Stingray Group Inc

TSX:RAY.A

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Stingray Group Inc.'s First Quarter 2022 Results Call. [Operator Instructions] Before turning the meeting over to management, I would like to remind everyone that this conference call is being recorded today, August 4, 2021. I will now turn the conference over to Mathieu Peloquin, Senior Vice President, Marketing and Communications. Please go ahead.

[Mathieu Péloquin]

Thank you very much. [Foreign Language] good morning, everyone. Thank you for joining us for Stingray's conference call for the first quarter results ending June 30, 2021. Today, Eric Boyko, President, CEO and Co-Founder; and Jean-Pierre Trahan, CFO, will be presenting Stingray's financial and operational highlights. Our press release reporting Stingray's fiscal 2022 first quarter result 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 on SEDAR.I will now give you the customary caution that today's discussion of the Corporation's performance and its prospects may include forward-looking statements. The Corporation's future operation and performance are subject to risk and uncertainties, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray's Annual Information Form dated June 2, 2021, which is available on SEDAR. The Corporation specifically disclaims any intention or obligation to update these forward-looking statements, whether because 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 reminded that some of the financial measures discussed during this conference call are non-IFRS. Please 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 over the call to Eric.

[Eric Boyko, Co]

[Foreign Language] Good morning, everyone. Welcome to our first quarter conference call. Happy for the medal we just won. Also very happy to be back in semi-normal business; happy for us as Canadians and everybody around the world. So good that business is back. The gradual return to normal commercial operations certainly lifted our radio business and our revenues, which posted a strong 24.9% increase overall. Organic growth for broadcast and recurring commercial revenues stood at 1.9%. Moreover, the U.S. reported an impressive quarterly rate of organic growth of 11.6%. We clearly see momentum in organic growth building in our sales pipeline across most or all of our business lines. On the EBITDA front, we measured up to last year's quarter, which has benefited from government subsidies and the implementation of significant cost savings measure, we're [ seeing it ] reduced subsidies this year and a return to sustainable operating expense, adjusted EBITDA was down slightly to $24.2 million.Meanwhile, in our Broadcasting and Commercial Music revenue remained relatively stable at $35.6 million, reflecting an increase in advertising along with a more favorable business environment. All of which was offset by a negative impact of FX, around $2 million. Adjusted EBITDA decreased to $14.7 million from $20.3 million due to lower CEWS and higher operating costs, both of which were related to the improving post Covid business environment.At this point, I'd like to briefly recap some of our very exciting growth opportunities we have in Broadcasting and Commercial Music. First starters in the U.S. free ad-supported TV channels made an important contribution to this year's growth with an overall advertising up 125% over the same quarter last year. We expect momentum for FAST channels to further accelerate with significant growth prospect for Naturescape and Stingray Music. We have several upcoming rollouts involving Samsung, Pluto, TCL, XUMO and LG among others. We are currently in discussion to introduce Stingray music on a major OTT platform. If successful, negotiation, this development will lead to significant organic growth and increased revenues. We're also seeing strong organic sales across all Stingray Business activities. We developed considerable momentum in several pilots with global enterprise brands are underway for commercial music, digital display and our consumer insight product with Chatter.We are also seeing a great opportunity to become one of the leading suppliers of in-store audio advertising in North America, a fast-growing market. In-store audio advertising is a natural evolution for all of our 100,000-plus customers. We have launched a pilot project involving several supermarkets in the GTA with ads running on our networks every few minutes. These targeted [indiscernible] ads will let shoppers know that a given product is on special in a specific store or aisle. Benefits of the brands are clear since they'll be reaching customers from right at the point of sale. Going forward, this will become a very important strategy for our radio business, which will be able to extend the reach of our national campaign into our retailers.As previously mentioned, discussion with global enterprise brands take time and our major investment in growing and supporting Stingray Business has not yet reflected in our revenues. That being said, major rollouts are planned over the coming months.Our SVOD, our goals to reach 1 million subscribers. Right now, that number is closing on 600,000, meeting our subtarget will result from a combination of new distribution, organic growth and M&A. We also see an opportunity to increase our ARPU with a goal of $8 per month. With that in mind, we are introducing new single product bundles on many Amazon countries. The recent acquisition of Calm Radio has added more than 30,000 subscribers to our SVOD numbers and will increase our overall ARPU. This is a great acquisition, which brings an acquired catalog of over 700 hours of classical and relaxing music to be programmed for all Stingray music and Stingray Business. In addition, Calm Radio offers multiple opportunities to upsell for hotel rooms, speakers, manufacturers, in cars and transportation. We intend to keep building and distributing this property of rights, including music catalog to new channels and platforms.In our last call, we indicated that we're moving ahead with a rollout in all Tesla dealership worldwide for in-store background commercial music. As you probably know, we also power Tesla popular in car Caraoke, Karaoke with a C experienced through Stingray Karaoke. After 2 years, Karaoke has become a favorite app for Tesla passengers. While this [ portion ] was originally driven by marketing purposes and visibility, we are happy that Tesla will renew the confidence in our Karaoke product for years to come and a new model.Moving to radio. A gradual easing of COVID-19 restriction and the return to normal commercial operation resulted in a 78.8% increase in revenues to $29.2 million. These are impressive results considering that Ontario remained under every Covid related restriction and closures during the quarter. Bear in mind that Toronto and Ottawa are 2 key markets for our radio business. Higher revenues fueled adjusted EBITDA growth 87.9% to $10.8 million. Despite reduced use, benefits and higher operating expense, the adjusted EBITDA margin increased from 35% to 37%.In upcoming quarters, our video business will capitalize on the easing of COVID-19 restriction and lower operating cost structure, resulting from permanent cost-saving measures implemented last year. As we move through fiscal 2022, our capital allocation strategy will prioritize M&A, followed by debt reduction, our share redemption show renewal of our NCIB. On the M&A front, the good news is that we see many opportunities to close transaction at reasonable evaluations. Hopefully, all that -- I have been able to convey a tremendous excitement about our business growth prospect.And finally, I'd like to finish with 3 points for the growth of Stingray. And -- first for Stingray broadcast and streaming, I think growth with the FAST channel, growth with SVOD, growth in the car sector. For Radio, I'd like to say radio is back. If we can be back to pre-COVID levels of $150 million. Our free cash flow and EBITDA should be north of $60 million. And finally, for Stingray Business with the growth of U.S., Chatter and in-store audio ads we see also a lot of good growth coming in the next few months.So with this, I'll pass it to you, Jean-Pierre, but very excited to -- like I said, to be back in a normal life.

