FAST channel this quarter grew by 70%. So this quarter, we didn't do plus 20%. We did 70% more. So we're really in a strong momentum with the FAST channels. So right now, we are on the opposite side because we're getting so much more access.

[Operator Instructions] Next, we will hear from Drew McReynolds at RBC.

First on the revenue recognition, Eric and Marie-Helene, absolutely I understand the complexity of these contracts and accounting. And just wondering from quarter-to-quarter, are -- like is the way you recognize revenue evolving that significantly? Or is it more steady state? And what we see is just kind of the relative buckets of revenues and how that mix evolves? Just trying to better understand what's moving here and what is kind of predictable from our perspective.

And so for -- in terms of the consensus revenue that you have for the market, we are very comfortable for the revenue and the EBITDA for this year. Our budget and our forecast is well aligned with yours, and we are very, very right now comfortable and even for FY 2028. So right now, based on the numbers we're getting, if you do the trends, we'll be in an incredible position.

On that, a lot of it has to do with contracts, Drew, that were written in 2015, 2018. You read the contract, is it net is it gross. So right now, what we're doing is just reestablishing our contracts to make sure every contract is clear. All the new contracts with all of our customers are clear. So it's more on that side. So no impact on your revenue guidance or targets for 2027.

Okay. No, that's helpful, Eric. Second on the audience space. multiplier model within retail media. Can you just flesh that out for us, just how it works and yes.

So eventually retail media, and we're not the only ones. I can -- all of our peers, Mood Media, other companies in Australia, other companies in Europe, other radio stations, a lot of radio stations want to be able to sell programmatic ads because the market is -- the trend is going that way. So I would say that we are working hard with a lot of our suppliers and with TuneIn to put that in place. We estimate we have anywhere from $300 million to $400 million of inventory on the retail media side.

And now good news is all retailers, maybe 2 years ago, they weren't too warm to nonendemic, meaning selling ads that they did not have in the stores. But I think now they're realizing that the retailer, their media, they're really media. So now they're letting us sell audio cars about -- ads about cars, ads about other retailers, like example, subways doing ads in [indiscernible].

So now they're accepting to have like a real media. So that's what we're excited. And I think the multiplier in the next 2 quarters, we should have a solution for that, and that will open up a lot of doors because we'll be able to open up that market to the programmatic ad people and sell that to the agencies. And I think for us, that will be really a catalyst for that unit.

Understood. And last one on the M&A environment, can you just remind us, Eric, what that environment and pipeline looks like from your perspective? And just more broadly, where your focus would be on that...

And still a lot of companies that are looking to sell and a lot of transaction. So I say -- but right now, our first step is we jolt the team, we got an elephant. Now we got an mammoth. We have a lot more synergies, positive synergies to get with TuneIn. Every week, every morning, we do a 9:00 a.m. synergy call on positive sales. So we have a lot of good -- I say there is a lot of food and muffin on the table that we can eat right now before looking at more targets. So we have a lot more that's it. So we're excited about continuing and having a great Q2, Q3 and really bringing exciting new synergies with the TuneIn acquisition.

Next question will be from Jerome Dubreuil at Desjardins.

First one is on the margins. You said you're very comfortable with consensus on EBITDA and revenue, but there's a bit of a shift in the profile and margins that we're seeing. I mean it's very good to see the absolute EBITDA growth. But if you can maybe help us on the margin profile you're expecting going forward to go with your double-digit organic growth expectation.

Yes. So again, this quarter, there's -- we're getting better. Our sales on backfill went from $50,000 a day in April, and now we're doing $200,000 a day. But don't forget, we buy the inventory from Vizio or LG, and we resell it. So if we buy at 5 and we sell at 8 then our margin is at 28%.

So our goal is really -- we have to be -- we're getting better and better every day to increase that gross profit margin and sales are expanding quickly. So we're adjusting. So that's one thing that we're improving on a daily basis, and that's why every quarter, we're going to see the gross margin on our EBITDA margin growing, I think Q2, Q3. Also a big impact this quarter where we had negative EBITDA with Singing Machine and now Singing Machine will be shipping in Q2, Q3, and that's also a big impact.

And what we'll be able to do, I think we'll be able to share with the analysts the impact of Singing Machine and the gross margin on the backfill. But we're getting back towards 35% in the next -- very quickly in the next few quarters.

That's great. Second one I had is on the retail media, you're pointing it out in the press release this morning. You're saying that the ads reach a broader audience rather than a one-to-one basis. If you can maybe explain what that means exactly? And if you can provide a time line on meeting those objectives.

Yes. So the issue we have -- the issue we have with retail media with audio, the issue the radio team has -- radio team, we would love to sell programmatic ads to all radio stations around the world. And the same situation at [indiscernible] Series is all of the ads, the programmatic ads market right now is seen as a one-to-one.

So you sell one audio ad or one video ad and you expect one person in front of the TV. So the market understands that. Now what we're establishing is a new product I would say, when you're a retail store, there's not one person listening to our ad.

There's really 50 -- and I think we're getting very close with a lot of our advertising partners to be able to accept that multiplier and be able to sell the product that way. And we're also working closely with the same multiplier for the radio division. So I think it's very encouraging, and that will -- it will be a catalyst to increase our sales.

Yes. And just to clarify on this, does that mean when you sell an ad in a grocery store, the contract or the pricing works as if there were only one person in the store?

No. If not, the model doesn't work. The model doesn't work because you're not -- the model only works if you get a multiplier in the store. If not...

Current pricing sorry.

Yes. So that's why we don't do programmatic sales. Right now, we don't do programmatic sales. And don't forget that Jerome, we were the first company to do an audio ad on CTV. So that just shows you how quickly we've been able to be technology-wise to be able to do that transfer. And most important is to tell our partners -- our CTV partners that we have audio demand. And with them, with the first one seeing the results, we could share with the other partners. And I can confirm that all 3 partners, LG, Samsung and Vizio will be taking audio ads, and that's going to be a great growth also for the next few quarters and few years.

At this time, Mr. Boyko, we have no other questions registered. Please proceed.

All right. On behalf of the entire Stingray team, thank you for joining us on this conference call. We look forward to speaking with you again following the release of our second quarter results in fiscal '27. And again, I always appreciate all the analysts to make themselves available and be there for us. So thank you for your hard work, and thank you for all your reports, and we love reading them. And I'll let you to know [Foreign Language].

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Stingray Group Q4 2026 Conference Call. [Operator Instructions] Also note that this call is being recorded on Wednesday, June 10, 2026. And I would like to turn the conference over to Mathieu Peloquin. Please go ahead.

Thank you. [Foreign Language] Good morning, and thank you for joining us for Stingray's conference call for the fourth quarter and fiscal year ended March 31, 2026. Today, Eric Boyko, President, CEO and Co-Founder; as well as Marie-Helene Fournier, Interim Chief Financial Officer, will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's unaudited fourth quarter and full year results for fiscal 2026 was issued yesterday after the market closed. Please note that the financial information discussed on today's call is currently unaudited. Our final audited financial statements and management's discussion and analysis for the fiscal year will be finalized, posted on our investor website at stingray.com and filed on SEDAR+ by June 30, 2026.

The additional time to close our audit this year reflects the scope of work involved in bringing TuneIn into our consolidated financial statements. I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operation and performance are subject to risks 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 SEDAR+.

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 are 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. A complete definition and reconciliation of such measures to IFRS financial measures is included in yesterday's press release and will also be detailed in our upcoming MD&A. Finally, let me remind you that all amounts 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 fourth quarter and full year results conference call for fiscal '26. Stingray delivered a strong financial performance in fiscal '26, reflecting strong execution in our key growth initiatives. Thanks to the game-changing TuneIn acquisition and a rapidly growing FAST channel segment, revenues increased by 21.9% and adjusted EBITDA by 12.6%. That momentum carried right in the fourth quarter where revenues surged by 43% and EBITDA grew by 21.3%.

TuneIn has truly transformative and synergistic impact on our business. Its programmatic advertising capabilities and extensive partner network of over 5,000 agencies will support the growth across all of our business units in the coming years. The success is driven by a number of factors. First, TuneIn is delivering strong organic growth, both on and off platform. Second, Stingray's premium ad network launch, what we call backfill just over a year ago is expanding rapidly.

We've achieved 175,000 U.S. sales a day, which is a $90 million run rate over the last 3 months, directly benefiting from its demand partners in TuneIn's advertising demand. This is creating a powerful flywheel effect across our advertising business. As a result, from our FAST channel surge over 60% year-over-year, a major highlight is our recent selection of a few CTV partners of choice to resell excess inventory. Additionally, several platform partners have chosen us to introduce and resell audio ads inventory alongside the video offering. This proves the power of combining TuneIn's expertise with Stingray's reach. Today, we stand as the one of the few players, and I would say the only one able to sell audio ads on connected TVs.

The most noticeable impact is that we are well ahead of schedule on our planned acquisition synergies. In less than 6 months since the TuneIn integration, revenue synergies have topped CAD 42 million and cost optimization has reached CAD 12 million. Now looking at other growth vectors. We continue to make progress on the retail media front with the integration of VMI, Walgreens and the strengthening of our revenue streams to more profitable managed services accounts where retailers are integrating our offering into their sales effort. We continue to work on enabling the introduction of programmatic advertising with retail media, which for us will be a game changer, where we should see some activity over the next 2 quarters.

On Retail Media, we still have $400 million of unsold inventory. So we have a lot of inventory to sell. In the connected car space, we are excited to see the user engagement with our new European rollout of BYD audio, the availability of Stingray in music in Mercedes-Benz vehicles and the U.S. rollout of TuneIn in Nissan and Infinity vehicles. Driven by this momentum, broadcasting and commercial music revenues surged 33% to reach $339 million in 2026. As mentioned, this growth was fueled by TuneIn deal, our expanded FAST channels, but also strong hardware sales from the Singing machine. In parallel, our radio revenues held steady at $132 million with higher digital ad revenues successfully offsetting lower airtime sales.

Now talking for 2027. We are very excited to say that we have an exceptional start of the year, probably the best start of the year since I've been CEO of this company, so for 20 years. Early signs of Q1 are very encouraging. Both April and May are showing organic sales well above 20%. This is a direct impact of the synergies we talked about. So going from 11.7% in Q4 to over 20% in Q1 is very exciting for the management team. Combined programmatic ad sales across Stingray and TuneIn are now approaching the run rate of $275 million. We had told the market that one of our goal is to beat the USD 500,000 a day. So we've achieved 20 -- we're achieving USD 520,000 sales per day. This proves our scalable growth model based on unparalleled reach and distribution, best-in-class monetization capabilities and the right content truly engaging audience worldwide across major platforms.

An important note, while we are maintaining our adjusted EBITDA margin target of 35%, we know Q4 was lower for many reasons, but that we maintain that position. We see clear potential for long-term margin expansion as TuneIn synergies continue to scale. I will now turn over the call to Marie-Helene for a financial review of the fourth quarter.

