Discussed in the company's filings with the SEC and SEDAR, and the company does not assume any obligation to update information contained in this call. During the conference call, we will discuss certain non-GAAP financial measures. The non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation or as a substitute for or superior to the financial information prepared in accordance with GAAP and should be read in conjunction with the company's financial statements filed with the SEC and SEDAR. The non-GAAP financial measures used in the company's presentation may differ from similarly titled measures presented by other companies. A reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release. With that, I'd like to turn the call over to your host, Mr. Fred Vandenberg, Chief Executive Officer.
Please go ahead, sir.
Good afternoon. Today we have myself, I'm Fred Vandenberg, the CEO, and Allan Benedict, who leads our business development and marketing team. Allan joined us a year ago and has a wealth of experience with the label promotions and marketing, his background in both radio and promotion at record labels. Allan has earned the respect of his team and our clients, and we promoted Allan last month to take over both the marketing and the business development groups. Today we'll talk about the results of the second quarter. I'll turn it over to Allan, and he'll talk about business development. Then I'll come back and talk about the strategy and looking forward. Q2 results. There's a few movements here.
Allan will provide a little bit more detail, but I'll talk about some of the things that have happened. Revenue is up just a little under 1% when it's currency adjusted. Q2 is our slowest quarter with the Christmas break. Overall revenue was down 3%. The comparative quarter was a particularly strong quarter, relatively speaking. If we compare to 2 years ago, we're up 12%. That generally shows that continues the trend of growth. That is kind of what I've alluded to here, that in terms of movement during the quarter, the largest single impact here is an exchange reduction.
The strength of the euro fell relative to the US dollar, and we see that hitting the top line. Also, as we've mentioned before on previous calls, Sony Music Australia is using their eCard system, at least for now. We hope to change that, but that hides some of our growth. Allan will talk a little bit more about where we've seen movements there. In terms of our expenses, they're up 10.5%. We've also had a little bit of a hit here in terms of unfavorable foreign exchange, where the Canadian dollar has strengthened relative to the US dollar, so that impact that grew our expenses by about 2%. Included in our overall expenses are one-time costs of between 5% and 6%.
We've had a reduction in our rent expense. We've secured a new office. Allan and I are actually both in the office today. It'll probably reduce our ongoing expenses by about 3%, but it's also just an office better suited to our culture. It's a really nice office, and we have facilities that will help us. In terms of the increase, the primary driver of cost increase is increased staffing. Over the course of the last few years, we've adjusted staffing and added as we went, and that process continues. You'll see that the Business Development group has added industry professionals over the last year.
I mean, Allan only joined us about this time last year. We've added product management, design, and development staff, and we continue to do that. It's not, you know, we wanted to do that over the last couple of years. That's really to develop new products and continue to develop Play MPE. I've already received some questions this morning, so it's probably a good time for me to talk about projections and our stock repurchase. We continue to grow. The general trend is growth, and Allan will talk a little bit more, both about what's happened this year, this quarter, and what we see in the immediate future, and also about the strategy looking forward.
We have confidence in our ability to grow, and while that growth might be a little lumpy, we're investing in more opportunities to expand our addressable market. We've reached a point where our immediate future is a little bit more clear, both in the timing of revenue growth and new products that we're bringing on board. We see opportunities to leverage who we are, our existing customers, to provide more services. We're not going to pursue the buyback, at least in the immediate future.
We think we can grow revenue in the near term and we might dip into the $2.4 million in cash that we have, but we're confident in our ability to manage that and adapt as necessary and our ability to grow near term. With that, I'll turn it over to Allan.
Thank you, Fred, and good afternoon. We'll start by looking into the growth in Canada. This quarter, the second quarter, we saw a 64.5% increase in revenue from Canada. This increase in revenue is largely caused by a substantial increase in both independent label and independent artist clients, a portion of whom have come to us from direct referrals from Canadian radio stations. Of course, those referrals are a great sign of radio's engagement with our platform, and we've seen that in our metrics as well. Looking at the five largest countries Play MPE distributes to, Canada is right near the top in active user engagement, showing that radio programmers are engaging with the system, they're living within the system, and it's working for their workflow.
While our revenue has been growing in Canada, the majority of that has come from Canadian clients sending releases to other territories at the moment. Now that we've established ourselves both as an option in the market and a viable source for radio to get their releases, we're beginning to charge within Canada and transitioning our label and promotion clients from their trial period to a paid structure. As we're moving them over, we're hearing very positive feedback across the board with clients complimenting both the ease of use, the reasonable cost, and the reliability of our system. Much like Play MPE's initial strategy in the U.S., we're in talks with a number of labels and promotion agencies hoping to enter into exclusive pilot agreements, and we're hoping that'll happen in the coming weeks and months.
