On Thursday, Reservoir Media (NASDAQ:RSVR) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Reservoir Media reported an 11% annual revenue growth and 12% adjusted EBITDA growth for fiscal 2026, driven by strategic acquisitions and strong catalog performance.
The company invested approximately $120 million in acquisitions, including the catalog of Miles Davis, and expanded its presence in key markets like India and the MENA region.
Guidance for fiscal 2027 projects revenue between $186 million and $191 million, with adjusted EBITDA expected to be between $75 million and $79 million.
Operational highlights include the launch of Pop India and the acquisition of Viral Wave, enhancing their distribution capabilities in the MENA region.
Management remains optimistic about the ongoing CRB5 proceedings and the potential positive impact on songwriter and publisher income, though this is not yet factored into their forecasts.
Full Transcript
Jackie Marcus (Moderator)
Thank you, operator. Good morning everyone and thank you for participating in today’s earnings conference call. Reservoir Media issued a press release with its results for its fourth quarter and fiscal year 2026 ended March 31, 2026. Earlier this morning, if you did not receive a copy of our earnings press release, you may access it from the Investor Relations section of our website at investors. Reservoir-media.com with me on today’s call are Golmar Khosrowshahi, Founder and Chief Executive Officer and Jim Heindelmeier, Chief Financial Officer. As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website. Before I turn the call over to Golnar and Jim, I’d like to note that today’s discussion will contain forward looking statements that reflect the current views of Reservoir Media about our business, financial performance and future events and as such involve certain risks and uncertainties. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our earnings press release and our filings with the securities and Exchange Commission for more information on the specific risks, uncertainties and other factors that could cause our actual results to differ materially from our expectations, beliefs and projections described in today’s discussion. Any forward looking statements that we make on this call or in our earnings press release are as of today and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In addition to financial results presented in accordance with Generally Accepted Accounting principles, we plan to present during this call certain financial measures that do not conform to US GAAP if we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliations of these non GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release. I would now like to turn the call over to Golnar.
Golnar Khosrowshahi (Founder and Chief Executive Officer)
Thank you Jackie Good morning everyone and thank you for joining us today. Reservoir delivered another strong year, generating 11% annual in revenue growth with 6% organic growth and 12% adjusted EBITDA growth in fiscal 2026. These results reflect the continued success of our disciplined acquisition strategy, the strength of our catalog, and the performance of our growing team around the world. Fiscal 2026 was a milestone year as we deployed approximately $120 million across acquisitions and advances for both publishing and recorded rights. This enabled us to retain exceptional creators, sign leading contemporary hitmakers, and further expand and diversify our catalog by genre, by era and geographic representation. In September, we acquired the catalog of music and culture icon Miles Davis as we officially mark his centennial. This week we have launched a global campaign with countless activations and press moments. Highlights from this week alone included the Voice of Miles, a Symphonic celebration by Park Avenue Artists, a Billboard in Times Square on the NASDAQ Tower, and an event with the New York Public Library for the Performing Arts and Simon and Schuster for the centennial edition of Miles Autobiography. With more to come this year, we look forward to continuing to celebrate Miles legacy and it is an honor to steward his extraordinary body of work and bring it to new audiences. We also continue to invest in today’s hitmakers, signing talent including disco soul band Seise, country pop songwriters Allison Veltz Cruz and Sam Tenese, UK singer songwriter Benjamin Francis Lefwitch and multi genre songwriter Britton Newbill, to name a few. At the same time, we reinforced our long standing relationships, extending deals with legendary singer songwriter Joni Mitchell, Grammy winning writer producer Chris Riddick Tynes and the estate of seminal artist Nick Drake as well as entering into a new deal with long term client Academy Award winning composer Hans Zimmer. Our relationship with Zimmer extends as investors in Payam Music, an innovative piano school with a novel methodology for teaching. This past Sunday, Payam Music and Zimmer were featured on CBS 60 Minutes highlighting the school’s successful approach to piano education and Zimmer’s