Reservoir Media Q2 Earnings Call Highlights

Key Points

• Revenue rose 10% year over year to $49.9 million in fiscal Q2, with growth in both Music Publishing and Recorded Music. Adjusted EBITDA increased 14% to $22.1 million, and net income more than doubled to about $4.6 million.
• Reservoir raised and narrowed its fiscal 2027 outlook, projecting $188 million to $192 million in revenue and $77 million to $80 million in adjusted EBITDA.
• The company continued investing in catalogs and creative partnerships, while total debt reached $458.6 million. Its board’s special committee is still evaluating previously disclosed acquisition proposals, and Reservoir is pursuing litigation against certain AI platforms over alleged unauthorized use of creators’ work.

Reservoir Media NASDAQ: RSVR reported fiscal second-quarter revenue growth and raised its full-year outlook, citing gains in both its music publishing and recorded music businesses as the company continued adding songwriter relationships and acquiring catalogs.

For the quarter ended Sept. 30, 2026, revenue rose 10% year over year to $49.9 million, or 4% on an organic basis. Founder and Chief Executive Officer Golnar Khosrowshahi said the performance reflected the company’s strategy of investing across the music lifecycle, from active creators producing future copyrights to established catalogs with enduring commercial value.

“In the second fiscal quarter, we extended our run of top-line growth with revenue up 10% year-over-year and organic growth of 4%,” Khosrowshahi said.

Segment growth and profitability

Music Publishing revenue increased 8% from a year earlier to $33.2 million. The segment benefited from a 10% rise in digital revenue, which Chief Financial Officer Jim Heindlmeyer attributed to catalog acquisitions and continued streaming growth. Publishing synchronization revenue rose 13%, driven by the timing of licenses.

Recorded Music revenue increased 18% to $15.4 million. Digital revenue in the segment rose 33%, supported by acquired catalogs and streaming growth, while neighboring-rights revenue also contributed through new catalog acquisitions and affiliations.

Heindlmeyer said newly acquired rights with low associated expenses helped improve recorded-music profitability compared with the prior-year period.

Operating income before depreciation and amortization, or OIBDA, increased 14% to $20.7 million. Adjusted EBITDA also rose 14% to $22.1 million. Net income was approximately $4.6 million, compared with $2.2 million a year earlier, while diluted earnings per share increased to $0.07 from $0.03.

Interest expense rose to $7 million from $6.7 million in the prior-year quarter, primarily due to higher debt used to fund catalog acquisitions and writer signings.

For the six months ended Sept. 30, cash provided by operating activities totaled $21.6 million, down $3.7 million from the same period a year earlier. The decrease reflected working-capital timing, including royalty payments to creators and accounts-payable payments, partially offset by the timing of royalty-advance recoupments.

The company ended the quarter with $113.9 million of available liquidity, including $24.8 million of cash and $89.2 million available under its revolver. Total debt was $458.6 million, net of deferred financing costs, resulting in net debt of $433.8 million, compared with $429.8 million at March 31.

Outlook raised and narrowed

Reservoir raised and narrowed its fiscal 2027 guidance. The company now expects:

• Revenue of $188 million to $192 million, with the midpoint representing 8% growth from fiscal 2026.
• Adjusted EBITDA of $77 million to $80 million, with the midpoint representing 7% growth from the prior year.

Heindlmeyer said the company’s second-quarter administration-expense run rate should be a reasonable proxy for the remainder of the fiscal year, aside from minor fluctuations. He added that the outlook includes what he described as an appropriate degree of conservatism.

Management also said second and fourth quarters have historically been stronger periods for cash generation. Heindlmeyer said the quarter was relatively light for merger-and-acquisition activity, noting that transaction timing is not linear throughout the year.

Catalog acquisitions and new creative partnerships

During the quarter, Reservoir announced several publishing and recorded-music investments. In publishing, the company signed future-works deals with London-based songwriter and producer Fred Ball and Grammy-nominated songwriter and producer Jake Sinclair.

Reservoir also formed a joint venture with Sinclair to identify and develop emerging songwriters and artists. Khosrowshahi said such joint ventures are structured to capitalize on a creative partner’s talent and access, with investments made on an as-needed basis rather than involving significant upfront dollar amounts.

The company expanded its roster with Scottish indie-rock band The Snuts, singer-songwriter Orla Gartland, songwriter Justin Dukes, singer-songwriters Ava Liv Mabry and Riley Biederer, and Canadian duo The Reklaws.

On the catalog side, Reservoir acquired Billy Strayhorn’s publishing catalog and rights participation related to his name, image and likeness. The company has published the catalog for more than a decade. It also reached a deal with Puerto Rican singer-songwriter José Feliciano to acquire master recording rights to his catalog and shared rights to his name, image and likeness.

Khosrowshahi said the Strayhorn and Feliciano transactions expand Reservoir’s participation in name, image and likeness rights. She pointed to the company’s work around the Miles Davis centennial as an example of using brand partnerships to bring cultural and financial value to an artist portfolio.

Market conditions, AI and strategic review

Management cited streaming subscription price increases, continuing interest in catalog transactions, and greater importance of touring and brand partnerships for established artists as supportive industry trends. Khosrowshahi said Reservoir continues to see no decline in catalog acquisition multiples, despite differences between public-market valuations and the perceived value of music assets.

She said the company’s pipeline includes a balanced mix of music publishing, recorded music and emerging-market opportunities, although the mix of completed transactions may vary from quarter to quarter.

Reservoir also said it is pursuing litigation against certain artificial-intelligence platforms, arguing that it has a responsibility to protect creators’ work where it believes that work has been exploited without authorization. Khosrowshahi said the company supports a framework that permits technological progress while protecting creative rights.

Separately, Khosrowshahi said the board’s special committee continues to evaluate previously disclosed non-binding, unsolicited acquisition proposals. The committee was formed in March 2026 and has retained Morgan Stanley & Co. LLC as financial adviser and Wachtell, Lipton, Rosen & Katz as legal counsel. Management said the review has not changed Reservoir’s day-to-day operating priorities.

About Reservoir Media (NASDAQ:RSVR)

Reservoir Media, Inc is a global independent music company that owns, administers and manages rights to musical compositions and sound recordings. Its business includes music publishing, recorded music, rights management and royalty collection, serving songwriters, artists, producers and other rights holders.

The company's catalog spans a broad range of genres and includes contemporary and historic songs, recordings and music-related intellectual property. Reservoir also operates record labels and provides services such as creative support, licensing, synchronization and administration for uses of music in film, television, advertising, video games and other media.

Founded in 2007, Reservoir has expanded through acquisitions and partnerships involving music publishing catalogs, recorded-music assets and related businesses.

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