Reservoir Media’s Earnings Call Highlights Robust Growth

Reservoir Media, Inc. ((RSVR)) has held its Q3 earnings call. Read on for the main highlights of the call.

Reservoir Media Reports Strong Earnings Amid Financial Challenges

The earnings call for Reservoir Media presented an optimistic outlook, showcasing a strong performance in revenue growth, EBITDA improvement, and strategic acquisitions. While the company experienced some financial challenges, including increased operating expenses and a decline in neighboring rights revenue, the overall sentiment was positive. This optimism was further buoyed by raised guidance and recognition at the Grammy Awards, indicating confidence in the company’s future prospects.

Strong Revenue Growth

Reservoir Media reported a total revenue of $42.3 million for the third quarter of fiscal year 2025, marking a 19% improvement over the same period last year. This impressive growth was primarily driven by a 16% increase in music publishing revenue and a 20% increase in recorded music revenue, showcasing the company’s effective strategies in expanding its music portfolio.

Significant Improvement in EBITDA

The company achieved an adjusted EBITDA of $17.3 million, a 26% improvement from the year-ago quarter. This growth in EBITDA was attributed to effective cost management and increased revenues, highlighting Reservoir Media’s operational efficiency in maximizing profitability.

Successful Catalog Acquisitions

Reservoir Media has invested over $70 million in catalog acquisitions year-to-date, securing prominent talents such as Snoop Dogg and k.d. lang. Additionally, the acquisition of the rights to the catalog of Grammy Award-winning composer Lebohang Morake further strengthens the company’s portfolio and creative influence in the music industry.

Increased Guidance for Fiscal 2025

Reflecting confidence in sustained growth, Reservoir Media raised its full-year revenue guidance to a range of $155 million to $158 million, along with an adjusted EBITDA guidance of $61.5 million to $64.5 million. This updated guidance underscores the company’s positive outlook and strategic focus on expanding its music catalog through acquisitions.

Grammy Awards Recognition

Reservoir Media celebrated six wins across its roster at the 2025 Grammy Awards. This recognition highlights the company’s successful management and creative efforts, further solidifying its position as a leader in the music industry.

Higher Operating Expenses

Despite its financial successes, Reservoir Media faced increased operating expenses, with total costs rising by 13% compared to the prior year quarter. This increase was driven by a 17% rise in administration expenses and a 14% increase in the cost of revenue.

Decline in Neighboring Rights Revenue

The growth in recorded music revenue was partially offset by a modest decline in neighboring rights revenue, indicating challenges in this specific revenue stream. This decline suggests potential areas for improvement as the company continues to refine its revenue strategies.

Increased Interest Expenses

The company reported a rise in interest expenses to $5.8 million, reflecting an increase of $405,000 from the prior year. This rise is attributed to increased borrowings to support its M&A strategy and higher effective interest rates, which may impact future financial performance.

Forward-Looking Guidance

Reservoir Media’s forward-looking guidance for fiscal year 2025 remains strong, with an increase in their full-year revenue guidance to $155 million to $158 million and adjusted EBITDA guidance to $61.5 million to $64.5 million. The company plans to continue focusing on growing its music portfolio through strategic acquisitions, having already deployed over $70 million in catalog acquisitions this year. The robust pipeline of off-market deals reflects Reservoir’s confidence in maintaining its growth trajectory.

In summary, Reservoir Media’s earnings call communicated a positive outlook for the future, driven by strong revenue and EBITDA growth, strategic acquisitions, and industry recognition. Despite facing some financial challenges, the company’s increased guidance and continued investment in its music portfolio suggest a promising path ahead.