involvement in advancing its mission. We are proud to support Payam Music to help nurture the next generation of pianists and through technical training while fostering a lifelong love of music. During this fiscal year, we also continued to expand Reservoir’s recorded music division, including a multifaceted deal with independent record label Fool’s Gold Records. The transaction included the acquisition of catalog master rights of several of the label’s artists and an exclusive partnership to market and distribute all their recordings on Fool’s Gold via the Reservoir label platform. Internationally, we expanded our presence in key growth markets. We launched our Mumbai based subsidiary Pop India and signed a publishing deal with Sri Lankan star Yohani while also extending our publishing agreement with multi platinum Indian hip hop artist Divine. Pop India also executed its first catalog deal, acquiring the publishing and master rights to the entire music craft entertainment catalog. The establishment of Pop India marks an important step in building a meaningful on the ground presence in India, one of the fastest growing music markets globally, with the streaming market alone projected to reach over $4.8 billion by 2030 with a compound annual growth rate of over 17%. This April, together with Paparavia, our partner in MENA region, we completed the acquisition of label and digital distribution company Viral Wave, a transformational transaction that significantly expands both the scale and capabilities of the Paparavia platform. Beyond increasing Paparabia’s team to over 30 employees across Egypt, Morocco and the UAE, the acquisition establishes a fully integrated distribution infrastructure alongside the company’s existing publishing and label services, creating one of the region’s most comprehensive independent music platforms. Importantly, this move deepens Reservoir’s operational footprint and strategic positioning across Menna and creates additional opportunities for cross border collaboration and global reach for regional artists. In addition, in fiscal year 2026 we acquired the publishing and recorded music catalogs of Iraqi production house HFM Production and Kuwaiti singer songwriter Essa Al Marzouk and executed a publishing deal with Moroccan artist producer 88 young Mena continues to be one of the fastest growing regions with recorded revenues increasing by 15.2% in 2025 and with growth projections reaching $8.5 billion by 2030 driven by streaming and digital adoption. We believe the proven success and expertise of our team and platform in MENA will continue to provide us a competitive advantage in securing top talent and capitalizing on the momentum across the region. Our ability to attract high caliber talent globally is due in large part to the quality and performance of our existing portfolio. Unlocking value for our assets and identifying opportunities to introduce our music to the next generation of fans are key factors of that growth. In the last fiscal year, we partnered with leading global brands including Anthropic, Volkswagen, Netflix, Lexus and Amazon, and had placements in major feature films and television shows such as Hopper’s Happy Gilmore 2, Marvel’s Fantastic Four and Stranger Things. This drove continued strength in our sync business with growth of 5% in music publishing and 39% in recorded music year over year. As we have previously noted, the music industry continues to demonstrate resilience within overall market fluctuations. The recorded music industry grew 6% globally in 2025 according to the IFPI, while music publishing global revenues grew 9.5% globally according to Music and Copyright 2026 report. Against this backdrop, Reservoir also continued our growth trajectory. Digital revenue increased 7% in music publishing and 18% in recorded music. We were also proud to be included in Billboard’s full year top 10 market share ranking, with Sabrina Carpenter’s Espresso co written by Steph Jones, contributing to the company’s position. In addition to market share, Reservoir’s music boasted commercial and charting successes as well as countless awards throughout fiscal 2026. Demonstrating the widely recognized value of the assets and the creators, we curate not only catalogs but also relationships with the creators behind them and are honored to be the partner of choice for so many talented songwriters. Before turning to our financial performance, I would like to briefly address the previously disclosed non binding and unsolicited acquisition proposals received by the company in March 2026. The board formed a special committee of independent and disinterested directors to evaluate the proposals, and the special committee engaged Morgan Stanley Co. LLC as its financial advisor and Wachtel, Lipton, Rosen and Katz as its legal counsel. Beyond that, we have no additional updates to share today and will provide further information as appropriate. I will now turn the call over to Jim to discuss our fourth quarter and full fiscal year financial results as well as our fiscal 2027 guidance in Greater detail.