[Jean-Pierre Trahan]

[Foreign Language] Thank you, Eric. Good morning, everyone. Kindly note that all amounts will be expressed in Canadian dollars unless otherwise specified. Stingray first quarter results mark a return to normal operating conditions led by gradual easing of restrictions. As a result of this improved market environment, consolidated revenues increased 24% year-over-year to $64.8 million, up from $52.3 million.By geography, revenues in Canada rose 47.5% to $41.4 million, representing 63.8% of total revenues versus 52.7% last year. This solid increase was driven by an improved market at [indiscernible]. In the U.S., revenues remained stable at $10.3 million, accounting for 16% of revenues as the negative impact of foreign exchange was largely offset by organic growth in advertising revenues in the broadcast and commercial music segment. Lastly, revenues in our other countries decreased 5.6% to $13.1 million or 20.2% of total revenues, due mainly to lower subscription revenues.Looking at our performance by business segment, Broadcasting and Commercial Music revenues decreased 1% year-over-year to $35.6 million. The decline mainly reflect a negative foreign exchange rate impact, essentially offset by an increase in advertising revenue and gradual return to normal commercial operations. It should be note that negative impact of FX, as discussed by Eric, represent just over $2 million in decrease of revenues.Looking at the operating expenses, which increased by $5.3 million to reach $20.9 million over the previous year. The increase is due to $2.7 million in reduced subsidies, higher operating costs related to the normalized salaries as compared to Covid related salary reduction in Q1 2021. And increased variable operating expenses caused by the gradual return to normal commercial operations.Radio revenues grew 79% to $29.2 million, again, mostly driven by a gradual return to normal commercial operations. Radio operating expenses increased by $7.8 million to $18.4 million over the previous year. The increase is due to $4.3 million in reduced subsidies, higher operating costs related to normalized salaries as compared to Covid related salary reduced in 2021 and increased variable expenses caused by the gradual return to normal commercial operations.Consolidated adjusted EBITDA decreased 5.2% to $24.2 million or 37% of revenues compared to $25.5 million or 49% of revenues a year ago. The reduction in adjusted EBITDA mainly reflect reduced subsidies and higher operating costs, partially offset by higher revenues from a gradual return to normal commercial operations.By business segment, Broadcasting and Commercial Music adjusted EBITDA decreased $5.6 million to $14.7 million from $20.3 million in Q1 2021. The decline reflects lower subsidies and higher operating costs, both stemming from gradual return to normal commercial operations.As for the Radio segment, adjusted EBITDA nearly doubled to $10.8 million, the adjusted EBITDA margin increased 37% this quarter, up from 35.2% last year. The improvement being from higher revenues, partially offset by lower subsidies and higher operating expenses.At the bottom line, Stingray recorded net income of $4.2 million or $0.06 per share compared to $7 million or $0.10 per share last year. The decrease is related to a gain of legal expense in Q1 2021, lower operating result and a negative change in fair value of contingent consideration, partially offset by a loss of fair value of investment reported in Q1 2021.Meanwhile, adjusted net income amounted to $11.2 million or $0.16 per share compared to $13.5 million or $0.18 per share a year ago. The decrease was mainly related to lower operating results and a negative change in fair value of contingent considerations.Turning now to liquidity and capital resources. Cash flows generated from operating activities reached $16.3 million in the first quarter of fiscal 2022 compared to $38 million a year earlier. The reduction was mostly due to a negative change in noncash operating items, higher legal expenses and lower operating results. Adjusted free cash flow totaled $15 million compared to $18 million last year. The decrease was mainly related to higher capital expenditure and lower operating results.Lastly, looking at our balance sheet, Stingray had cash and cash equivalent of $6.4 million as at June 30, 2021, subordinated debt of $31.8 million and a credit facilities of $305.8 million, of which approximately $87.2 million was available. Total net debt at the end of the quarter stood at $331.1 million or 2.88 pro forma adjusted EBITDA ratio. We are very comfortable with our financial position, which will allow us to execute our growth strategy and capture any accretive M&A opportunities that will build value for our stakeholders.This ends my presentation. I will turn the call back to Eric.