Good morning, everyone. Revenues reached $137.8 million in the fourth quarter of fiscal 2026, up 43.6% from $96 million in Q4 2025. The year-over-year growth was mainly driven by higher advertising and subscription revenues from the recent TuneIn acquisition, along with greater equipment sales related to the Singing Machine acquisition. These factors were partially offset by a negative foreign exchange impact.

Revenues in Canada decreased 5.5% to $44.2 million in the fourth quarter of 2026. The year-over-year decline can be attributed to lower radio revenue stemming from softer airtime sales. Revenues in the U.S. grew 117% to $82.5 million in Q4 2026 for the same reasons previously outlined for the consolidated revenues. Revenues in other countries decreased 0.6% to $11.1 million in the most recent quarter. The year-over-year decline was mainly due to lower subscription revenues, partially offset by greater FAST channel sales.

Looking at our performance by business segment. Broadcasting and Commercial Music revenues increased 68.4% to $108.8 million in the fourth quarter of 2026. The growth was driven by higher advertising and subscription revenues from the TuneIn acquisition, greater equipment sales from the Singing Machine transaction and higher FAST channel revenues. These factors were partially offset by a negative foreign exchange impact. Now looking at the breakdown by product for the full year. The Broadcast and Commercial division performance was highlighted by exceptional growth in advertising, which surged 74% to $150.7 million. This was further supported by a 63% increase in equipment and labor to $46.1 million, while our core subscription revenues remained stable, growing 2% to $142.3 million. For that part, Radio revenues decreased 7.5% to $21.1 million in Q4 2026, largely due to lower airtime sales. In terms of profitability, consolidated adjusted EBITDA improved 21.3% to $42.5 million in the fourth quarter of 2026. Adjusted EBITDA margin reached 30.8% in Q4 2026 compared to 36.5% for the same period in 2025. The increase in adjusted EBITDA was mainly driven by increased revenues from the TuneIn acquisition. The decline in EBITDA margin meanwhile can be attributed to lower gross margins on higher sales related to the TuneIn and the Singing Machines acquisition.

By business segment, Broadcasting and Commercial Music adjusted EBITDA grew 32.4% to $37.3 million in Q4 2026, primarily driven by the TuneIn acquisition. Adjusted EBITDA for our radio business dropped by 18.6% year-over-year to $7 million in the fourth quarter of 2026. The decrease is primarily due to a higher cost of sales, reflecting a change in sales mix, coupled with lower airtime revenues, partially offset by increased digital advertising sales. In terms of corporate adjusted EBITDA, it amounted to negative $1.8 million in the fourth quarter of '26 compared to negative $1.7 million in the same period of 2025.

Stingray reported a net loss of $64.6 million or $0.95 per diluted share in the fourth quarter of 2026 compared to net income of $7.7 million or $0.11 per diluted share in Q4 2025. The year-over-year decline is primarily due to a goodwill and license impairment charge for the Radio division of $64.7 million, along with higher acquisition costs, amortization expenses and restructuring costs. These factors were partially offset by an income tax recovery in the most recent quarter versus an income tax expense in the same period last year as well as improved operating results. Adjusted net income totaled $20.8 million or $0.31 per diluted share in Q4 2026 compared to $18.6 million or $0.20 per diluted share in the same period in 2025. The increase is largely due to higher operating results and an income tax recovery in Q4 2026 compared to an income tax expense for the same period last year, partially offset by a greater interest expense. Turning to liquidity and capital resources. Cash flow from operating activities amounted to $35.2 million in Q4 '26 compared to $39.7 million in Q4 '25. The decline was mainly due to increased legal fees and settlements and higher restructuring and other expenses. Adjusted free cash flow totaled $20.1 million in Q4 '26 compared to $18.4 million in the same period of '25. The improvement can be attributed to enhanced operating results, partially offset by higher interest expense and greater realized foreign exchange loss. From a balance sheet standpoint, Stingray had cash and cash equivalents of $20.7 million at the end of the fourth quarter and a credit facilities of $524.1 million. Net debt at the end of the fourth quarter of 2026 totaled $503.4 million, up $1 million sequentially, while our leverage ratio improved to 2.38x at the end of the fourth quarter. Finally, we repurchased 185,772 shares for a total of $2.8 million during the fourth quarter under our NCIB program. Overall, this year, we repurchased 1.1 million shares for $12.9 million. This ends my presentation. I will now turn the call back to Eric.

Okay, Marie. Again, this concludes our prepared remarks. At this point, Marie and I are pleased to answer your questions from our fantastic analysts. So very proud of the analysts that we have.

[Operator Instructions] First, we will hear from Adam Shine at National Bank Financial.

Eric, if we remove the revenue synergies, obviously tracking ahead of plan for TuneIn, what sort of growth rate at the top line are you seeing? Because I think at the time when the deal was announced, I think the expectation was 10%, 15% top line growth initially. Can we start there? I've got a few others.

Yes. And our budget this year, I think our budget is we're planning to be, I think, between 12% and 14% growth for the stand-alone Stingray budget. But what's happening, Adam, which is out of our control, is incredible news. On the backfill, we were doing USD 30,000 a day in January, February, March. And the back -- we started doing audio ads on connected TVs with the help of TuneIn and the Stingray team. And with now the backfill went from USD 30,000 a day, our dream was to do USD 100,000 a day, and now we're hitting USD 175,000 a day. So the backfill went from a $20 million business, and now we're rolling at $90 million. So that's why the organic sales are jumping in April and May. So the only issue is the backfill of USD 175,000 a day in or $90 million, and we feel it's going to go to 200,000 a day, which we'll see maybe in June, but that's the big difference. So that's where the synergies have TuneIn and are really coming up. So the backfill is all coming on our side.

Okay. Understood. And just in terms of retail media, I think in the press release yesterday, you talked about pursuing more profitable managed service capabilities. Can you elaborate a little bit further on that?

Yes. Good question. So on Retail Media, a bit of a change in direction, but also I think very good news. So the first change is a lot of the -- a lot of retailers do core programs. So when people buy via their core program, we'll charge a managed service fee, which is higher EBITDA margin than what we would make with us selling and the share that we give the retailers. So on the EBITDA side, it's going to improve our EBITDA margin. It's going to -- because it's 100% EBITDA. But for a period of change, it's going to affect a bit of the organic sales because we're going from gross instead of selling $100 and making $20, we're charging $20 and keeping $20. So -- but it's not that material for the company as a whole. So that's the first change that's happening. The second change is that one of our partners, StrataCache is having financial difficulties -- so a lot of retailers were promised big MGs of that company. So now all retailers are accepting nonendemic. And the importance of accepting non-endemic in stores is that, that's where we can get TuneIn involved and for us, working very hard to get the multiplier. So the multiplier is to accept that there's 40 person in a store listening to an audio ad. I think we're two quarters away. And once we can start bringing the TuneIn inventory into our retail stores, again, reminding you that we have $400 million of unsold inventory on the retail media. That for us will be a game changer, and we will be the first company, again, pioneering of bringing the programmatic sales into retail media. So I think we're two quarters away from that, and that will be a game changer for us and for the retail media.

I'll let someone else ask on the margin profile. But just on capital allocation, I think last quarter, you talked about leverage ultimately perhaps getting below 2x in F '27. I mean the stock has pulled back. I would assume that you might step up some of your buyback activity. But maybe just talk about some of the priorities for capital allocation in F '27.

Yes. So again, we are maintaining -- we're very confident that by December, not by year-end, by December, we'll be very close to two or below 2x EBITDA. We will finish the year well below 2x EBITDA. The TuneIn acquisition is -- don't forget, we also have $200 million of tax losses. So the TuneIn acquisition in terms of a cash basis, it's -- the EBITDA equals cash, very low CapEx in TuneIn and lots of tax savings. So we're very happy with our cash flow generation. I think the forecast from you guys, from Adam, from the analysts, sales up 40%, EBITDA roughly up 50% and our free cash flow up 60%. So I think the analysts are expecting us to deliver about $2.30 a share of free cash flow. And we, as a company and as a Board, our budget is above the consensus of our analysts of your group of peers. So very confident to deliver a strong year and very confident for the deleveraging. So that is very happy about that. Right now, our #1 focus is just executing the TuneIn deal.

Next question will be from Aravinda Galappatthige at Canaccord Genuity.

With respect to the organic growth numbers that you quoted, Eric, the 11.6% for Q4 and the 20% plus, it seems that, obviously, much of that is coming from TuneIn, sort of the pro forma growth within TuneIn. Can you just give us a sense of what the growth rates have been, in particular, on the advertising side and perhaps on an aggregate revenue side for TuneIn since you closed the acquisition? I realize it's still a short period of time, but just to kind of help us with the modeling.

Yes. Again, I know there's a lot of numbers, but what we call the premium ad network, which is the backfill. So when VIZIO, LG or Samsung doesn't sell the ad, they only sell 40% to 50% we now have the right to sell after them. So we call it the backfill, but we need a better word than that. But -- so right now, that backfill segment, we were doing $ 30,000 a month in Q4. So in January, February, March, the backfill went from USD 30,000 a day to USD 175,000 a day. So right now, we're running at a CAD 90 million run rate. That backfill is 100% Stingray. This is us selling on connected TVs with the synergies, with TuneIn. What happened the big change. The big change is that a lot of our partners accepted audio ads. So you're watching TV and you'll see a photo. And then while you see this photo, you'll hear an audio ad, and that's TuneIn doing that, and that's where we get the $42 million of positive synergies. We have over $500 million of unsold -- our partners have over $500 million of unsold inventory on CTV. So it's unlimited inventory for us to sell, and that's really coming on our side. TuneIn also, TuneIn is growing. TuneIn is the organic growth of TuneIn right now because of the synergies, their growth right now is between 60% to 70%. So TuneIn is growing at a very high rate and Stingray organic sales are growing highly. And April and May, again, we doubled the organic sales from January, February, March to April and May, and June is looking even stronger. So very excited to speak to you on August to report our Q1. I think Q1, you will see the real numbers of Stingray and TuneIn. This Q4 of last year, it was a start. We also had -- when we first started selling the synergies in January, February, we buy the inventory from our CTV partners. So there's a cost, and we were buying and selling at the same price. So our gross margin for the first 2 months of the year -- of the calendar year was 0. But now we've arranged everything, but it's great to get synergies. But the first 2 months, we had synergies at a 0% margin, which explains a bit what happened in Q4. But beauty about Stingray, we adjusted quickly. In March, we were back in line. And now we're happy that the backfill is generating above 30% gross margin. So very excited about that move and excited to report more in August.

And then just to follow up on your comments about Retail Media. I just wanted to be clear. So what you're saying is within 6 months, so let's say, by the end of the calendar year, you're in a position to be deploying programmatic ad sales within the retail platform as Retail Media platform as well. Just wanted to clarify that. And what kind of needs to happen between now and then? What are kind of the bumps on the road that you need to kind of get past to make sure that, that execution happens because obviously, that's another material piece going forward.