Jim Heindelmeier (Chief Financial Officer)
Jim thank you Golmar and good morning everyone. As Golnar highlighted, we executed at a very high level in fiscal 2026, drove strong growth across all our key performance metrics and expect that to continue into fiscal 2027. These results affirm the effectiveness of our strategy, the quality of our portfolio of assets, and our ability to acquire new assets for Reservoir’s platform while unlocking the fullest potential of their value. Let’s start with a review of the fourth quarter Revenue for the fourth fiscal quarter was 47.5 million, which was a 15% increase compared to the fourth quarter of fiscal 2025. Strong growth across both segments was led by 27% growth in recorded music and 11% growth in our music publishing segment inclusive of the acquisition of various catalogs. With respect to our operating expenses for the quarter, our overall cost of revenue increased 13% versus the prior year quarter. Our depreciation and amortization costs increased 20% year over year due to our continued catalog acquisitions. Company administration expenses saw a 16% increase year over year partially due to costs incurred with our acquisition of Viral Wave. Turning to operating performance, fourth quarter OIBDA increased 16% year over year to 19.9 million adjusted EBITDA increased 16% to 21.2 million, which was largely driven by strong top line growth, particularly in our digital category across both segments, partially offset by higher administration expenses. Interest expense was 6.8 million for the quarter compared to 6.1 million in the same period last year. Net income for the fourth quarter of fiscal 2026 was 4.1 million versus 2.7 million in the fourth quarter of fiscal 2025. This resulted in diluted earnings per share for the quarter of $0.07 compared to $0.04 per share in the prior year period. Moving to our full fiscal year 2026 results, revenue was 1 75.7 million above the top end of our previously stated guidance range. This beat was the result of growth in both the music publishing and recorded music segments which posted annual growth of 9% and 16% respectively. Turning to our operating expenses for fiscal 2026, our overall cost of revenue saw an 8% increase from fiscal 2025. This increase was attributed to a higher revenue base resulting from acquisitions and value enhancement efforts. The lower increase in cost of revenue as compared to the increase in revenue resulted in a higher gross margin in fiscal year 2026. Administration expenses for fiscal 2026 rose 12% from the prior year to 44.7 million, primarily due to higher administrative expenses in both the music publishing and recorded music segments and to a lesser extent an increase in other administrative expenses. We also incurred costs in fiscal 2026 associated with our acquisition of IRA Way. OIBDA in fiscal 2026 increased 12% year over year to 69 million, while adjusted EBITDA grew 12% to $73.6 million. These increases were mostly attributable to increased revenues and higher gross margin. As a reminder, we have reconciliations for these metrics in our earnings press release and 10k filing. Our interest expense was 26.5 million for the full year compared to 21.9 million last year. The higher interest expense was due to an increase in debt resulting from acquisitions of music catalogs and writer signings. Net income for fiscal 2026 was 7.8 million versus 7.7 million last year. The increase in net income was primarily the result of increased operating income as well as a decrease in the loss on fair value of interest rate swaps, partially offset by higher interest expense and income tax expense. This resulted in diluted earnings per share for the year of $0.13 compared to $0.12 per share for fiscal 2025. Our weighted average diluted outstanding share count for the full year is 66 million. Turning to our segment breakdown for the fourth quarter. Music publishing generated revenue of 30.9 million in the quarter, which represents an 11% increase when including acquisitions versus the same period last year. Our digital revenue increased 3.2 million or 24% to 16.9 million, and performance revenue decreased by 16% to 5.5 million. Synchronization revenue in the publishing segment totaled 5.8 million, a 6% increase from the fourth quarter of last year. This is primarily due to the timing of licenses. Mechanical revenue within the publishing segment posted a 16% increase year over year to 1.3 million. Other revenue within the publishing segment was 1.4 million, an increase of 20% year over year. Our recorded music segment generated 15.2 million in revenue, representing an increase of 27% versus the prior year quarter. Digital revenue within the recorded segment increased 17% primarily due to subscriber growth and price increases at DSPs, while physical revenue increased 35%. Our synchronization revenue increased 161% as a result of the timing of licenses, while neighboring rights increased 18% to 1.4 million, in part due to additional direct affiliations with collection societies. For the full year, our music publishing segment revenue rose 9% compared to the prior year. Our improvement is largely a result