[Eric Boyko, Co]

Okay. [Foreign Language] Thank you, everybody, for being on the call today. This concludes our prepared remarks. Thank you for your time and attention. At this point, JP and I will be pleased to answer any questions you might have.

[Operator]

[Operator Instructions] We have our first question from the line of Adam Shine from National Bank Financial.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

So Eric, 2, 3 questions. I'll ask them in order and let you answer them accordingly. It's only a few weeks now since Ontario eased restrictions. Can you talk a little bit about what you're seeing in terms of improvements to the overall radio business, particularly as you alluded to, the importance of Toronto and the Ottawa clusters? And then also with regards to any incremental traction in commercial music as it relates specifically to Canada and the easing of restrictions in Ontario? And I'll follow-up with a couple more.

[Eric Boyko, Co]

Yes. So a very good question for radio. For radio, the most important number that we -- is to compare to 2 years ago. So our -- if we can be minus 20% compared to 2 years ago, then we're back to a breakeven or to our $55 million EBITDA we had in fiscal 2020. So right now, for the last 3, 4 weeks, we've been beating 2 years ago. So that's the importance of Ontario. With Ontario back, local sales in Toronto and Ottawa are strong, and we're up minus 15% so far for the quarter, but we're beating every week last year. If we can be back to $150 million in sales, like I mentioned, that means our EBITDA should be north of $60 million with our cost structure. So very excited. The other thing that we're strong is I think that Stingray management on the radio side is, we're the first to meet customers.We're out there all over the country. Some of our competitors haven't aligned yet the way that they can meet their -- because they're bigger companies. So I think we have an edge right now being independent, smaller and more aggressive to gain market share. And the last TRAM report, which compares markets, Stingray was up 35% compared to our peers last month. So you can see that we're really taking market share right now. So let's see if this maintains. But very happy about radio. Regarding Stingray Business, the biggest improvement we'll have is there's no more credits. I think all credits are finished as July 1. So that's good news.For me, I was always talking about casinos, or casinos open because that was still a good customer. And also E&L, E&L now every store, all stores that were closed for the last 2 years or had restrictions are now planning worldwide to invest for the fall. So we have to really be ready for all our products from using digital signage and insight with Chatter. So I'm very excited about the next few quarters.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

Eric, just on the SVOD business, 572,000 subs, obviously, including those from Calm radio, just over 300,000 there. Could you help us with -- pick your poison, either pro forma ARPU at this point, including Calm Radio, which was supposed to be accretive or perhaps the run rate in regards to SVOD revenues pro forma?