Yes. So the multiplier is a very simple concept is the multiplier is the fact that all of TuneIn audience and every ad we sell right now on the CTV is 1:1. So one ad, person. But in a retail store, there's 40, 60 people. So with the multiplier is the same concept that's been given for out-of-home. So when you drive on the highway and you see a billboard, the billboard is not a 1:1. They estimate the number of cars and there's a multiplier. So we're bringing this multiplier into effect in the audio space, and we're not the only one that wants it. So you can imagine XMSirius also would like the multiplier for their satellite for the radio business, we would like to use programmatic sales to have the multiplier for terrestrial and for retail media. So a lot of companies are working together to try to get the multiplier. The biggest issue there is not the technology is for the agencies to accept that you have 1 to 40. And I think that because a lot of us are working on this project, I think we're 6 months away from the agencies accepting it. So it's not about technology, it's really about acceptance of the new technology.

Next question will be from Stephanie Price at CIBC.

It's Sam Schmidt on for Stephanie Price. I wanted to ask around TuneIn cost synergies. It looks like those are progressing more slowly compared to the revenue synergies. Can you share some color on that and how you're thinking about the timing of executing on those cost synergies?

Well, what's happening is that the TuneIn right now are -- how can I say, they're beating their budget by 30% to 40%. Like I said before to Adam, I think organic sales of TuneIn are between 60% to 70%. So our sales are so strong. We're executing so well with the positive synergies that there is less plan to do cost saving because right now, we've got a team that's in a Stanley Cup winning every game. So we don't want to change the players on that team because we have the winning team. So the focus is on -- is really on the positive synergies. We've achieved $42 million. And I think that we have achieved that after 6 months. And I think we have a long way to go on the synergies because, again, because of the fact that the CTV -- that the CTV manufacturers, VIZIO, Samsung and LG are accepting audio ads, -- those synergies are so important that we're just focused on that side. I think there's more value creation for Stingray. And on the cost saving, we've achieved our goal. So on the cost savings, we told the market $10 million. We've achieved $12 million. So we're very happy on that side.

Okay. And then maybe just on the advertising demand environment more broadly. What are you seeing at this point? And can you share some color on the organic advertising revenue outlook?

Yes. So advertising for us, like we told the market that one of our dream was to do USD 500,000 a day of programmatic sales. We've achieved USD 550,000. So that's why we mentioned today, so we're -- right now, our run rate is $275 million of programmatic ad sales. A year ago, it was 0. So a lot of it is coming from TuneIn. So you got about $180 million from TuneIn that were. And then the rest, the other $90 million is coming from the backfill we talked about. So very excited about what's happening there. And to be -- on that side, we don't see -- it's not -- we have -- we'll do $90 million of sales this year, our run rate is, and we have one person. So it's not based on number of salespeople you have. It's about the fact that we have 7,000 to 8,000 commercial partners or advertising partners buying. And what happens is that, let's say, you got Subway once gives us 20,000 a day. But if we bring in a CTV with one of our partners and we increase our reach, then automatically, the next day, they'll give us 30,000 just because we have more reach. So the programmatic advertising is all about scale. And now we got 75 million users on TuneIn, and we're teaming up with all the -- with the 25 million users of VIZIO, the 100 million users of Samsung. So we're able to reach everybody in the U.S. So we are in a unique position to really reach everybody, and we don't know where that will stop. So -- but I must tell you that this -- and programmatic ad sales are a bit like Costco. Our average CPM is between $6 to $8. But the beauty about Costco is that even if the economy goes well or bad, people still go to Costco.

Next question will be from Jerome Dubreuil at Desjardins.

Just wanted to jump on something you said earlier in the Q&A. You were talking about the budget being above consensus. I'm just not sure if you were referring to free cash flow there and what you said are all of the revenue, EBITDA and free cash flow line that you're seeing.

Well, roughly, what we see with our consensus, I can look at my -- our sheet here, but roughly, I think the market is at $226 million, Marie, $226 million of EBITDA. So I think our budget is above that, and we are ahead of budget. So good news. But Marie doesn't want you guys to change your consensus. So that's a lot of pressure from Marie on that one. So please, Jerome, don't change your consensus. So -- but right now, we're looking -- again, the year started to have organic sales growing by above 20% in the first 2 months of the year and June looking even stronger than April and May, we're starting the year like we're doubling organic sales compared to last year. And again, one point I want to mention that we haven't mentioned, it's going to be a third year in a row that we have organic sales above double digit. So that's something we should -- when you do your reports, I think our EV to EBITDA should be higher. Right now, we're trending at 7.11 EV to EBITDA for a company growing with our cash flow at double digits. And right now, we're starting the year above 20%. So no, we're very, very -- I think it's a strong start.

Great. Second for me. So you're pretty upbeat on the FAST bouncing back or accelerating in the next quarter. You said one of the reasons for that is the audio ads now being sold. But I'm also seeing in the press release that you're talking about VIZIO allowing you to resell of excess inventory. Can you clarify what exactly that is? And if this could be another fundamental reason for the bounce back in growth on FAST?

Yes. So again, so we call it backfill for marketing terms, we call it the Stingray premium ad network. But at the end of the day, is that VIZIO, Samsung, LG, they only sell 40% of the ads on their channels. And what the partners are giving us, which only a handful of partners have the right to is to resell the inventory that they're not selling on all their channels. So not only on our channels, but all the channels of VIZIO, all the channels of Samsung, all the channels of LG. So we're talking about billions of impressions a day. So that's a big advantage for us. And this inventory seems to be increasing. And that's why our backfill went from, again, USD 30,000 a day to USD 175,000 a day. So we had budgeted for the backfill this year, 25 million. And now we're humming at CAD 90 million of run rate per year. So I think this is exciting. And here's the good news is that when we do backfill, we give back the money to our partners and the more money we give them, it's a bit like they become addicted to the money, they put it in our budget. And so these will be partners as long as we give them money, they'll be partners for life. I can tell you in the case of VIZIO, they told us that our number with them is so strong that even it gets reported to Walmart. So we -- one of our dream was to tell VIZIO, maybe it's time for us to get the Walmart account for audio and digital media in the U.S. So that will be one of our dreams.

Yes. Walmart is a huge retail media player there.

Next question will be from Tim Casey at BMO.

[Technical Difficulty]

I'm sorry, we're having trouble hearing you.

[Technical Difficulty]

Sorry, Tim. Okay. Now we can hear you.

Yes. What happened in radio this quarter? I mean, if you look at the revenue run rate year-over-year, it's been positive or very marginally negative for many years, and you're down 7.5%. Was that airtime sales? Was that digital advertisers moving away from the radio websites? So what happened in radio in the quarter? And how are you thinking about radio in '27 and '28?

So very good question. So you're correct on both points. So point number one, I think the Olympics, the Olympics did not really help us in radio, a very tough quarter. I agree. It was the toughest quarter we had since COVID. So I think we're -- maybe the Olympics, we're not 100% sure. And the second point is the online gambling in Ontario, huge customers for us on the digital side. So online gambling, there's a lot of competition in Ontario. So that also dips. So with both of them coming at the same time.

The good news is radio for Q1, radio is on budget. The budget was we were looking to be down about 3%, but at least we're both on budget on sales and on budget on EBITDA. So we're stabilizing. And the very good news on online gambling is the fact that Alberta. Alberta is also doing the same thing in Ontario. So the online gambling in Ontario is going to be a $10 billion business, incredible, just good for Ontario. So we're -- and what we like about Alberta is we have 43 radio stations. We are dominant. And I think you're going to see a lot of buying coming this year because we're going to be dominant for Alberta and the opening of the online gambling.

Online gambling includes also sports betting and all these jackpots and all these websites. I'm not a big gambler myself. I'm not against it, but I'm just saying, but I think it's going to be good for us this year. But there's no doubt that the terrestrial radio ads are declining, and that has to be offset by digital ads. And the third line that we're doing that we're doing -- that we're very successful is I think the radio business will sell this year $3 million of ads on TuneIn. And the beauty about that is that $3 million is 100% EBITDA margin because there's no cost on tune-in. So that's one of our strategy. So that should help the EBITDA. And on the radio side, there's no doubt that we'll need to look at cost savings because OpEx there is $62 million. and with the business being tougher for growth. But the goal is to have digital compensate for terrestrial radio, but terrestrial radio is coming down and the trend is it will go down. So we have to adjust ourselves with that. And hopefully, we'll be able to bring programmatic sales to radio. I think that not only us, but in the U.S., XM, iHeart, everybody is looking at that. How can we put all that together and bring programmatic sales to radio. We have about $10 million to $15 million of unsold inventory on terrestrial, and that could be filled up by programmatic sales. So we got to work with technology, and we got to diversify.

And what do you -- and so if we -- if you consider an operating environment where you've got declines in radio, you talked about cost savings. What -- how do you think about the margin outlook for radio?

Yes. So we're very confident that our EBITDA for this year and our budget for this year and for next year, radio budget, the EBITDA will be growing. So EBITDA will not be coming down. We'll have a growing EBITDA in terms of dollars. And I think the margin will be also very stable. So we got a great plan for radio because what we're doing on the digital side. And for us, the home run for us on the radio side for everybody in Canada, now that we're much more involved in the U.S., the U.S. are allowed to have 8 radio stations per city, and the FCC is looking to take away that rule. There's unlimited radio stations. The CRTC going from 2 to 3 was a ridiculous decision because everybody owns 2 stations. So nobody is going to sell you 1 station. So really, you got to push the minister. We got to push the CRTC to go to 4 stations. At 4 stations, then the market can consolidate and we all start making more money. So that for us will be the major win in Canada. Radio will keep on doing the $42 million EBITDA, almost $42 million free cash flow, well-run organization, and we do the positive synergies with TuneIn. Also, just a quick note, not material, but our TuneIn, listenership in Canada because we're promoting it through radio has gone up 571% in the last 3 months. So just to show you the power that radio can do to a product like TuneIn. I understand Canada is not the U.S., so it's not going to be billions of dollars. But as Canadians and as Montreal and Quebec, I'm very proud that TuneIn is becoming a known name in Canada.

When you think about the potential ownership rule changes, would you be willing to put new capital to work and acquire radio? Or would it be more about trading stations so you can consolidate -- so operators can consolidate markets?

Yes, it would really be about -- there's a big advantage. It will be about trading, absolutely. And there's a big advantage. You own 2 radio stations, you own 3 radio stations, you have 1 sales force. You have 4 radio stations, you have 1 sales force. There's a lot of savings to having 4 radio stations or 3. We're happy that we bought a third one in Calgary. The synergies there are incredible. And I think that one day at the CRTC and the government, if you want to protect local media, both on the TV and radio side, you'll need to accept to have more dominant players per city because it's the only way that I get.

Eric, you just took a $65 million write-down on radio. I mean you're not suggesting you're going to put more capital into the radio, are you?

No, no, it would be trading, not more capital, but it would be good for us to trade certain cities that were strong. We would love to get 2 more stations in Ottawa. In Ottawa, we have 1 and 2. We'd love to get 2 more stations in Ottawa. Where we're very strong, it would be great to add stations. And where we're weaker, it'd be great to let go stations.

