Reservoir Media’s revenues grew 15% YoY to $38.4m in calendar Q3

New York-headquartered Reservoir Media has raised its monetary outlook after recording one other quarter of double-digit income progress, regardless of some headwinds to the music rights firm’s backside line.

In an earnings launch on Tuesday (November 7), Reservoir reported income of USD $38.4 million for its fiscal Q2 2024, which corresponds to the third calendar quarter of 2023, ended September 30.

That income determine represents a 15% enhance in income in comparison with the identical interval a yr earlier. Stripping out acquisitions over the previous yr, the corporate noticed a 10% YoY enhance in natural income.

Music publishing

Reservoir’s income from music publishing got here in at $25.9 million, up 8% YoY, whereas recorded music income jumped 22% YoY to $10.8 million.

Inside the music publishing phase, income from efficiency rights jumped a whopping 47% YoY to $6.5 million, whereas income from mechanical rights jumped 25% YoY to $1.3 million.

Nevertheless, the most important income supply in Reservoir’s music publishing portfolio, digital rights, declined by 4% YoY (see beneath) as a consequence of a $2.1 million increase, recorded within the year-earlier quarter, associated to the Copyright Royalty Board’s affirmed royalty charges for the 2018-2022 interval.

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Recorded Music

Inside the recorded music phase, digital revenues jumped 15% YoY to $7.3 million, whereas bodily rights jumped 122% YoY to $1.9 million. That was barely offset by a 12% YoY decline in synch rights, to $0.9 million.

Reservoir attributed the energy in recorded music to its Chrysalis Music and Tommy Boy labels, which noticed robust digital and bodily income progress.

Nevertheless, that huge enhance in bodily income led to a lower within the recorded music OIBDA margin, from 54% a yr in the past to 51% within the newest quarter, as a consequence of larger prices related to bodily revenues.

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The corporate’s adjusted EBITDA got here in at $15.9 million, a 24% YoY soar. OIBDA rose 3% YoY to $12.4 million.

Nevertheless, Reservoir’s working revenue fell 6% YoY, to $6.1 million, which the corporate attributes to larger administrative bills, together with a $2.7-million write-off of recoupable authorized charges.

That authorized write-off additionally contributed to a steep 85% YoY decline in Reservoir’s web revenue, from $4.5 million within the year-ago interval, or $0.07 per frequent share, to simply $0.7 million within the newest quarter, or $0.01 per share.]

Apart from the write-off, the corporate additionally attributed the web revenue decline to larger amortization and curiosity bills.

Regardless of the revenue squeeze, founder and CEO Gholnar Khosrowshahi mentioned the corporate was “happy with our ends in the second quarter as we delivered double-digit income and profitability progress whereas investing in our enterprise by closing quite a few offers that diversified and expanded our roster of artists”.

Added Khosrowshahi: “We superior our technique of including award-winning songwriters and distinguished catalogs to our portfolio to capitalize on the continued robust secular tailwinds within the music trade.”

Amongst Reservoir’s acquisitions over the previous yr was a deal to acquire the catalogs of 4 authentic members of Seventies R&B group The Spinners. The corporate additionally acquired the catalog of Latin music hitmaker Rudy Perez, and struck a global publishing deal with Joe Walsh of Eagles fame.

The corporate additionally signed a deal with De La Soul that introduced the hip-hop trio’s music to streaming providers for the primary time; bought the rights to the catalog of Miami Sound Machine co-founder and lead songwriter Enrique “Kiki” Garcia; and signed a publishing deal with Armani White, the rapper behind the TikTok hit Billie Eilish.

“We are going to proceed to pursue acquisitions within the US and throughout the globe, and we’ve the precise workforce and technique to shut accretive offers enhancing the portfolio and constructing long run worth for the enterprise and our shareholders.”

Gholnar Khosrowshahi, Reservoir Media

Reservoir additionally acquired the whole publishing catalog and future works of rock legend Dion; purchased the publishing and recorded music rights of Grammy-winning hip-hop producer and artist Mannie Contemporary; purchased the catalog of jazz icon Sonny Rollins, and launched a joint venture with American Idol producer 19 Leisure to signal publishing offers with Idol contestants.

“Reservoir stays effectively positioned to profit from the expansion of the music trade, and we’re assured in our capability to successfully deploy capital given our robust market place in each the US and rising markets,” Khosrowshahi mentioned.

“We’re inspired by the rising alternatives internationally and welcome latest additions of El Sawareekh and RE Media increasing our presence within the rising markets. We are going to proceed to pursue acquisitions within the US and throughout the globe, and we’ve the precise workforce and technique to shut accretive offers enhancing the portfolio and constructing long run worth for the enterprise and our shareholders.”

Reservoir Chief Monetary Officer Jim Heindlmeyer added: “Our constant progress in opposition to our strategic progress plan demonstrates the resilience of our enterprise mannequin and ongoing tailwinds from the rising music trade. Because of this, we’re elevating each our income and Adjusted EBITDA steerage for fiscal 2024.”

For fiscal yr 2024, which ends March 31, 2024, the corporate is now issuing steerage of $133 million-$137 million, which might signify a roughly 10% enhance over the $122.3 million in income it clocked in fiscal 2023.

The corporate expects adjusted EBITDA to come back in at $50 million-$52 million, additionally a roughly 10% enhance over the $46.3 million it recorded in fiscal 2023.Music Enterprise Worldwide