This month, we've also launched a variety of new lists within Canada, including a classic pop option and a Francophone option, which will be great for our French speakers in Canada. Moving into the Latin market, as opposed to Canada, where there is an existing competitor in place, the Latin market doesn't have a system in place right now to distribute music to their tastemakers. The radio landscape is a lot more muddled and varies in structure from country to country, even within Latin as a whole. Just recently, JN Music Group is one of the largest major independent labels in the Latin space, as well as a top major independent in the tropical music space.
They have over 40 years of history in the market, and just on March first, we signed them on with our first exclusive pilot agreement in Latin America. The fees for this agreement are relatively low, but I know Fred will talk more about this stage of our growth, a little bit later for the newer market. On top of J&N, we're currently in talks with multiple other major independent clients looking to secure some additional pilot agreements to grow our exclusivity and solidify our place in the Latin market. As you may know, we've been working tirelessly to grow our recipient lists in Latin America, and we now have fully operational lists in 19 Latin countries. Our engagement with radio continues to grow as well, just this quarter.
Since December of last year, we've seen a 32% increase in active users on those lists, showing that as we go market to market, we're engaging radio and they're engaging back with us. We are seeing strong growth on the sender side as well. Just this past quarter, we saw 184 releases go to our Latin America lists, and that is compared to 25 in the second quarter of 2021 as we were just entering the Latin space. We're seeing this usage continuing to grow from quarter to quarter to this fiscal year. In past quarters, we've talked about Latin music as more of a homogeneous thing. Latin music is actually incredibly varied with genres ranging from tropical to regional Mexican, to Latin pop to reggaeton and so on.
Just like these genres, the Latin market is also spread out geographically. Up until this point, we've been treating it basically as one package, such as we would with the U.S. radio, Canadian radio, et cetera. As we grow usage, we are going to start segmenting this market into different territories, and those lists will really stand up on their own. Moving to the U.S., revenue from U.S. major labels is up just under 8% this quarter, 7.6% to be exact. That's been helped along by both Warner Records and Atlantic Records, both of whom are members of the Warner Music Group. They have more than doubled their usage this fiscal year to date.
These increases are the result of our efforts to engage new promotion teams at these labels and within their systems and expand their usage of both new recipient lists and new genres that they rely on us for. Among major independent labels, and this is a group that includes longstanding and often historic labels, such as Sub Pop, Secretly Group, Epitaph, Beggars Group, a lot of the, I guess, quote, unquote, "indie labels", we saw a revenue increase in that group of just over 10%. In true independence, both artists and very small labels, we did see a decrease in revenue of under 2%. However, that's in comparison to the highest revenue year among indies that Play MPE has had in its history, and it's still very much an increase over the second quarter in 2020.
The nature of independent labels in the U.S. leads to a bit of an ebb and flow scenario with their releases. For instance, some of these smaller labels, they may only have anywhere between 3 and 10 artists signed to their label. They'll have one year when multiple artists have priority releases on schedule, and then they'll have a year or two off as they're off album cycle producing new music. Looking into South Africa as well, we saw a substantial increase in revenue in South Africa. It is up just over 500% from the second quarter of 2021. A large driver of this is the increase in revenue we saw from our multi-year exclusive agreement with Warner Music South Africa. We also have ongoing conversations with rights organizations in South Africa hoping to expand even further into the territory.
We really do see South Africa as a door into the African market, which up till now has been largely untapped. With that, I will pass it back over to Fred for some more detail.
Thanks, Allan. Okay. I wanted to spend a little bit more time talking about our strategy and our market growth. It's probably a good idea to give you a little bit of an example of what we've done in the past, and this sort of informs how we operate in the future. This chart that you see in front of you is our actual results in revenue in the U.S. market. This is really limited to genres of like country and Christian and alternative music with a few others thrown in there and, you know. This is isolated to those genres within the U.S. market. The first stage that we had with the U.S. market was really a market introduction.
We went to record labels, and we talked to them. We said, "This is what we have. This is what Play MPE is." It was actually called something different at the time. We told them what it was and, you know, there is that first stage where you want content in the system, and you want recipients to use the system and try to that chicken and egg sort of thing. Over time, you know, we explained what it is. We convinced them to use it. Once we are getting a certain usage, once we get, you know, the initial hurdle overcome, the second is our pilot phase.
You know, the J&N agreement that we just announced is relatively small dollars, but it's symbolic of the start of our pilot phase. The fact that we're now in the Latin market, that we're providing value, and that we can start charging. You know, we think and hope that J&N is the first of many Latin labels to enter this phase. As Allan's talked about, the Latin market is. We've really in the past talked about it as this one market, and it's really not one market. It's a relatively huge market and, you know, we're starting in the U.S. with Latin music stations in the U.S. We're building up our list, and we've really had some success in certain territories within South America and Central America.