The other thing I'd like to just -- if you could flesh out is you have a line in the press release where you talked about $275 million of revenue. Can you explain to us what is in that bucket? Because I think one of the challenges we have is where does -- what buckets do all these revenue items fall in as we try and model out the business. So could you flesh out what's in that $275 million and where the growth is coming from?

Yes. So roughly the $275 million is $90 million of backfill. -- and $185 million of TuneIn programmatic sales. So TuneIn does $185 million, and we do $90 million.

So that is legacy TuneIn before backfill?

That's what TuneIn does in sales and the backfill is what we're doing incremental sales.

And what would -- like what's the growth rate on that TuneIn? What -- like $185 million this year, what did it do last year notionally?

I think that the last year because we're talking U.S. and Canadian, but I think TuneIn right now is growing at around...

Eric, let's stick with Canadian. So you've talked about CAD 275 million, CAD 90 million of it is backfill and CAD 185 million is TuneIn?

Yes.

So what -- notionally, what did TuneIn do last year, legacy TuneIn that's comparable to the CAD 185 million you're looking to?

TuneIn roughly did about CAD 120 million last year. And right now, we're running at CAD 185 million. Tim you know all about numbers.

That's what we do, Eric. We just look at numbers all day long.

[Operator Instructions] At this time, we have no other questions registered. I will turn the call back over to Eric.

Okay. Thank you, everyone. So on behalf of the entire Stingray team, thank you for joining us on the conference call. We look forward to speaking with you in August for the first quarter results, and that's going to be quick. It's going to be less than 2 months. So excited about that and excited to show the -- to have more view and execution on the TuneIn acquisition that we're very pleased and excited to officially be able to tell you the exact numbers for Q1. And again, thank you for all the analysts, your time and work you dedicate to us. We're very happy. And the good news is we might have a new -- a couple of new friends joining us in next quarter. So I think we have a few new analysts that are looking and maybe 1 or 2 from the U.S. So step by step, but we'll have more friends. Okay.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your line.

Good morning, ladies and gentlemen, and welcome to Stingray Group's Third Quarter 2026 Conference Call. [Operator Instructions] This call is being recorded on Wednesday, February 11, 2026.

I would now like to turn the conference over to Mathieu Peloquin. Please go ahead.

Good morning, everyone, and thank you for joining us for Stingray's conference call for the third quarter of fiscal 2026 ended December 31, 2025.

Today, Eric Boyko, President, CEO and Co-Founder; as well as Marie-Helene Fournier, Interim Chief Financial Officer, will be presenting Stingray's operational and financial highlights.

Our press release reporting Stingray's third quarter results was issued yesterday after the market closed. Our press release, MD&A and financial statements for the quarter are available on our investor website at stingray.com and SEDAR+.

I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operation and performance are subject to risks 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 SEDAR+. 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 MD&A for a complete definition and reconciliation of such measures to IFRS financial measures.

Finally, let me remind you that all amounts on this call are expressed in Canadian dollars unless otherwise indicated.

With that, let me turn the call over to Eric.

[Foreign Language]

Good morning, everyone, and thank you for joining us for our third quarter fiscal '26 earnings call.

I want to begin the call with talking about the significant progress that Stingray has made in positioning itself for long-term sustainable growth. We have built a unique and powerful position in the market, and I want to share with you the framework that will underpin our strategy.

Stingray is built on 3 pillars that work together to drive our growth: distribution, monetization and content. Our first pillar, distribution. Our purpose is simple: to be everywhere our listeners are. We had executed on this and today, Stingray is the most widely distributed streaming media company across the platforms that are now part of our daily lives. We are the most widely distributed music player on connected TVs, smart speakers, mobile device, connected cars and thousands of retail stores.

This massive footprint is our core strength. We have built our services directly into the device people use every day, making our content very easy to access. This gives us a powerful and lasting advantage that is difficult for anyone to replicate. As of today, we estimate that we have over $200 million of FAST channels unsold inventory and over $400 million of unsold retail media inventory. And as you can see with our reveals, we are quickly building our car inventory.

Second, our second pillar, monetization, that -- we like the word monetization. Having a massive audience is one thing, monetizing it effectively is another. With the acquisition of TuneIn, we now have a world-class advertising engine to turn our reach into revenue. We have the technology, the ad stack, and the right demand side partnership to sell both audio and video ads across our entire network. For advertisers, this is a game changer. They can now come to one place, Stingray to connect with a global audience through their TVs, their speakers, their cars and at retail. This unified platform creates a predictable and highly scalable revenue stream for our businesses.

So we have distribution. We have the monetization engine. That brings me to our third and perhaps the most important pillar, content. So in terms of monetization, we feel that we will be achieving $500,000 a day of programmatic sales. A year ago, when we were talking at this time, our sales of programmatic was 0. And now our run rate is $500,000 a day at USD 102 million or CAD 250 million. So when you talk about growth going from CAD 0 to CAD 250 million, that's a great new vector.

Well, content -- what is the fuel in our entire model and what truly sets us apart? While other streaming compete in the expensive, very expensive world of on-demand music, we have built a smarter model focused on creation. We create expertly crafted players, engaging karaoke experience and world-class catalog of recorded concerts. This strategy gives us something very powerful, unmatched and scalable unit economics. Our content costs do not grow at the same pace of our audience.

As we reach more listeners, our models become more profitable. We deliver premium experiences to hundreds of millions of users without the prohibitive costs that challenge others in the industry. It is a smarter, more sustainable way to grow.

This is the story of Stingray, a company with unmatched reach, a world-class advertising engine and a unique content strategy. We are building a scalable platform for the future of streaming. The results we are sharing today are a direct outcome of this focused strategy.

Let me now turn to review to our third quarter fiscal 2026. Stingray announced exceptional third quarter results for fiscal '26 with revenues and adjusted EBITDA -- adjusted free cash flow reaching record levels. On a consolidated basis, Stingray generated adjusted EBITDA of $44.5 million and adjusted free cash flow of $34.8 million on revenues of $124.8 million in the third quarter.

The highlights has similar positive impact of its recent TuneIn acquisition and the continued expansion of high-growth areas like FAST channels, in-car entertainment. FAST channels, particularly drove our robust financial results as we leverage Stingray premium ad networks, which we call backfill to monetize unsold inventory and benefit from new deployment across the LG platform.

In addition, the integration of TuneIn has progressed even better than planned. Following the closing of this transformative acquisition on December 19, TuneIn's performance has exceeded our expectations, creating powerful, new synergies that are already reflected in our strong financial performance.

Revenue synergies with TuneIn reached an annual run rate of $16 million in revenues and $5 million in cost savings. As a reminder, we have established synergy goals for sales between $20 million to $40 million of cross-selling and for cost savings between $10 million to $15 million in the next 18 months or before March 27. So we started the year, let's say, on a fast track.

On the in-car entertainment side, our recent agreement with world-class automated brands like BYD, Mercedes, and Nissan are a powerful validation of our in-car entertainment strategy. By integrating our full suite of products from Stingray Music and Karaoke to the rich content of TuneIn, we are cementing our role as an essential partner for the connected cars. These new partnerships certainly expand our global footprint and accelerate our momentum.

At BYD, we raised our partnership to a new level through an OEM radio deal involving the integration of our full suite of products, including Stingray Music and TuneIn, under the BYD audio by Stingray brand, Stingray Karaoke and Comm Radio.

Turning to Mercedes, we will launch Stingray Music and Stingray Karaoke applications in all vehicles equipped with our latest MBUX infotainment system. This application, which will be newly pre-installed in Mercedes cars is expected to be released in the first half of calendar '26.

Just last week, we announced a collaboration with Nissan to bring a unique TuneIn offering to select Nissan and INFINITI vehicles in the United States. As a result, drivers will gain access to live sports, breaking news, creative music, millions of podcasts and tens of thousands of radio stations on the latest Nissan infotainment system. These partnerships do -- not only strengthen Stingray's global automotive presence, but also accelerate the rollout of branded in-vehicle audio experiences.

Amid this flurry of activity, revenues for Broadcasting and Commercial Music business grew by 22% to $88 million in the third quarter of '26, while Radio revenues rose 2% to $36.7 million.

In terms of our Radio business, we entered into the agreement to acquire the assets of CHUP-FM in late November to solidify our position in the Calgary market. More specifically, this deal will enable us to improve efficiency and achieve economies of scale, since we already own 2 other radio stations in the market. Altogether, Stingray Radio owns and operates 32 radio license in Alberta and 96 radio stations across Canada. Calgary, the transaction is subject to CRTC approval, while we expect it to close in the second quarter of fiscal 2027.

Finally, I would like to reiterate the relative strength of our balance sheet post-acquisition. We are very happy to show that our leverage ratio is below 2.8x that we had told the market for the third quarter, and we ended December 31 at 2.49x. So a very good closing, very good cash flow for the company.

Looking ahead for the next 12 months, reducing our debt will be our top of our capital allocation priorities with a target set to drop below 2x EBITDA by the end of calendar year, so by the end of December. So a very quick deleverage of this acquisition. Consequently, we believe Stingray's path to value creation will be marked by accelerated EBITDA growth and free cash flow generation in upcoming quarters.

I will now turn over the call to Marie-Helene for our financial overview of the quarter, and I will be pleased to ask questions. [Foreign Language] Marie.

[Foreign Language] Good morning, everyone. Thank you, Eric.

Revenues reached $124.8 million in the third quarter of fiscal 2026, up 15.4% from $108.2 million in Q3 '25. The year-on-year growth was mainly driven by enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to the acquisition of The Singing Machine, and greater FAST channel revenues.

Revenues in Canada decreased 1.1% to $53.6 million in the third quarter. The year-over-year decline can be attributed to lower equipment and installation sales related to digital signage, partially offset by higher radio revenue.

Revenues in the U.S. grew 42.5% to $60.3 million in Q3 '26, reflecting enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to The Singing Machine Company transactions. Revenues in other countries decreased 6.7% to $10.9 million in the most recent quarter. The year-over-year decline was mainly due to lower subscription revenues, partially offset by greater FAST channel sales.

Looking at our performance by business segment, Broadcasting and Commercial Music revenues increased 22% to $88.1 million in the third quarter of 2026. The growth was driven by enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to the acquisition of The Singing Machine and greater FAST channel revenues. Further apart, Radio revenues rose 2% to $36.7 million in Q3 on higher digital advertising sales, partially offset by lower airtime revenues.

In terms of adjusted EBITDA, Stingray also reported record numbers. Consolidated adjusted EBITDA improved 5.7% to $44.5 million in the third quarter. Adjusted EBITDA margin reached 35.7% in Q3 compared to 38.9% for the same period in 2025. The increase in adjusted EBITDA was mainly driven by organic revenue growth as well as the impact of the acquisitions. The decline in EBITDA margin, meanwhile, can be attributed to lower gross margin on sales related to the TuneIn and The Singing Machine acquisitions.

