Acquisitive music rights company Reservoir Media has posted its 12th consecutive quarter of year-over-year revenue growth, though the company has also recorded a net loss of $0.5 million.
The New York-headquartered company released its earnings for Q1 of its fiscal 2025, which corresponds to the second quarter of calendar 2024, on Wednesday (July 31).
The company clocked revenue of $34.3 million, an 8% YoY increase when including acquisitions, or a 6% YoY increase organically.
A 15% YoY jump in publishing revenues more than offset a 7% slide in recorded music revenues.
The company reported a 58% YoY increase in operating income, at $5.0 million, versus $3.1 million in the year-ago period. OIBDA came in at $11.3 million, up 23% YoY, with adjusted EBITDA of $12.6 million, up 25%.
Nonetheless, the company’s net income came in at -$5.0 million, which Reservoir attributes to losses on the fair value of interest rate swaps (hence the divergence between operating income and net income).
“Our results in the first fiscal quarter reflect a continuation of our proven track record of financial outperformance in the three years since we became a publicly traded company,” Founder and CEO Golnar Khosrowshahi said in a note to investors.
“We have had year-over-year revenue growth every quarter since our listing, and we have raised guidance over the course of each fiscal year.”
She added: “The music industry has enjoyed an unprecedented return to growth, which experts predict will continue for the next decade… We are well-positioned to capture additional organic growth while continuing to pursue accretive opportunities.”
Publishing revenue
Reservoir’s publishing revenue came in at $24.0 million, up 15% YoY, which the company said was driven by catalog acquisitions, revenue from existing catalogs, and an increase in prices at multiple music streaming services.
Among its catalog acquisitions over the past year were the producer rights and publishing catalog of 2Pac producer Big D Evans (aka Deon Evans) and a publishing deal for the works of Latin Music hitmaker Rudy Perez (Natalie Cole, Jose Feliciano, Luis Miguel).
Digital formed the largest segment of Reservoir’s publishing revenue, at $14.6 million (up 23% YoY), followed by performance rights at $5.1 million (up 14%) and synch at $2.8 million (down 7%).
Music publishing OIBDA jumped 19% YoY to $6.8 million, while operating income jumped 56% YoY to $2.2 million.
Recorded music revenue
Recorded music revenues came in at $9.6 million, a 7% YoY slide from $10.4 million a year earlier.
The company attributes the decrease to the release of De La Soul’s catalog in the year-ago period, which caused a spike in recorded revenues, particularly in the physical category, that made for a difficult year-on-year comparison in the latest quarter.
Physical revenues fell 62% YoY, to $1.4 million versus $3.6 million a year earlier.
“The music industry has enjoyed an unprecedented return to growth, which experts predict will continue for the next decade… We are well-positioned to capture additional organic growth, while continuing to pursue accretive opportunities.”
Golnar Khosrowshahi, Reservoir
Digital revenues jumped 17% YoY to $6.6 million, while neighboring rights grew 29% YoY to $1.1 million, and synch revenues jumped 87% to $0.6 million.
Recorded music OIBDA improved by 27% YoY to $4.5 million, while operating income jumped 53% YoY, to $2.7 million.
“Our top-line growth and cost containment efforts in the first quarter provide a strong foundation for the remainder of the fiscal year,” CFO Jim Heindlmeyer said in a statement on Wednesday.
“Our healthy cashflow generation and available debt give us the financial flexibility to continue adding to our portfolio and to pursue new organic growth opportunities in the coming quarters. We are well positioned to achieve our previously issued 2025 fiscal year financial guidance.”
That guidance, which remained unchanged from the prior quarter, calls for revenues of $148 million–$152 million for fiscal 2025, which ends on March 31, 2025, an increase of 4% YoY at the midpoint.
The company is forecasting full-year EBITDA at $58 million–$61 million, a 7% YoY increase at the midpoint.
“Our healthy cashflow generation and available debt give us the financial flexibility to continue adding to our portfolio and to pursue new organic growth opportunities in the coming quarters.”
Jim Heindlmeyer, Reservoir
The company’s relatively high debt level, which has at times been the subject of questions from analysts, came in at $324.1 million (total debt) and $307.8 million (net debt) against cash and cash equivalents of $16.4 million (down slightly from year-ago levels).
That compares against a current market capitalization of $540.5 million.
The company reported it has $121.2 million available for borrowing under its revolving credit facility, for total available liquidity of $137.6 million.
In an investor factsheet released earlier this calendar year, Reservoir said it had spent nearly $1 billion on catalog acquisitions and signings since it launched in 2007.
Reservoir’s shares were down around 1% on pre-market trading on the NASDAQ Wednesday, at around $8.30 per share.Music Business Worldwide