As we grow that market, the segments within that market will become clearer, like the different genres of Latin music, the different territories of Latin music. Drawing this back to the U.S. chart here, we think we can replicate this. Now, the dollars here are just the revenue in U.S. dollars, but you know, the Latin market is a gigantic market and we hope to capitalize on that. This is in our history with the U.S., you see probably six quarters in this chart where we were in the pilot phase.
It's hard for us to say exactly how long we'll be in this pilot phase for Latin, and that question might be answered by segment as we grow. We, you know, we're seeing initial success in Colombia and Argentina and the U.S. itself. We'll start to commercialize more and more. I hope that gives you an example. I can do this segment by territory and the similar thing is happening in Canada. You know, Canada's is a little bit different because there was an entrenched competitor. We sort of spent the last two years introducing the market to Play MPE, and it's funny in a way because you get customers that are peripherally aware about us when, you know, we're spread around the world.
That initial reaction was quite positive. But they, you know, they started sending through us to other territories, not within Canada initially. Then, you know, we started to grow and grow and grow, educate recipients' usage and now we're kind of at that pilot stage in Canada as well, even though it's a bit less. It's more of a blend of pilot and commercialization. It's a little bit different, but that really depends on that's dictated by the type of market it is. But we'll see. We're seeing growing use within Canada. Getting references from radio, and you'll start to see a little bit of a tip in the revenue curve within Canada. I think I'll leave that there. With the
There's a couple of housekeeping items I'm sure that people are wondering about. The Universal agreement, we're still working through a couple of terms. I expect I'll release an 8-K shortly. It's just little housekeeping items. Our new CFO was appointed today. We began this process several months ago. I think with this change, I'll be able to focus more on the strategic direction of the company rather than the financial management. I think this will be especially important as we continue to grow and expand in new addressable markets. With that, I'll turn it over to questions.
Now it's time for a question and answer period, as Fred said. If there are any questions, please raise your hand by selecting the hand icon at the bottom of your screen. When you are chosen to speak, you will have the option to unmute yourself. Go ahead. Go ahead, Jerry.
I think that's Larry. Larry, you gotta unmute yourself.
Why have we got a new CFO?
Well, I think I addressed that in my comments at the end. I needed to be able to focus in on the financial, sorry, the strategic direction rather than spending time on financial management.
Was there a CFO before this lady became the CFO?
Yeah, Sam was our CFO for the last two years.
That's why I asked, "Why have we a new CFO?
Larry, I think I've answered that question. I'll leave it there. I don't wanna comment any further on it. There's nothing mysterious about it. It's just, I'll be able to focus in on strategic direction rather than helping out with the finances.
Go ahead, Lawrence.
No, it-
Fred?
I think it's Jerry. Yeah. Jerry?
Fred, can you hear me?
Yeah, yeah.
All right, thanks. I might have missed this. Again, I kinda joined a little late. Any update on the Universal contract?
You missed it.
There we go.
We're finalizing some terms, and I expect to have an 8-K out shortly. It's never as fast as you want it to be, but I suspect it'll be out soon.
Okay. It's going in a positive direction still?
Oh, yeah.
Oh.
Oh, yeah.
Great.
Universal's use is just, you know, it is growing, so.
The growth in the Canadian market, that's all, I guess, organic. Is that at the expense of, I guess, the other competitor there, or is it just an expanding market?
That would be at the expense. It might be a bit of both, but it's primarily at the expense of the competitor, I would say.
Okay.
Well, okay. Let me caveat that a little bit. The initial use that we have is from Canadian labels realizing, wow, we can send. You know, with Play MPE, you can send around the world, because we have managed lists in several territories now. That initial use, the initial Canadian revenue was that peripheral use outside of Canada. Now we're seeing more and more Canadian use within Canada, and that would be at the expense of competitors.
Okay. Fair enough. Again, if I miss something, you know, tell me. Is there still in the strategy of M&A to kind of, you know, complement growth, organic growth? I mean, your organic growth is there, but it's still pretty small for a public company. Any comment on that?
Yeah. Well, first of all, Play MPE's growth is always gonna be a little bit sporadic, where you know, you have that. I've talked about this stage where you introduce it, and then you get over that hump where you'd create that network, then you enter pilot phase. There's always a bit of a delay when you enter new markets. I expect that to change now. You see Canada and Latin growing quite well. I also think that's helped by the changes we've made within our business development group and on the platform itself. You're really starting to see, or you will start to see the investments over the last few years that we've made and the changes we've made, that'll start to tip that revenue growth.