By business segment, Broadcasting and Commercial Music adjusted EBITDA grew 4.6% to $33 million in the third quarter. Like consolidated adjusted EBITDA, the increase was due to organic revenue growth as well as the impact of the acquisition.

Adjusted EBITDA for our Radio business improved 5.5% year-over-year to $13.2 million in the third quarter on the strength of higher revenues. In terms of corporate adjusted EBITDA, it amounted to negative $1.7 million in the third quarter of '26 compared to negative $2 million in the third period of 2025.

Stingray reported net income of $7.5 million or $0.11 per diluted share in the third quarter of '26 compared to $15.7 million or $0.23 per diluted share in Q3 '25. The year-over-year decline was mainly due to the higher performance and deferred share units expense related to an increase in the Corporation's share price, as well as greater acquisition, legal restructuring and other expenses. These factors were partially offset by an unrealized gain on the fair value of derivative financial instruments and by a foreign exchange gain.

Adjusted net income totaled $26.3 million or $0.38 per diluted share in Q3 2026 compared to $23.4 million or $0.34 per diluted share in the same period in 2025. The increase can be attributed to a foreign exchange gain and higher operating results, partially offset by greater income tax expense.

Turning to liquidity and capital resources. Cash flow from operating activities amounted to a record $38 million in Q3 '26 compared to $35.4 million in Q3 2025. The year-over-year improvement was mainly due to a foreign exchange and positive net change in non-cash operating items. These factors were partially offset by higher acquisition, legal, restructuring, and other expenses.

Similarly, adjusted free cash flow reached a peak level in the most recent quarter. Adjusted free cash flow totaled $34.8 million in Q3 compared to $28.6 million in the same period of '25. The improvement can be attributed to higher operating results, combined with lower income taxes and interest paid.

From a balance sheet standpoint, Stingray had cash and cash equivalents of $17.3 million at the end of the third quarter and credit facilities of $519.7 million.

Net debt at the end of the third quarter of '26 totaled $502.3 million, up $181.2 million from the end of Q2 2026, mainly due to outlays related to business acquisitions. As Eric mentioned earlier, our leverage ratio stood at 2.49x at the end of the third quarter. We intend to bring it down under 2x over the next few months or by the end of the calendar year, by diligently reducing our debt and generating higher adjusted EBITDA.

Finally, we repurchased 303,000 shares for a total of $3.8 million during the third quarter under our NCIB program.

This ends my presentation. I will now turn the call over to Eric.

Okay, Marie. This concludes our prepared remarks. I hope you like my introduction. At this point, Marie-Helene and I will be pleased to answer your questions. Back to you guys.

[Operator Instructions] First question comes from Stephanie Price at CIBC.

It's Sam Schmidt on for Stephanie Price. I appreciate the disclosure around the run rate TuneIn revenue synergy figures.

How are you thinking about the cross-selling opportunity from here? And what gets you to the top versus bottom end of that $20 million to $40 million target?

You know what, when we started it was very interesting. The deal wasn't even closed because we announced the deal and we had 2 weeks to wait for the Competition Bureau. And I think 3 days later, we already had like 8 different vectors that TuneIn is already helping us sell. So what are we selling? They're helping us on CTV, helping us sell Comm Radio, they're helping us sell ads on Stingray Music, they're helping our radio team, which we sell TuneIn in Canada. So the cross synergies, we have over 9 products.

We quickly achieved just in 1 month in January, $16 million run rate. We said $20 million to $40 million, but right now, I'd say $20 million to unlimited because like I said before, a year ago, we were doing 0 in programmatic sales and we are very confident that by the end of this quarter, by the end of March, we will be running at USD 500,000 of programmatic sales on all the different platforms, which is USD 182 million, which is roughly CAD 250 million.

So I think the cross synergies are really -- and the more we launch products, the more we launch cars, again, we're talking about distribution, all will be net finance, all the model is advertising in programmatic. And the beauty of programmatic is it's a very deep lake and the TuneIn team is a first-class, sophisticated, ad tech machine. And I think this merger is a perfect merger on the cross-selling. So I think the $20 million is just a starter and we're very excited -- in June, in 4 months -- to really give you our first quarter together and just give you a bit of feedback. TuneIn grew in January by 81%. So a big start of the year in January. So very happy about that.

Again, we have to be careful, it was a good quarter, last year was a bit weaker. There was the tariffs, and there was Trump and the Liberation Day -- won't go in that debate, but a very good start of the year, so very happy.

Just one more for me. I wanted to ask around the cost synergies as well. Can you provide some color on those initiatives? And how are you thinking about Broadcast and Commercial segment margins as you work through those cost synergies...

In terms of cost synergies -- right now, we've only focused on cost of goods sold. For example, cost of goods sold, music rights, since we have more scale, we have better music rights, usual saving on insurance, saving on audit fees, saving on all these. So we haven't even looked yet at the personal side. Over time, there will be -- there are duplication in certain positions. But right now, we started the year so strong. The results are so strong on their side and our side, there is no big rush.

So very confident to achieve our $10 million plus of OpEx and COG savings by year-end. And I think we might just achieve it with the COGs. We have a lot of also synergies on in terms of paying the Amazon fees and also ad service fees. So we're very excited. Again, a great merger on both sales and cost savings. I would say it's a perfect marriage.

The next question comes from Adam Shine at National Bank Financial.

Eric, just on the synergies, can we just confirm that these are in CAD, or are they actually in U.S., because I thought originally they were in CAD.

So very good. We didn't realize, but we had told the markets last time when we did the deal that all these savings are in U.S. dollars. So thank you, Adam, for the question. So we had sold USD 20 million to USD 40 million of positive sales and $10 million to $15 million of OpEx savings...

So turning next, we're seeing obviously, some of the top line growth. Can you speak a little bit about the possibility of margin expanding? I mean, understandably, your mix has evolved with some lower margin components that are putting a bit of pressure on the margin. But how do you see margins expanding going forward above, let's say, a 35% level?

Yes. And we did a good sheet on different margins. For sure, examples, when we get money from a fast channel partner like from LG or VIZIO, that money in that case is recorded net -- I'm going to accounting. When we do backfilling and when we do programmatic sales, we sell $1, now we have to pay our partner whatever the amount, $0.35, $0.40, $0.50.

So the gross margin on both products are, one is at 95% gross profit, the other one is at 40%, 45%. So very difficult to predict. The more we do backfilling and programmatic, it's not the same margin as getting net revenues. So I'm happy offline with Marie to give you more guidance on the gross margin and the EBITDA margin. But there is an effect, when we sell directly, we report the numbers gross. I'm an accountant, so I don't want to go into too much detail, so I'll get you bored. I do have brown socks today.

Okay. But my point is simply that do you see over the next, let's say, 3 years to 5 years, an opportunity to scale a mid-30% margin towards 40% or something maybe slightly above the current level?

I think we're now globally at 35%. The programmatic sales will grow so fast that a bit of the other products that we sell with E&L and with our friends at Singing Machine, I think, we can expect the 35% to grow back again towards the 40%.

Okay. And just in terms of leverage, I mean, you've done a good job in the prior 2 years of significantly bringing down leverage. And I think you're already doing a pretty good job in terms of bringing leverage down after TuneIn. But what's the optimal target for you on the leverage front? Do you really want to be sub 2x? Is 1.5x, frankly, too low? What's the strategy here?

I think before a bit more aggressive entrepreneur, our range was 2.25x to 2.50x. Now I'd say after what happened, the tariffs, and COVID and all this stuff, we're getting older. So I think for Stingray, the second we get below 2x, you can start expecting capital allocation, which, again, would be increasing the dividend. We're always looking at deals, but increasing the dividend or doing more NCIB.

I was reading your report this morning, Adam. I think you're estimating $2.32, $2.40 of free cash flow per share. If we do $2.40 of free cash flow per share and our dividend policy is $0.20, $0.25, then you should expect our dividend to be growing to $0.45 to $0.50.

The next question comes from Aravinda Galappatthige from Canaccord Genuity.

I just wanted to clarify, go back to the sort of the synergies on TuneIn, Eric. I mean the way that you kind of laid it out, the fact that you've already realized on a run rate basis, the $5 million on cost of $16 million on revenue synergies. If I were to perhaps simplify and simply add that to the EBITDA at the point of acquisition, as you announced is $30 million, I mean, we're really talking about a bump of a little more than $50 million in U.S. dollars, that is, by the way, in EBITDA for raised numbers as we look to kind of lay out our fiscal '27 in a more granular fashion.

I just wanted to make sure I'm properly characterizing that. Is that accurate?

Roughly, you can see the cost synergies, depending if we sell third party and all that, roughly 40% gross margin and the fixed costs are pretty much -- so you can add 40% to that. So I agree with you there. And the cost synergies are coming in over the next few months. So I think those synergies will be fully coming in, in our year-end 2027.

So for example, some of the cost synergies are happening in February. So you're not going to get the full value. But starting April 1, you will get full value of those synergies. And I think Marie can give you more guidance of exactly when do they come in and what timing. But you're exactly right. This deal with TuneIn, if it's a $50 million, like you say, was a very accretive deal that we did since we paid $150 million, excluding also the fact that we have all those incredible fantastic tax savings.

Exactly. And then on the same subject, but more qualitatively, can you just talk about now that you've closed the transaction, how you're sort of synthesizing your efforts in the in-car side? Because obviously, they've had their sales efforts, you had yours. How are you kind of thinking about harmonizing that? Are you just letting that run parallel for now?

No. So the day happened, the next day we were one. So when you think about it, what we do right now is every deal we have, there will be in every car. So the Nissan deal was a TuneIn deal. But with Nissan, we already added Stingray Music, and we're going to be adding Karaoke. With BYD we're adding TuneIn right away.

So every car deal we have, and I must say, we used to play a game when we were -- with cash and all, we call quote on the market. But I think in this one, TuneIn and Stingray for the car manufacturers, they're very excited about our offering, but they were each talking to both of us one against each other. We were the only 2 companies offering a model that we said we'll put music, we'll put TuneIn Radio, and we'll do a rev share on advertising.

Our competitor, which is a known satellite company are more in asking for a fixed price per car. But now that we merge both together, I say the car manufacturers are very excited. They're talking to one company. They feel that we're well positioned. We're the only global company on music.

When you think about our competitors being iHeart or XM, they're only U.S.-based. There is not many companies that are global. And when you talk to BYD, and Mercedes and Nissan, they want us to be global and also we have the right structure of rights management. As you know, we're not on-demand, we don't pay 70% rights, so we're able to offer advertising and rev shares.

So I think the car manufacturer, we're talking at CES. We met all car manufacturers in the world. We had a BYD car there at CES in Vegas. Everybody was going crazy to see the BYD car. We had Stella, the President of BYD with us in Vegas. So now we're very well positioned. And I would say now, I was telling our team here, I feel we're like the Seahawks. We're winning 19-0 in the third quarter.

So I think it's for us to lose this game because we're really ahead, and we don't see anybody else in the space. And I think the car manufacturers want to go faster, because I think, they see a clear solution. So very excited.