[Eric Boyko, Co]

Yes. So pro forma, we like the RPU to be back towards $8. We've also negotiating a lot of our B2B2C deals, the Amazon deals, the Comcast, we're increasing our wholesale price because we feel some of our products are going to have it. So we'll see an increase in the ARPU for the clients like Comcast and Amazon and also a strong focus with Calm Radio and the other products on the B2C side, which we sell at anywhere from USD 12 to USD 16.And just Calm Radio, Calm Radio was 30,000 subs. So not 300,000, just to make sure my English is good. So not, very -- look, we see just with Amazon. Amazon, we're deploying worldwide. We're deploying bundles with them. So we're going to be deploying a bit like STACK, as you know, with our friends at Corus did in Canada. I think they have over 600,000 subs. We're going to be putting together and launching soon Classica, Djazz, Karaoke and Qello at a higher price and offering, I guess, a better product, a better priced product for all our customers.And we're looking to launch this in Canada, U.S., Mexico, Brazil, India, Australia and all of the Nordic countries. So we see a lot of runway just with Amazon worldwide. So we're very excited with those new deals and excited also just personally to be in Canada. So excited that we will be able to buy our products in Canada. And that should be launched in early August, so we're talking weeks, not months.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

Okay. But right now, ARPU would be closer somewhere in a $7 to $8 out obviously, right?

[Eric Boyko, Co]

The ARPU rate now is -- I'll let JP get the [indiscernible] sheet? We are at what -- what are we? What's the exact number, JP?

[Jean-Pierre Trahan]

$6.97.

[Eric Boyko, Co]

$6.97, so we're closer to $7. With the bundles, we're trying to increase some of our wholesale buy ad dollar. So it increase your wholesale by $1, your ARPU quickly increases.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

Just one last quick one related to margin. And I don't want to put any pressure in regards to giving us guidance per se, but a lot of moving pieces to the business. Obviously, some operating leverage to be anticipated going forward. But when we think about in fiscal 2020, 38.5% adjusted EBITDA margin, obviously, with the compression of revenue from Covid and then the government subsidies, you blew it up to 46%. When we think about fiscal 2022, should we be thinking about an overall business that's running somewhere close to or just above 40%, is that a reasonable level?

[Eric Boyko, Co]

And for your model, I think it's important -- I would put 40% as our target, and I think is easily attainable with business being back. As you know, Radio has great margins. And when you get over your fixed costs, radio runs at 80% gross margin. So it really adds to the EBITDA. So -- and also that's where for the U.S., we mentioned it. We're growing 11.6%, but we feel comfortable even starting this close this quarter that the U.S. will be growing closer to 20%.

[Operator]

The next one, we have the line of Tim Casey from BMO.

[Tim Casey, Equity Research Analyst]

A few from me, guys. One, you talked about some foreign exchange pressure. Could you quantify that? And was that all in the subscriptions business? And then on subscriptions, I mean, it was on the quarter, the number was weak, being down 10%. Can you walk us through what happened there and how that's going to get through the back half of the year? And then, Eric, can you give us some color on how you think the contribution of the FAST channel advertising business will be. And just so we're clear, is $1.8 million you reported in advertising in B&C, is that all FAST channel? And I guess, what I say, how fast do you think what kind of quarterly run rate do you think you can get that up to?

[Eric Boyko, Co]

And Tim, sorry, but question 1 and 2, if you can -- maybe the line here on our side isn't that good. Can you repeat question 1 and 2.

[Tim Casey, Equity Research Analyst]

Exchange impact in the quarter. And question two, the subscriptions revenues in BC were down in the quarter. What happened there? And how is -- expect that metric will perform going forward?

