Reservoir Media Q1 Earnings Call Highlights

Key Points

• Reservoir Media reported solid fiscal Q1 growth: Revenue rose 12% year over year to $41.5 million, with recorded music revenue up 35% and publishing revenue up 6%. Adjusted EBITDA increased 13% to $15.7 million, while the net loss narrowed to approximately $508,000.
• The company expanded its growth strategy through Latin music partnerships, catalog acquisitions and artist-development ventures, including deals involving Nacional Records, TU Publishing, Some Action and T.I.
• Reservoir reaffirmed fiscal 2027 guidance for revenue of $186 million–$191 million and adjusted EBITDA of $75 million–$79 million. The company ended the quarter with $98.9 million in available liquidity, while its board continues reviewing unsolicited acquisition proposals.

Reservoir Media NASDAQ: RSVR opened fiscal 2027 with revenue growth across its music publishing and recorded music operations, while reaffirming its full-year financial outlook and highlighting new investments in Latin music, artist development and catalog acquisitions.

For the fiscal first quarter ended June 30, 2026, Reservoir reported revenue of $41.5 million, up 12% from the prior-year period including acquisitions and 6% on an organic basis. Founder and CEO Golnar Khosrowshahi said demand remained healthy across both major business segments, supported by recent acquisitions, streaming-service price increases, subscriber growth in international markets and activity from the company’s roster.

“Our first quarter results reflect the continued execution of our long-term strategy,” Khosrowshahi said, pointing to efforts to expand the catalog, invest in creative talent, grow recorded music operations and increase exposure to higher-growth markets.

Recorded Music Outpaces Publishing Growth

Recorded music revenue increased 35% year over year to $14.1 million. Chief Financial Officer Jim Heindlmeyer said the increase reflected a 23% gain in digital revenue, contributions from acquired catalogs, continued streaming growth, synchronization revenue and higher physical revenue associated with the timing of releases.

Music publishing revenue rose 6% to $26.5 million. The segment’s digital revenue grew 7%, while performance revenue increased 17%, aided by hit songs. Those gains were partly offset by declines in synchronization, mechanical and other revenue categories within publishing.

Heindlmeyer said the recorded music segment benefited from recent acquisitions and unusually strong synchronization activity during the quarter. He noted that synchronization revenue is not linear throughout the year and said the company closed “a couple of large syncs” in the period.

On digital revenue, Heindlmeyer said Reservoir generally expects organic growth in the mid-single-digit range, though individual periods can be affected by one-time items.

Profitability, Debt and Cash Flow

Operating income before depreciation and amortization, or OIBDA, increased 7% year over year to $13.7 million. Adjusted EBITDA rose 13% to $15.7 million. The company attributed the gains to higher revenue, partially offset by increased administrative expenses.

First-quarter net loss narrowed to approximately $508,000, compared with a loss of $644,000 a year earlier. Reservoir reported break-even diluted earnings per share, improving from a diluted loss of $0.01 per share in the prior-year quarter. Interest expense increased to $6.9 million from $6.3 million, primarily due to higher debt balances used to fund catalog acquisitions and writer signings.

Cash used in operating activities was $1.4 million, a $7.4 million improvement from the prior-year quarter. Heindlmeyer said the result reflected the timing of royalty payments and recoupment of royalty advances. During the question-and-answer session, he said the company had made somewhat higher outgoing advances than in the prior year, while lower recoupment in the quarter did not represent a meaningful change in Reservoir’s outlook for advances.

Reservoir ended the quarter with $13.7 million in cash and $85.2 million available under its revolving credit facility, for total available liquidity of $98.9 million. Total debt was $462.2 million, net of $2.7 million in deferred financing costs, resulting in net debt of $448.5 million, compared with $429.8 million as of March 31, 2026.

Administrative expenses rose 16% year over year, while amortization and depreciation expenses increased 13%. Heindlmeyer said first-quarter overhead included items that elevated the quarterly run rate and should not be viewed as the baseline for the remaining quarters of fiscal 2027.

Latin Music Partnerships and Artist Development

Reservoir outlined several transactions intended to build its position in Latin music. In June, the company announced a joint venture with TU Publishing, under which Reservoir will publish current and future writers signed to TU Publishing. The partners also plan to co-sponsor songwriting camps for artists, songwriters and producers serving the global Latin audience.

The company also acquired the catalogs of independent Latin label Nacional Records and its publishing arm, Canciones Nacionales, while entering a joint venture to sign and develop recording artists and songwriters. Khosrowshahi said the arrangements combine established catalogs with creative platforms focused on discovering and developing talent.

“We believe that Latin music is not a regional story, but a global one,” Khosrowshahi said.

In recorded music, Reservoir completed a venture with U.K. A&R executive Ollie Hodge to bring his label, Some Action, to Reservoir. The label has signed artists McGrath, JP O’Grady and L Devine, and its team is based in Reservoir and Chrysalis Records’ London office.

Reservoir also announced a publishing partnership with hip-hop artist T.I. covering his catalog and future works, including his album Kill the King. Additional publishing signings included songwriter and producer Adam Kapit, U.K. producer and multi-instrumentalist Fretworm, and singer-songwriter Jarrett Doherty. The Doherty agreement also launched a joint venture with Tinman, a publishing company founded by Reservoir writer Sam Tinnesz.

Outlook and Review of Acquisition Proposals

Reservoir maintained its fiscal 2027 guidance for revenue of $186 million to $191 million and adjusted EBITDA of $75 million to $79 million. At the midpoint, the outlook implies revenue growth of 7% and adjusted EBITDA growth of 5% over fiscal 2026.

Heindlmeyer said the company expects revenue seasonality to resemble prior years, with payment-cycle effects tending to result in relatively higher revenue in the second and fourth fiscal quarters than in the first and third quarters.

Khosrowshahi also addressed previously disclosed non-binding and unsolicited acquisition proposals. She said Reservoir’s board formed a special committee of independent and disinterested directors in March 2026 to evaluate the proposals. The committee engaged Morgan Stanley & Co. LLC as financial adviser and Wachtell, Lipton, Rosen & Katz as legal counsel. The company said it had no further update to provide.

About Reservoir Media (NASDAQ:RSVR)

Reservoir Media Inc is a global independent music rights management company that acquires, administers and monetizes music publishing and master recording assets. Its business model centers on building a diverse portfolio of copyrights and recordings across genres, then generating revenue through licensing, royalty collection and direct-to-fan initiatives. Reservoir’s catalog includes works by established and emerging songwriters and artists, spanning pop, rock, country, R&B and other contemporary styles.

The company operates two primary segments: music publishing and recorded music.

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