The only negative thing about cars, cars is a long process. You don't build one million cars overnight, you start with your cars. But the beauty about the cars, once you're in the car, you're in the car for 10 years and the cars last for 11 years. So it's like doing a 20-year deal. So by the time all the cars are all ready, I'm going to be 76 years old.

Congrats on all the progress.

We're very, very happy with the monetization of the current inventory -- of the unsold inventories.

The next question comes from Jerome Dubreuil, at Desjardins.

First one, I want to touch again on the synergies there. You seem to be kind of resisting the urge to change your synergy guidance. So maybe other than the initial $10 million in cost savings, it now sounds like it's $10 million to $15 million.

Can you agree that the lower end of the ranges seem a bit too conservative now in light of the update that you provided last night?

No, I think on the COGS and OpEx or the...

Revenue and OpEx, both with the update that you provided.

On the sell side, when we said $20 million to $40 million, I said to our Board yesterday, I said we should never say -- we should say $20 million and above. Right now, I think it's $20 million to $100 million. I think there is no limit to the positive sell side that we can have. We're adding an increased number of the inventory that we're adding with LG right now, with VIZIO, we're adding Samsung, we're adding a lot of new partners with the cars, we're doing more retail deals, we're also discussing also with different partners. So the inventory that's coming in with our distribution is unmatched.

Again, it is the chicken and the egg. So the more you monetize, the more people want to give you their inventory. The more you have inventory, the more you have scale, the more you can monetize. So it's a virtual circle. We have a daily meeting at noon every day to watch the programmatic sales. And if we're going to be doing $500,000 a day in March, if you look at the trends, that means we should be doing USD 1 million a day of programmatic ads in November, December in the big months. So that's the scale of that business.

It's not a business programmatic that will grow by 5% to 10%. It's a business that can easily double in 6 months. And we have the inventory.

Yes. Follow-up for me on the organic growth perspectives for TuneIn, you mentioned that they were up 81% year-on-year in January. Wondering if you can discuss maybe what are their stand-alone opportunities, maybe on and off platform aside from the revenue synergies that you've already discussed?

Yes, good point. Again, January was a weak January last year. Last night, we had our LG partners in town, and I don't want to say their numbers, but they had a huge number in January. January seemed to be a very -- in 2026, all of our partners are saying for programmatic ads is looking like a great year.

So let's see, but a very positive year on advertising for programmatic, not only us, but we're seeing from LG, from VIZIO, and Samsung. So that's good to hear.

But your exact question is what?

I want to hear whether your stand-alone opportunities, maybe they can help monetize other audio platforms that are outside of the Stingray ecosystem. Maybe is that still on the table?

Absolutely. We have deals that have been announced that will be -- I guess, we'll be able to announce, but I think you'll be surprised about many third-party platforms that we're reselling on. TuneIn really developed an ad tech selling platform that we are able to sell third parties, and the third parties are approaching us and don't want to get all the details to really leverage their inventory.

In Radio, believe it or not, in Radio, there is more demand than there is inventory. I know you're going to say it's impossible. But right now, with terrestrial radio declining, a lot of audio ads, people are looking to where they can advertise. So there is more demand right now than there's inventory. And TuneIn is tapped to all these partners. So it's a very exciting time where we're positioned.

The next question comes from Drew McReynolds at RBC.

Eric, I'll say you don't see a perfect marriage very often from my experience. So good to see all of this goodness coming through. Two follow-ups.

One, on the Connected Car side, are you able to just size up like at a 30,000-foot view, the revenue kind of contribution maybe in fiscal 2026, and then what that could look like in fiscal 2027?

The second question, just on TuneIn and subscription revenue. I know this is not necessarily the focus of the acquisition, but just maybe some updated expectations around that revenue bucket.

Yes. So the car business, again, car business is growing well. Car business is growing by 40% to 50%, still a small number. This year, we'll do above $10 million. I think the number should double next year. Again, it's a long curve. But once you're in the cars, you're in forever. So I think the car business, we're really investing for the next 10 years.

So this year, let's say, we'll go from $10 million to $20 million, but we won't go from $10 million to $100 million in the car business. It's just all the deals, they have to produce the cars and then we got to start selling the ads. So we love the business. It's good.

Again, a lot of partners, every time we win a deal, you can imagine that the people that are in the cars or want to be in the cars, the Amazon, the Google, the Apple, they start calling us and say, "Hey, you're with this car. How can we be your partner in that car? How can we sell advertising with you in this car?" So we're really attracting all of the big players, because they're not in the cars.

So it's going to be interesting, the monetization and the growth of each of these deals. Once you sign, it's a long time to implement and to produce the cars. It's not as fast as the FAST channels.

So that was your first question. And Drew, the second question?

Just on the TuneIn subscription revenues...

Good point.

Your focus of the acquisition, any update there.

So when we did the deal with TuneIn, we told this to the Board and the market. So advertising growing very aggressively. We had budgeted for subscription to be down by 9%. In Q1, we're slightly better at 6%. So our goal is to become flat. The focus of the company for the last 3 years was really to sell the inventory. And now one of our focus, and we have a team put together is to bring new content to the subscription and at least have a subscription that is stable, but the growth of TuneIn and the growth of Stingray is going to be programmatic sales for the next 3 years to 5 years. Subscription for us is going to be a nice add-on. And Drew, it's a perfect wedding because like the Royal Bank, it's a royal wedding.

The next question comes from Tim Casey at BMO.

Questions have been asked and answered.

At this time, I will turn the call back over to Eric Boyko for closing comments.

All right. So I hope that you like our little introduction. A couple of points that we didn't talk today, I think it's important. We also announced with a big move, the one ticker. What's the timing of this? With the deal of TuneIn, we met with all the U.S. largest investors, met with a lot of their investors, the TuneIn team was very well connected in the U.S., and we quickly realized that having the rate A, rate Bs, if you're American, you had to buy Bs, but there was no market on Bs, and the As, so we work hard to make it simple.

The goal is to increase the liquidity for both Canadians and Americans to buy one symbol and not have 2 tickers. So I think all the banks did it, Canada did it, all the telecoms did it. And so our goal here is really to increase U.S. investors. We're going to be looking for U.S. coverage, and we will be much more aggressive since TuneIn is a well-known brand, and we do 60% of our sales in the U.S. to really attract a good U.S. investor base and every media company in the world, every tech company in the world has been able to grow their market cap and their multiple by having U.S. investors.

We love Canada, we love Quebec, but we have to be world winners. So I'm very excited about the ticker. So hopefully, we'll see the impact of that over the next few quarters, and we'll see more of our U.S. friends buying our shares. So that was also a big move for us and excited to see the impact of that.

So with this in mind, I'll say thank you very much. [Foreign Language] And excited for our next call because this year-end is only in June. So we have 4 months until we see each other. So I will miss you great analysts. If you have friends in the U.S. that want to cover us, give me their names. [Foreign Language]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to Stingray Group's Q2 2026 Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 12, 2025.

I would now like to turn the conference over to Mathieu Peloquin. Please go ahead.

Thank you very much, [Foreign Language]. Good morning, everyone, and thank you for joining us for Stingray's conference call for the second quarter of fiscal 2026 ended September 30, 2025. Today, Eric Boyko, President, CEO, Co-Founder; and Marie-Helene Fournier, Interim CFO, will be presenting Stingray's operational and financial highlights.

Our press release reporting Stingray's second quarter results was issued yesterday after the market closed. Stingray also issued a press release to announce the acquisition of TuneIn Holdings, which will be discussed on the call. This press release as well as the MD&A and financial statements for the quarter are available on our Investor website at stingray.com and on SEDAR+.

I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operations and performance are subject to risks and uncertainties, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the risk factors identified in our press release announcing the TuneIn acquisition and Stingray's annual information form dated June 10, 2025, which is available on SEDAR+.

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 are 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 MD&A for a complete definition of reconciliation of such measures to IFRS financial measures. Finally, let me remind you that all amounts on this call are expressed in Canadian dollars unless otherwise indicated.

With that, let me turn the call over to Eric.

Merci, Mathieu. Good morning, everyone, and welcome to our second quarter conference call for fiscal 2026. What a busy day we're having. Today marks a pivotal moment for Stingray as we're not only reporting solid Q2 results but also announcing the second largest acquisition and the largest U.S. acquisition in the corporation's history, TuneIn Holdings, creating an audio streaming and advertising powerhouse. This transformative acquisition is expected to greatly expand Stingray's global digital audio footprint, video footprint and accelerate its growth in streaming services and bolster its advertising offering.

But before sharing with you more of the major highlights, let's review Stingray's continued achievement for the second quarter. Stingray's momentum accelerated with organic growth of 16.7% in Broadcast and Recurring Commercial Music, largely driven again by rapidly increasing FAST channel sales, where we have unmistakenly become the leading provider of music, ambience and music entertainment channels. During the quarter, we further expanded our premium advertising network by securing a second partnership with LG for additional supply and ad inventory. They will join Vizio in a growing portfolio of partners and we anticipate adding a lot more in the next year.

We significantly diverse our FAST channel portfolio in Q2, launching 29 channels with Amazon Fire TV in the U.S., 7 on Roku USA and U.K. This builds our success on our recent Roku launch in North America, which are generating over 50,000 listening hours a day or 1.5 million a month. When we're looking at advertising revenue for the quarter, we achieved a remarkable growth of 55%, significantly surpassing our 40% target. This outstanding performance was driven by year-to-year revenue increase in Retail Media and, again, strong growth in our FAST channel sales.

A couple of weeks ago, we announced the acquisition of DMI, a leader in music branding and in-store audio advertising. This represents a strategic transaction for Stingray because it expands our U.S. retail network by 8,500 Walgreens locations, and we reached 33,000 locations across North America. For the first time now, Stingray is officially the pharmacy network. We cover all pharmacies across U.S. and Canada. They consolidate our leadership position within the in-store audio advertising market and helps global brands reach and engage consumer in their shopping journey. We are pleased to welcome the DMI team to Stingray.

And last, for the in-car entertainment segment, we recorded a double-digit revenue growth increase in the second quarter as new vehicles have progressively replaced older fleets. With the recently announced launch of the advanced karaoke experience for BYD vehicles, we expect this trend to continue.

Altogether, revenues from our Broadcasting and Commercial Music division grew by 33% to $80 million this quarter, while Radio revenues declined less than 1% to $32.4 million. Our latest Numeris PPM ratings for summer 2025 highlight our strong momentum in Canadian radio, showing significant growth in our key markets. On a consolidated basis, we delivered growth of 21% to $113 million in sales, which is a record, and adjusted EBITDA improved by $16.3 million to $39.5 million.

Now tuning to our TuneIn acquisition, a good play of words. Now turning our focus on the TuneIn acquisition. Given the strong progress we're making with key growth pillars and our strong free cash flow, we believe the timing is right to announce the second largest acquisition in the corporation history, TuneIn Holding. This acquisition will further strengthen Stingray's position as a global leader of audio and video entertainment and digital advertising sales.