[Eric Boyko, Co]

Okay. Thanks, Tim. For the FX, yes, the more we grow in the U.S., like I mentioned, we think we'll be growing by 20%. And the more we're dependent on the U.S. dollar. Last year, it was up to $1.40; this quarter, it went almost down to $1.20, $1.22. So I think that part of it is going to be behind us. But for sure, Stingray is a net exporter and all of our costs are mostly in Canadian. So we, at Stingray, we prefer a higher dollar. So this quarter, it's $2 million. And after the call that we could give you for every set, what's the impact on sales and EBITDA. But it is important and it will be more and more important in the future. For the SVOD B2C, absolutely. Last year, we had the strength of the Covid.This year, post Covid, we're getting the post Covid decline on the B2C side. And there is an impact. The B2C product we're down a larger part. So that one, we have to see the beauty about B2C is great, but B2C also that's something that you can forecast as much as a deal with Comcast or a deal with Amazon that just grows every month. So that one is -- we'll have to be tracking over the next few quarters. And regarding FAST, the FAST channels are still growing at this time of the year at 5% per month, with the best season coming up in the fall. The big win for us is our audio channels. The FAST audio, which is really pay audio, which we would not launch in Canada because we have a protected market in Canada. But for the rest of the world, an average listener listens to 4 hours of pay audio a month.If we're able to transfer that to the FAST channels that will be a huge win. We've already launched a few channels with LG, XUMO, so for us is to be able to convince Samsung and to go from 5 channels to 40 channels, which will be a true pay audio product. And that for us will be the winning product for faster, FAST growth. So I like the way you said that. So excited to be announcing some audio music on TV. Is that good answer, Tim?

[Tim Casey, Equity Research Analyst]

Yes. Just -- I mean -- so that $1.8 million that reported. That is all the FAST channel advertising.

[Eric Boyko, Co]

Roughly it's 80% FAST channels. And the only other advertising that we -- that is in there are the music videos in Canada. So -- and in that, it's about $100,000 a month, so $1.8 million, minus $300,000. So it's $1.5 million on $1.8 million. So you're looking at almost 80%, but the FAST channels are growing so much that it's going to -- the advertising will become almost 95%, 98%, the FAST channel growth.

[Operator]

[Operator Instructions] We have our next question from the line of Matthew Lee from Canaccord Genuity.

[Matthew James Lee, Associate Analyst of Telecom and Media]

On the radio front, I think you're still about 30% below F '20 levels. And we talked about kind of getting back to about $150 million. But if I'm thinking about this year specifically, do you think that you'll be in the 90% range of that or 85%? Or do you think you'll reach that $150 million all the way, full recovery?

[Eric Boyko, Co]

Yes. So our budget, depending on the -- again, the timing of Covid, was about 80%. We wanted to be at 80% of $150 million. But again, Covid delayed our first quarter. If things are good again, and I think we are -- again, I'm not a doctor. But if things stay the same, I think we should be back to less than minus 20 and back to normal. So if we're back to normal, which is the most important is the future because we can't go back, then if we're back to $150 million, we are $10 million of cost savings, well, you take that $55 million EBITDA that we did 2 years ago, and it goes all the way up to up north of 60%. So we're very positive on radio, a very strong team.The TRAM reports, which measures us and our competition in each market, is very positive. And I think we're getting market share. So right now, for -- like I said, the last 4 weeks, we're above 2 years ago. It's only 4 weeks, you're going to tell me. And for this quarter, we were minus 32% last quarter. For this quarter, we're closer to minus 15%. So it's improving every week. So where is this quarter going to finish? I think it's going to finish better than minus 15%. So very happy with the results. And also, our digital sales are doing very well. So that's also a big segment for us, which is going to be this year north of $10 million of digital sales.So I'm excited about the strategy we have and our team. And also, I think this spring, we had the best ratings of all radio companies in Canada. So you got to be careful with ratings because what happened this spring is not going to happen this year in the fall. But again, very happy about the segment. And I think radio proved how strong it is. And for us, if we're with the in-store audio advertising, you're going to say what's the link to radio?If we have the chance that we control 80,000 locations in Canada, including every grocery and every pharmacy, every Walmart, every Dollarama into our music system. We will start doing audio ads in stores, which we're testing with a lot of our grocers. Then we give ourselves an edge for our radio team to sell those ads and also to have a unique selling proposition when we approach the big brands and say, you want to be in the grocery stores, you want to be in the dollar stores or the Walmarts. Well, there's only one person I can offer you those stores. So we like more radio buys for you. So that, I think, is one of our strategy that we did when we bought radio and it's coming forward. So maybe in a year or 2 years from now, you're going to say that the Stingray we were genius.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Yes, I'm sure I will. But just in terms of cash flow.

[Eric Boyko, Co]

Thank you. We appreciate it.