As far as acquisitions go, that's one of those strategy items that I'd like to focus in on. There are opportunities to do that, but we'll evaluate them on a case-by-case basis.
When you say opportunities, is that coming inbound or you see opportunities out looking out there?
Say that again.
The opportunities are ones that are available or ones that you would like to approach, or there has to be an inflow of opportunities coming across your desk, or is this something that is part of your strategy over the next 12 months, or it's something what if we'll see if an opportunity arises?
Well, we're aware of who our competitors are within different markets and you know. We've had competitors approach us to buy them. The prices are unrealistic, at least what we've had. We can do it the other way around, too. We have competitors that we think maybe there's an opportunity to purchase them. We'll evaluate it on a case-by-case basis.
Okay. Finally, obviously you have some gains in some markets, and I know currency's affected some of the revenue growth. Has there been pressures in other markets where you may be losing business or market share?
From pricing? Are you asking?
pricing or just competitive competitors because it, you know, the revenue's kind of staying flattish, and you know, you report about gains in you know in Latin America and Canada.
Mm-hmm
The overall results, you know, currency aside, kind of stays, you know, flat, give or take a couple points. Is there
Yeah. Yeah, yeah.
Is there competitive pressures that's kind of, you know, in certain markets where which accounts for the offset there?
Um-
On pricing?
Yeah, I mean, that's a hard question to answer. Like in Australia, that's probably the biggest factor that with Sony, they've got their own eCard system that, you know, essentially for Australia, Sony Australia, it's free. It's hard to compete with that. It's not a good system. It doesn't provide list management services, which we do. It's not always about price, but sometimes it is. I think we're fairly priced, and it's just a matter of acquiring new markets. Like we don't really see price pressures in existing markets with, you know, one exception really.
You always get people that if they don't use the system, if they're entering into the system, they don't know the value proposition, and that's a trick in talking to people about what they're getting for their money. Once they are educated and they see it, then the pricing pressure is off. In fact, I mean, one of the things we'll be looking at is increasing our pricing in existing markets.
Okay. Given some of the changes that you've made to your business development team or marketing, et cetera, and some of the new product developments or product additions that you have added, the web-based, et cetera, do you envision in the near term, you know, I guess that's 12 months, that your growth rate will return to at least double-digit? Or is that those expectations too lofty?
Yeah, I assume you're asking for the entire Play MPE business, whether that'll return to double-digit growth. I hope so. I think it's possible that we can do that. You know, the growth I think in Latin is going to be very high, at least I hope so. It's just a matter of when that starts to occur. I think we have, you know, with Play and Pay itself, as it exists right now, it has a great capacity to grow. It's a bit of a niche market, you know, where our addressable market is not extraordinarily large. But we can grow that core business reasonably significantly if we invest in the right staffing and our product is, you know, suited to all the different new markets.
We've done that, you know. Plan MPE is translated into different languages. In Canada, it has a CanCon feature, which tells Canadian radio if they're playing Canadian content. You know, we've added business development staff like Alan, for example, who are much more well-versed in how record labels work. Those investments I think will help grow that. It's just a matter of timing. I think we'll return to double digit growth, but it's really hard to predict that, when that happens.
In saying that, if it's hard to predict double-digit growth in your core business, is it in its strategy to add some other complementary businesses, maybe non-core to this, in order to-
Yeah.
to bring your growth rate to at least a higher growth rate to kind of justify being a public company?
Well, you probably missed that as well.
Sorry if I did.
No, it's all right. Our growth in expenses really has been all about adding development and design resources, whether it's product management design or software engineering. We see additional addressable markets that we will add, and I think, you know, as the year unfolds, those expenses will start to present more things to talk about on these calls. I wanna leave it there, but you're absolutely right that we are looking to, you know, grow the core Play MPE business, but then add things to it.
When you say adding things to it, that's gonna be through internal R&D development more or less?
That's right. We see tremendous opportunities to leverage our existing workflows. Our customers add new services to those customers that are complementary or ancillary to Play MPE. You know, we've got ideas that we're developing internally and, you know, we see the light at the end of the tunnel where we can start to hire more resources to pursue those things aggressively.
Okay. Thank you, Fred. No further questions. Thank you.
I think there's a question on Canadian dollar revenue. It's not a huge percentage of our existing revenue. I think it's CAD 20,000, so you know, it's this relatively small percentage. We see that growing though. Yeah, I've kind of addressed the other questions here, so I think if there's no more other questions, we can wrap it up. I think, Audley, I guess there's no further questions.
It doesn't look like there's any more questions.
Okay. Thanks, everyone, and we'll see you next quarter.
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