TuneIn is a pioneer in audio streaming content, serving 75 million active listeners each month and providing access to 100,000 radio stations and podcasts and music channels. With over 600 hours –- 6 million -- 600 million hours of listenership per month, we are the third most listened to channel in the world after our friends at the YouTube video and Spotify.

TuneIn's digital content is distributed across more than 200 platforms in 100 countries and fully integrated in 50 in-car audio systems. Equally important, and probably what we're most excited, TuneIn has redefined the art of programmatic advertising via its strategic ad channel partners, reaching audience across our platform with innovative audio, display and video ad products. It's a growing ad segment, represents more than 70% of its revenues, with the rest coming from premium subscription.

We are crafting an unmatched audio/video ecosystem by merging Stingray extensive technology infrastructure and content distribution capabilities with TuneIn's expertise in monetization, advertising technology and diverse content offering. We're partly excited about expanding our reach in the automotive sector, where TuneIn and Stingray have both established strong integration with leading manufacturers.

We are confident that this highly transformative acquisition supported by the cost synergies within the next 12 months of closing will supplement our robust internal growth in digital advertising with our CTV and retail media offering and our car offering, delivering solid margin over time and building shareholder value.

Overall, the transaction carries an enterprise value of up to $175 million, $125 million paid out at closing of the transaction by the end of '25 and an amount of $29 million to be paid post-closing. The deal is subject to the regulatory authorities of customary closing conditions.

TuneIn is expected to generate an estimate of $110 million of revenues this year and $30 million of U.S. EBITDA, plus with a $10 million of synergies that we expect to come. TuneIn will continue to operate under its existing brand and be led by the existing management team. Combined business are expected to generate $560 million of revenues on a pro forma basis and an over $200 million pro forma adjusted EBITDA as of December LTM. We also expect our free cash flow to increase by 50% and to be above $2 per share.

I'll conclude on our balance sheet, which remains solid even after these 2 pivotal transactions. We expect after closing of this transaction that our debt-EBITDA will be around 2.8, and we expect to deliver and be below 2 by December of next year or in the next 12 months.

Reflecting our strong financial performance and our confidence in future cash flow generation, I am pleased to announce that the Board has approved a 13.3% increase in our quarterly dividend, raising it from $0.075 to $0.085. This decision underscores our commitment to delivering sustainable long-term value to our shareholders.

I will now turn the call to Marie-Helene for a fantastic financial overview of the quarter. Marie?

Thank you, Eric. Good morning. [Foreign Language]. Revenues reached $113.3 million in the second quarter of fiscal 2026, up 21% from $93.6 million in Q2 '25. The year-over-year growth was mainly driven by greater FAST channel revenues and higher equipment sales related to the acquisition of the Singing Machine.

Revenues in Canada rose 5.2% to $51.5 million in the second quarter of '26. The growth can mainly be attributed to higher equipment and installation sales related to digital signage. Revenues in the U.S. grew 57.9% year-over-year to $51.9 million in Q2 2026, reflecting higher FAST channel revenues and greater equipment sales related to the acquisition of the Singing Machine. Revenues in other countries decreased 16.2% to $9.8 million in the most recent quarter. The year-over-year decline was mainly due to lower subscription revenues.

Looking at our performance by business segment, Broadcasting and Commercial Music revenues increased 32.8% to $80.9 million in the second quarter of '26. The growth was primarily driven by high FAST channel revenues and greater equipment sales related to the acquisition of the Singing Machine. For their part, Radio revenue decreased 0.9% to $32.4 million in Q2 due to lower national airtime sales, mostly offset by higher digital revenues.

In terms of profitability, consolidated adjusted EBITDA improved 16.3% to $39.5 million in the second quarter. Adjusted EBITDA margin reached 34.9% in Q2 '26 compared to 36.3% in the same period in 2025. The increase in adjusted EBITDA dollars year-over-year can be attributed to higher revenues, partially offset by greater operating expenses, mostly due to higher cost of sales.

By business segment, Broadcasting and Commercial Music adjusted EBITDA grew 24.8% to $31.2 million in the second quarter of 2026. The year-over-year increase was primarily driven by higher revenues. Adjusted EBITDA for our Radio business decreased 7.2% year-over-year to $10.2 million in the second quarter of 2026. Adjusted EBITDA for this segment was negatively affected by a higher proportion of digital revenues, which carry a greater cost of sales. Control over fixed costs helped minimize overall cost increases. In terms of corporate adjusted EBITDA, it remained stable at a negative $1.9 million in the second quarter of 2026.

Stingray reported net income of $11.8 million or $0.17 per diluted share in the second quarter of 2026 compared to $5.8 million or $0.08 per diluted share in Q2 2025. The improvement was driven by better operating results and an unrealized gain on the fair value of derivative financial instruments. These factors were partially offset by the higher performance and deferred share unit expense related to an increase in the corporation's share price.

Adjusted net income totaled $21.9 million or $0.32 per diluted share in Q2 2026 compared to $16.7 million or $0.24 per diluted share in the same period in 2025. The increase was mainly due to higher operating results and lower interest expense, partially offset by a greater income tax expense.

Turning to liquidity and capital resources. Cash flow from operating activities totaled $24.3 million in Q2 compared to $19.2 million in Q2 2025. The year-over-year increase reflects higher operating results. Similarly, our business also generated a significant year-over-year increase in adjusted free cash flow. In the second quarter of 2026, it totaled $28.4 million compared to $21.1 million in the same period in 2025. The improvement can be attributed to higher operating results and lower interest rate.

From a balance sheet standpoint, Stingray had cash and cash equivalents of $15.1 million at the end of the second quarter and a credit facility of $336.3 million. The credit facility consists of a $500 million revolving credit line, of which $162.1 million was available.

After the quarter, we also finalized the financing for the TuneIn acquisition. We secured an additional USD 150 million term loan and extended our credit facility maturity by 1 year to November 2029.

Total net debt at the end of the second quarter of '26 stood at $321.1 million, down $4.8 million from the end of last quarter as we continue to reduce our debt level. Combined with improved adjusted EBITDA over the last 12 months, our leverage ratio improved to 2.13x at the end of the quarter from 2.72x in the same period last year.

Finally, we repurchased 311,500 shares for a total of $3.1 million during the second quarter under our existing NCIB program, which was renewed for another 12 months. We also made dividend payments of $5.1 million in the quarter to reward shareholders.

As Eric mentioned earlier, our commitment to delivering shareholder value remains a top priority. In recognition of our strong performance and positive outlook, the Board has declared a quarterly dividend of $0.085 per share. This represents a 13.3% increase and reflects our confidence in our ability to generate sustainable cash flow for the long term.

This ends my presentation. I will now turn the call over to Eric.

Merci, Marie. Thank you, everyone, for your time and remarks today. I think we're ready for our questions from our team. And again, we didn't have a chance, but thank you. Also, welcome to the TuneIn team. Very excited to have -- TuneIn is about 105 people. So very happy to have a larger family, and excited on working together and maintaining the high momentum that we have right now.

So with this, we'll go to the question part. Merci.

[Operator Instructions] With that, our first question comes from Aravinda Galappatthige with Canaccord.

Congrats, Eric and the team, of the acquisition in the quarter. I'll start with a question or a couple of questions on TuneIn. First of all, can you give us a sense of what TuneIn's sort of revenue and profitability trajectory has been? I mean, clearly, the valuation multiples are attractive, but a sense of what the trend has been in recent years in terms of growth.

And secondly, with respect to how it can help with your longer-term ambitions in car, can you just maybe connect that for us and then maybe help us understand how TuneIn can contribute to those aspirations that you have?

Two good questions. So their sales this year are -- they're $110 million. It's $80 million of advertising, $30 million of subscription. Right now, advertising is growing by 40% year-over-year, a very strong, aggressive advertising model. In terms of trend, they're finishing the second half of the year. So from June till December, the run rate is at $20 million EBITDA. So the run rate now is at $40 million. So they're really finishing the year strong. So we expect to start the next year very good. So excited about that trend. And we expect, again, strong, again, advertising sales growing by, again, 30%, 40%. Right now, the model is really well leveraged.

The car. The car is for sure is what's most exciting. We are talking to 20 car manufacturers. TuneIn is talking also to 20 car manufacturers. The homerun or the holy grail is, I would say, every car manufacturer wants to monetize their audio system. For years, they were not making money with radio. For years, they never got a penny from XM Sirius (sic) [ SiriusXM ]. You saw the move about GM taking away Apple CarPlay. You saw the move of Tesla taking away FM. The cars want to monetize that segment. So we believe that we are well positioned to own what we call OEM radio.

So I believe that every car manufacturer in the world, from GM -- GM, BYD, Ford, Toyota, our friends in Germany will have their own OEM radio. They'll call it Ford Radio. They'll call it Toyota Radio. And in there, you're going to have the Stingray music channels, just like XM Sirius (sic) [ SiriusXM ]. You're going to have the TuneIn player, and you're going to have access to the beautiful Stingray Karaoke.

So I think the both of us coming together, we're really positioning ourself to be a global dominant player. And I wouldn't be surprised that in the next 5, 10 years that Stingray and TuneIn will be embedded in every car manufacturer in the world.

Can I just clarify your comment about EBITDA, the EBITDA run rate at TuneIn? Did you say $40 million -- you hit a run rate of $40 million? And are you referring to U.S. or Canadian?

Yes, U.S. So the run rate for the second half of the year, so from June till December of this year, the run rate is at $20 million. So the run rate at the second half is $20 million actually.

Understood. Okay. And just maybe one last thing on the dividend. I mean, it was a significant increase in the dividend. Are you -- I mean, how should investors kind of look at this? Are you sort of suggesting that you want sort of Stingray to be a growth plus income story where there is growth, but also your -- the returns to shareholders will remain as strong as opposed to just sort of a heavy investment theme? I mean I just wanted to understand that because it's been a while since you raised your dividend. I wanted to understand the signaling here.

Our deal with TuneIn is increasing our free cash flow by 50%. Our LTM free cash flow is at $1.40. We always said to the market we want to be between 20 to 25. We want to be kept in that range. But right now, with our free cash flow expected to be well above $2, we're still at a very -- at $0.34, we're still at a very low end compared to free cash flow above $2. So we'll see where the business goes. And again, like I'm mentioning, we expect that closing to be at 2.8 of debt-EBITDA and to be below 2 by December of next year in the next 12 months. So very accretive deal. Also, we don't -- I know we don't talk about it much, but TuneIn had $200 million of tax losses. So we're recuperating USD 25 million of tax losses that we can use starting right now.

And the next question comes from the line of Drew McReynolds with RBC Capital Markets.

Congrats on the acquisition. Just a couple of follow-ups here, Eric. Just in terms of advertising and EBITDA, like obviously quite good. On the subscriber side, can you just provide an update on kind of what those revenues or sub trends look like? And also, can you just elaborate on TuneIn's ad platform and monetization expertise? Just want to kind of better understand what their better mousetrap is relative to kind of your current capabilities.