of price increases at multiple music streaming services as well as the expansion of our catalog through M and A. Additionally, synchronization revenue increased because of the timing of licenses and performance revenue grew 14% as a result of hit songs. Recorded music revenues increased 16% compared to fiscal 2025. The growth is attributable to the acquisition of additional music catalogs and continued user growth and price increases at multiple streaming services. This was partially offset by the non recurrence of royalty recoveries in the prior year related to underreported usage for music catalogs. Additionally, the increase in revenue was aided by an increase in synchronization revenue driven by the timing of licenses. Let’s move on to our balance sheet. As of March 31, cash flows from operating activities increased by 4.9 million year over year to 50.1 million due to an increase in earnings as well as an increase in cash provided by working capital. We closed the year with total liquidity of 1:17.1 million, comprised of 25.9 million of cash on hand and 91.2 million available under our revolver, which gives us the capital to fund our strategic objectives. We ended the year with 455.7 million of total debt, which was net of $3.1 million of deferred financing costs and thus we maintained $429.8 million of net debt. That compares to net debt of $366.7 million as of last fiscal year end. Turning to the 2027 fiscal year, we expect revenue to be in the range of $186 million to $191 million and adjusted EBITDA to be in the range of 75 million to 79 million. After our strong results in fiscal year 2026, we believe we are well positioned to continue our track record of growth. Remaining true to our proven capital deployment strategy and value enhancement efforts, combined with disciplined cost management and consistent operating cash flows should enable us to deliver on our initiated fiscal year 2027 guidance ranges. With that, I’ll now pass the call back to Golnar.
Golnar Khosrowshahi (Founder and Chief Executive Officer)
Thank you Jim At Reservoir we take a long term view focused on protecting our creators, growing the value of their work and running the business with discipline. That approach has driven strong growth and consistent cash flow since our debut as a public company and positions us well for sustained long term growth. With that, we will now open the line for questions.
OPERATOR
Thank you. At this time we’ll be conducting a question and answer session. If you’d like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from Griffin Boss with B. Riley Securities. Your line is now live.
Griffin Boss (Analyst)
Hi, good morning. Thanks for taking my questions. Apologize for any background noise here. I just want to start off on Viral Wave. Golnar, you mentioned the over 30 employees that come with that acquisition cross border collaboration activities, but is there any more context you could give us as to the size or scale of the catalog that Viral Wave brings? Is that more early days and there’s opportunity for expansion? Just curious if there’s anything on the financial side there you could elaborate on?
Golnar Khosrowshahi (Founder and Chief Executive Officer)
Not specifically. I will say that it is a business that comes with a stable of existing clients and existing relationships and existing product. Hence the headcount. And we plan on expanding on that. But it’s an investment in an entity that is already an established business.
Jim Heindelmeier (Chief Financial Officer)
Yeah and I would just add to that Griffin that you know, as Golnar said, it’s an established business. It’s a distribution business. So a little different than some of the other businesses that we’ve Been in a little bit lower margin, but we are excited about the way it will expand our opportunities in the region.
Griffin Boss (Analyst)
Okay, I appreciate that color. And then so next for me on the guidance, Jim, if you take the midpoint there, it looks like it’s implying a slight step down. And ebitda margin for 27. Is the expectation there just higher administrative expenses going forward or is it something else?
Jim Heindelmeier (Chief Financial Officer)
Yeah, there’s a couple of things there, I would say. One, you know, not that Viral Wave is the most significant piece certainly of our consolidated financials, but it is a lower margin business, so that slightly impacts that. And we are continuing to make some investments on the frontline side of the recorded business. And that is certainly an area where we, we are very cautious about the revenue and conservative with respect to the costs associated with it. So that’s why you’re seeing a little bit of that step down in guided EBITDA margin.
Griffin Boss (Analyst)
Okay, got it. That’s helpful. Thanks, Jim. And then just one more if I could squeeze it in. I’m just curious if I could get any insights from Golnar into the CRB5 proceedings. Obviously, we’re relatively early days there, but would love to hear kind of what our expectation is, generally speaking, if you have one, in terms of kind of what you’re looking for to get negotiated there over the next couple years.