[Matthew James Lee, Associate Analyst of Telecom and Media]

Switching gears a bit. $15 million was a little bit more -- less, sorry, than I was expecting. Are you expecting to reach last year's rate? I mean, that pretty much indicated that you'd have to do about $20 million per quarter for the remainder of the year. I mean, is that still the objective given the wage subsidies?

[Eric Boyko, Co]

For who – once again, can you start the question, sorry?

[Matthew James Lee, Associate Analyst of Telecom and Media]

Sorry, free cash flow objective for F '22?

[Eric Boyko, Co]

Yes. So we're still confident. We always maintain that we want to reach about $80 million. $80 million is our target. First quarter, for sure, was softer, a lot of Covid credit still. I was surprised with the Covid credits. Softer with the E&L, a lot of E&L projects were delayed, but just a bit softer. But the trends are looking good and confident that we will achieve our dollar plus per share. Now 2 years ago, we did, I think, $1.03 per share. Last year, we did $1.01. So very confident about doing $1 per share and close to $80 million of free cash flow with a strong remainder of the year and stronger organic sales. Again, that's with the U.S. dollar not moving too much. That's with the U.S. dollar staying where it is. If the U.S. dollar goes down again, then we'll adjust. But the beauty we have [indiscernible] Stingray that we have higher margin products. So we always -- I guess, we always make money.

[Matthew James Lee, Associate Analyst of Telecom and Media]

So yes, that's a fair point. Can you quantify the Covid credit?

[Eric Boyko, Co]

The Covid credits, it was, again, close to $842,000 this quarter. But it's still -- we thought it's going to be 0, and it's still delaying. It's $1 million plus, it might be a bit more -- a lot of E&Ls are getting delayed. But I think now everything is back on. And so that's why we're happy that we're back to business. And happy that all our customers are also back in business. It's tough to collect money from music in a store that's closed. So that was one of our issues. Even if we do have a contract that's valid.

[Matthew James Lee, Associate Analyst of Telecom and Media]

And then maybe just a big picture item. Obviously, SVOD platforms are a key M&A focus for you, given your objective of reaching 1 million subs. But can you maybe talk about the other areas you're looking at? And what timing looks like for acquisitions throughout the year?

[Eric Boyko, Co]

Yes. So it's a good question. So we had a Board yesterday. The Board a lot of tuck-in acquisitions. We like tuck-in like Calm. Great deal, great vertical. So I think we have a bunch of small tuck-ins, also in certain verticals. We're also looking -- we like 50% of our music and our video in the future that is owned by Stingray. One of the strength of Stingray Karaoke is we own 26,000 songs of Karaoke, we're the label. We own the masters.And with Calm Radio, we just bought ourselves 700 hours of audio music that we'll be able to put on all our platforms in planes, again, rights free. So we'd like to be able to have 50% of our music, 5-0 in the next 3 years that we own. We're not going to own a label. We're not going to own Rihanna, and we're not going to be in that space. But when you think about SVOD, nature, you think about easy listening, which are -- classical, wellness, that's where we want to buy. So you'll see a lot of acquisitions, tuck-ins that we're buying a business, but also buying a catalog, which at the end is you're really buying real estate. You're buying a business with a big land.So I think that will change our -- those are a lot of tuck-ins, but I think you'll see a lot of those in the next few years, in the SVOD space. We're also for Stingray Business. Stingray Business has a lot of small competitors in the U.S., 10,000, 15,000, 20,000 stores. So we're talking with a lot of different operators in the U.S., in Mexico, in Europe. So also looking at those. But strong pipeline, and I think you'll see a lot of small deals coming. Our goal with capital allocation is to deploy at least $20 million to $25 million a year for deals. So we have a lot of runway left for the next 9 months.

[Operator]

I'm showing no further questions at this time. Presenters, please continue.

[Eric Boyko, Co]

Okay. All right. Thank you very much, everybody, for your time today. I'd like to thank all the analysts for attending the conference call. At 11:00 today, by the way, we're also hosting our AGM our Annual Shareholder Meeting. So excited to do it. Virtually is not the same. I agree. But you're still invited to join us. Look forward to speaking to you again following the release of our second quarter results in early November. In closing, I wish to thank all members of the Stingray team who worked so very hard over the past year. Also I'd like to impress our appreciation to our investors for their trust in us. Have a great day, everyone, and thank you very much for your time. Thank you. Merci.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.