A very good question. So subscription -- the model of TuneIn in the last 5 years, and a great job by management, was to stay away from subscription and move towards advertising. So we expect -- right now, subscriptions are decreasing by about 5% per year. Our focus is not on subscription. Our focus is on monetizing every hour of listenership. And that's why we're seeing such very strong advertising growth of 40% and that will be for the future. So decreasing subscription, focusing on advertising.

What they've developed is they have the reach. They have the ad -- they call it an ad stack. I don't want to get into details. But they're able to monetize very well both audio and video, and that's what we're excited. We have over right now because of our deals with LG and Vizio, what we call backfill. But we don't like it. We call it the advertising network. We have over $100 million of inventory right now that is unsold. So for the first project, and we've already started this morning, TuneIn will help us sell this unsold inventory on our FAST channels.

Then, as you know, in retail media, we do a great job, but we have over $400 million of unsold inventory in retail media. TuneIn also right now is going to be helping us sell this unsold inventory. And we also have a lot of audio inventory like we have LG Radio, we have our Stingray Music app. So we have a lot of audio inventory that also TuneIn and the cars will start monetizing. so we see TuneIn as a great monetizing machine for Stingray that can be implemented right away.

The positive sales synergies of this deal, we expect them to be anywhere from $20 million to $40 million. The margins right now, we can't elaborate, but that is -- we're more excited about the positive sales synergies of TuneIn selling on our platforms than we are about the OpEx synergies.

Yes. Okay. No, that's good context. And maybe last one and then I'll pass the line. Obviously, on the Broadcast and Commercial Music recurring revenue, very strong organic and the advertising within that obviously strong as well. Just -- can you just for modeling purposes kind of level set here? Is this all kind of sustainable here into Q3, just obviously putting TuneIn's impact aside?

Yes, that's -- we have to be careful. Q3 last year was also very, very strong. So let's get back after the call for that one. Because last year, we had a very strong Q3. So I want to be careful with the -- again, for the year -- now you can imagine that all of the advertising sales will go in the same line and all subscription of TuneIn will go in the same broadcasting unit. But let's talk offline for that. I agree there'll be a lot of modeling to do with the TuneIn deal.

And the next question comes from the line of Jerome Dubreuil with Desjardins.

Congrats on what looks like being a fantastic deal so far. You touched, Eric, on the subscription aspect. I'm not going to be putting too much time into that. But I'm wondering, in terms of the general momentum of the platform, if you can maybe discuss other growth metrics maybe in terms of monthly active users, just to assess the general momentum? And appreciating that it seems that by this -- this management team has been putting more efforts into margin [indiscernible].

Yes. One point that's surprising about TuneIn, which we were very -- and by the way, we've been talking to TuneIn for the last 3 years. So it's been a long deal in the making, discussion, partnership. So of TuneIn's listenership of 600 million, 80% is outside the U.S. 80% of their listenership is outside the U.S. But in terms of revenue, 95% of the revenues come from the U.S. market. An average hour in the U.S. will generate $0.08 to $0.10 an hour. If you look at Europe, TuneIn is not getting $0.003 because the programmatic advertising system is much more sophisticated in the U.S. and Canada and not as strong in Europe yet.

So one of the key strengths here for us is in the future when we start monetizing that 80% of listenership across the world, which we'll be investing with both TuneIn -- and we'll need that advertising for the car business, a lot of the cars are in Europe -- we have a strong savings account for the next 5 years for us to increase that $0.003 in Europe and the rest of the world and to bring it to the $0.08, $0.10 range of the U.S. So that also is a very exciting growth portfolio for us. And the market will get there. Just -- we see the same thing with FAST channels. We sell -- our revenues per hour are much stronger in the U.S. and Canada and Australia than they are in Europe for now or in LatAm. So we're excited about that growth.

Awesome. Second question for me is I want to touch on the second backfill deal that you announced with your results. I'm wondering if we should be expecting kind of a similar financial profile of the second backfill deal than what you have been discussing last quarter on the first one.

So with the backfill, we've -- I would say we're right now doubling to tripling our inventory. Like I said, I think we have – we are very -- right now, our biggest issue is the fill rate. We really need to build that machine that TuneIn has. And so, we're excited to see and we'll be able to quickly announce to the market what that -- how quickly we'll be able to fill all that inventory that we're getting from our TV manufacturers. We got Vizio, we have LG. We have 2 more coming on board. And now with the TuneIn monetizing machine or the mousetrap, like one of you called it, we're very excited to see how we can increase our fill rate, which is still very low.

Great. And maybe last -- a quick clarification for me on the back of Aravinda's question in terms of the run rate of $40 million EBITDA in the second half of the year. Is there any seasonality dynamics that we should be considering? Or it's just a great momentum on the EBITDA for them as well?

What happened is that their machine -- TuneIn was able with their -- they're so efficient that TuneIn is now selling to third parties. So we help iHeart fill their -- some of their inventory and we help third parties fill their inventories, and you'll see deals being announced. So they're so efficient that they're even allowed to sell on third parties. And I must say that, that trend will not stop because we're getting a lot more third parties approaching us to be their advertising partner. And that is a very lucrative business. And the more reach you have, the more you get advertisers. And that seems to be the model and we're very excited about the prospect of the advertising growth.

And the next question comes from Stephanie Price with CIBC.

Congratulations on the TuneIn acquisition. I just wanted to ask a little bit more about the USD 10 million in synergies. It sounds like you're expecting significant revenue synergies from the deal. Is this embedded in the $10 million? Or is that primarily cost synergies that you're talking about with that?

Yes. It's -- we're looking at about -- we have about $10 million in OpEx synergies that will surely come over time just because of the way the companies are structured. As you can imagine, we have a lot of different functions. But what we're most excited are the COGS. Just in music rights, because we're much more of a music company -- we have about $4 million in savings in music rights just because we pay less margin. TuneIn is a third party. So we have big savings on music. And we have a lot of savings we see with ad servers. So there's another $5 million to $10 million in COGS savings, which, for us, will apply very quickly. So we're excited to establish those 2 in the next 12 to 18 months.

But generally speaking, TuneIn is doing great. Their sales are double digit. Their EBITDA is more than double digit. I explained the run rate, in the second half of the year at $20 million EBITDA. So we're looking at much more of COGS savings, a bit of OpEx of certain position because there's duplication. And we haven't monetized yet, but -- the positive sales synergies that we see from this deal.

And maybe I'll touch on the other acquisition you announced post quarter end of DMI. Maybe you could give a little bit more color about what that acquisition brings to Stingray's Digital Media platform...

Yes. DMI in terms of financial – yes, DMI a very small -- it's a much smaller tuck-in. We told the market $6 million in sales, $2 million EBITDA. What we don't know is that DMI Group had a sales force. They have a strong sales force. We have a sales force in retail media. Like we always say, our fill rate is low. So we're excited that their sales force that they were selling only in Walgreens, will be selling in CVS, will be selling in Kroger, will be selling in Albertson and all the other stores. And we're excited. We already are -- we've already put in the last couple of weeks a lot of our sales in Walgreens. So we're getting a double sales positive. So we're more excited about that synergy, the positive sales synergies about this deal.

And also, right now, we're the only retail audio media in the U.S. and Canada. So we really have positioned ourselves. Now our challenge is how do we quickly increase our fill rate. And one of the strategy is to work with TuneIn's partner and with their national sales force and their sales team. So excited to see how much TuneIn can help monetize all of this new location or inventory we have.

And the next question comes from the line of Tim Casey with BMO.

Eric, can you talk a little bit about the monetization you're seeing on TuneIn now in terms of radio stations versus some of the video platforms that are on there, the sports deals, the podcast? Is this a play on local radio? Or is it on some of these other platforms? Because I'm presuming like the sports side would be lower margin because of the rights issues and whatnot. And then with respect to the growth, which sounds very strong, is there any investment you have to make in terms of technology or OpEx to drive that, that isn't there, that isn't in the model right now?

So a very good question. So they're able to -- in music rights, so whenever -- when you rebroadcast a radio station, there's no cost of goods sold because you're really just distributing. When you have our music channels like our -- the Stingray music channels, we pay about $0.03 an hour. So they're able to monetize both radio and they have TuneIn channels, which are like 70s and 80s at about $0.08 to $0.10 an hour. So that for us is great news because we're able to really monetize all that. They're doing it with different -- when you go on the app, they have pre-rolls, they have muted videos, and they're able to really well monetize both products. So it's exciting. And we'll get more in details of the different strategy for monetization.

So -- and now good news -- TuneIn has a very extensive force of engineers. They have over -- like over 80 engineers in their team, about 40 in the U.S., 40 in Ukraine. They're very sophisticated. This company was built from the Palo Alto area. So I must say very impressive, robust. So for now, the biggest thing is there's not much to do with connecting their pipes. And they have about like 50 pipes of advertisers -- I won't go on the names and all the technology -- to our product and our inventory and how we speak to advertisers to explain how they can have access now to the Stingray inventory, our FAST channel retail media. So there is no investment to be done right now in terms of building a special technology project. So it's really just continuing what we're doing already. So that's why it's a quick integration.

Would you not have to compensate the radio stations for the rebroadcast? I don't imagine that would be a huge number, but would there not be some sort of -- would they not generate revenue from this?

Yes, I won't go into exact details. But the answer is, when you rebroadcast, we do pre-rolls and then it's still the ads of the radio station that plays. But while you're playing -- while you're listening to Boom FM in Toronto and you listen to Boom on TuneIn, you have display banners, there's banners and display video. And those display video, they are muted. So you still listen to that channel while you're getting advertising. So that's why it is very, very -- their system is very -- creates a lot of revenue per hour.

And I think, Tim, you had a good question. I think someone is -- in terms of the owners, TuneIn was owned by 40, 50 shareholders. It wasn't owned really by a PI Group. They had -- their shareholders were a lot of the big names coming from California and from Eric Schmidt, a lot of CEOs, CEO of -- even iHeart was an investor, the CEO of Salesforce. A lot of big names that you would know their names, but not me because I'm not as good. And also good news -- also Tom Hanks was one of their shareholders. So I'm happy. I'm supposed to -- I will have the chance to meet Tom Hanks. He has a few audio channels with us. So I'll let you know if ever I see Tom Hanks, Tim.

And I'm showing no further questions at this time. I would like to turn it back to Eric Boyko for closing remarks.

Okay. Thank you. I know it's a long call. We had a lot to cover with both the quarter and our 2 acquisitions. So thank you everyone for your questions and, again, the analysts for your support. And we talked to you a lot about –- we talked to a lot of you last night. So you guys really work full time.

In summary, we're confident that TuneIn acquisition is a perfect fit to further Stingray's growth in its key pillars with significant expertise in ad monetization and a perfect companion to our in-car product offering. We are looking forward to sharing our progress in coming quarters.

On behalf of the entire Stingray team, thank you for joining us on the conference call. We look forward to speaking with you following the release of our third quarter results for fiscal 2026. Have a great day. [Foreign Language].

Thank you. And this concludes today's conference call. Thank you all for joining. You may now disconnect.