Golnar Khosrowshahi (Founder and Chief Executive Officer)
Yeah, there isn’t any material update at this point. Still sort of in discussion phase. I think we remain optimistic, but that’s not optimism that we bake into our own forecasts. We do, however, remain optimistic insofar as getting to an agreement and having a positive impact of the share of income for songwriters and publishers.
Jim Heindelmeier (Chief Financial Officer)
Okay, got it. I’ll pass it off, but thanks for taking my questions. Col9 Jim. Appreciate it. Thank you, Griffin.
OPERATOR
As a reminder, if you’d like to ask a question, please press Star one on your telephone keypad. One moment, please, while we poll for questions, our next question comes from Richard Baldry with Roth Capital. Your line is now live.
Richard Baldry (Analyst)
Thanks. I wanted to see if you dig a little deeper into the gross margins on a blended basis. They set a record high. So I’m sort of curious, you know, are the trending behind that sustainable or give you sort of an outlier and understanding that there’s some headwind from the Viral Wave acquisition. Just curious about the underlying trends to that.
Jim Heindelmeier (Chief Financial Officer)
Yeah, certainly. I think, you know, the gross margin ticking up a little bit this year. It’s a result of some of the acquisitions that we did to the extent that we are acquiring assets where you know, we may retain 100% of the revenue. That’s obviously going to have a positive impact on our overall gross margin. And I think you saw a couple of deals this past year that had that type of impact for us. So we don’t expect that our gross margin is going to change significantly on a percentage basis, but we may have opportunities for that to tick up slightly depending on the types of acquisitions that we do. But, but certainly as you noted with respect to the go forward forecast, we will have the impact of lower margin deals such as viral Wave impacting the gross margins as we move to fiscal 27.
Richard Baldry (Analyst)
And on an overall sort of adjusted EBITDA basis. Is international a headwind at this point because it has yet to get sort of the scale of the rest of the business or is it sort of curious that impact and where that heads to?
Jim Heindelmeier (Chief Financial Officer)
Yeah, I think if you were to isolate just our kind of international operations, certainly it would be a lower EBITDA margin than our core business. But again, even though we are excited about these regions and we see a lot of growth opportunity there, it’s a very small part of our overall business. So. So just keep that in mind as you think about it.
Richard Baldry (Analyst)
Got it. And maybe last for me, when you look at the revenue and earnings for fiscal 27, if you talk about seasonality, you know the business is sort of changing and evolving over time. So we’re curious how how seasonal you expect the top and the bottom lines to be next year and whether that’s similar to prior years or is is is sort of changing.
Jim Heindelmeier (Chief Financial Officer)
Well, I’d like to think that it’s pretty flat quarter to quarter. We do sometimes have things that impact and cause spikes in our revenue. It’s less about seasonality though, more about it could be in the prior year we had. The royalty recovery. Wasn’t anything to do with seasonality, just happened to be when we resolved that issue. So we’ll continue to have some things that cause our revenue to spike from time to time. But on a baseline view, I expect us to be pretty consistent. Quarter to quarter, maybe last for maybe. When you look out to the fiscal 27 guide, how much of that do you think is sort of assuming a steady organic growth or any tailwinds from streaming pricing versus acquisitions, you know, or acquisitions you expect to do. Thanks. Yeah, I think that from an organic growth standpoint, we expect things to be pretty steady, you know, kind of mid single digits. We are always though looking at our catalog at a pretty granular level. So to the extent that we have frontline successes in one year. We don’t necessarily project those frontline successes going into the next year. We will project the decay that’s expected on those new or young copyrights. So you have that impacting our overall view of revenue that’s baked into our guidance. Having said that, we have a pretty good track record of having one new frontline successes every year. So as we move through the year we will continue to evaluate where we are. Thanks Congress and a great quarter. Thank you.
OPERATOR
We have reached the end of the question and answer session. I’d now like to turn the call back over to Golnar Khosrowshahi for the closing comments.
Golnar Khosrowshahi (Founder and Chief Executive Officer)
Thank you Operator the strength of our portfolio and our proven ability to attract award winning and legendary talent across genres and geographies continues to distinguish our business. We are excited about fiscal year 2027 and look forward to updating you on our progress in a few months. Thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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