Q4 2024 Reservoir Media Inc Earnings Call
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Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Reservoir Media's financial results for the fourth quarter and fiscal year 2024, which ended March 31st, 2024. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. I would now like to turn the call over to Ms. Jackie Marcus with the Alpha IR Group, who will review our agenda today and the company's forward-looking statements. Jackie?
Speaker Change: Good morning, everyone and thank you for participating in today's conference call to discuss our immediate financial results for the fourth quarter and fiscal year 'twenty 'twenty four and at March 31st 2024.
Speaker Change: At this time, all participants on a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session. You wanted to Westar one one on your telephone you will done in automatic message advising yohanan space.
Speaker Change: I would now like to turn the call over to MS. Jackie markets with the Alpha IR group, who will be our agenda today in the company's forward looking statements Jackie.
Jacqueline Marcus: Thank you, operator. Good morning, everyone.
Speaker Change: Thank you operator, good morning, everyone and thank you for participating in todays earnings Conference call Reservoir Media issued a press release with the results for its fourth quarter and fiscal year 2024 ended March 31, 'twenty 'twenty four earlier this morning.
Jacqueline Marcus: And thank you for participating in today's earnings conference. Reservoir Media issued a press release with results for its fourth quarter and fiscal year 2024 and did March 31st, 2024 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 Golnar Khosrowshahi, Founder and Chief Executive Officer, and Jim Heindlmeyer, Chief Financial Officer.
Speaker Change: 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 Doc Reservoir Dash media dotcom.
Speaker Change: With me on today's call are Goldman closer shy, founder and Chief Executive Officer, and Jim <unk> Chief Financial Officer.
Jacqueline Marcus: As a reminder, this call is being simultaneously webcast and will be recorded and archived in 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 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.
Speaker Change: As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website.
Speaker Change: Before I turn the call over to Golar 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 risks and uncertainties.
Our expectations beliefs and projections are expressed in good faith and we believe there is a reasonable basis for that.
However, there can be no assurance that our expectations beliefs, and projections will result or be achieved.
Jacqueline Marcus: 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 call. 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 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 U.S. GAAPs 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 pressure calculation. I would now like to turn the call over to Golnar.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: In addition to the 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 U S. 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.
Speaker Change: Conciliation of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release.
Speaker Change: I would now like to turn the call over to Golar.
Golnar Khosrowshahi: Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Our 2024 fiscal year results are representative of our high-quality roster and catalog, our management team, and our value enhancement infrastructure. Together, these factors contributed to record-setting total revenue and operating income for the full year. We continue to build on our proven track record and strong financial footing. We posted an 18% increase in revenue for the fiscal year, which included acquisitions, and 15% and 22% growth in our music publishing and recorded music segments, respectively.
Speaker Change: Thank you Jackie and good morning, everyone and thank you for joining us today.
Golar: Our 2020 for fiscal year results are representative of our high quality roster and catalog our management team and our value enhancement infrastructure.
Speaker Change: Together. These factors contributed to record setting total revenue and operating income for the full year, we continue to build on our proven track record and strong financial footing, we posted an 18% increase in revenue for the fiscal year, which includes acquisition and 15% and 22% growth in our Muse.
Speaker Change: The publishing and recorded music segments, respectively.
Golnar Khosrowshahi: We added several award-winning artists and songwriters to our catalogue, which I will discuss in a moment. And we were honored to share recognition with our creators, who contributed to an impressive 10 Grammy Awards across six genres, two Rock and Roll Hall of Fame inductions, and 42 number ones across all of Billboard's charts. The roster broke records and achieved new milestones this year, including the celebration of the 35th anniversary of De La Soul's groundbreaking debut album, Three Feet High and Rising.
Speaker Change: We added several award winning artists and songwriters so our catalog, which I will discuss in a moment and we were honored to share recognition with our creators who contributed to an impressive 10 Grammy awards across six genres to rock and roll Hall of Fame induction and 42 number ones across all of Billboard charts.
Golnar Khosrowshahi: We also saw SZA's Snooze, co-written and co-produced by our writer-producer, Chris Riddick-Tynes, sit at number one on Billboard's R&B Hip-Hop Airplay chart for a record-breaking 37 weeks. Additionally, Robert Gossett's co-write, Need a Favor by Jelly Roll, became the first song ever to reach the top ten on both the Billboard Country Airplay chart and the Mainstream Rock Airplay chart, going on to claim the top spot on multiple other charts.
Speaker Change: Our roster of broke records and achieved new milestones this year, including the celebration of the 30 <unk> anniversary of <unk> groundbreaking debut album three feet high and rising. We also saw says its news coverage and co produced by our writer producer, Chris Roddick times sit at number one on Billboards RMB Hip hop airplay chart for Rex.
Speaker Change: Breaking 37 week Adil.
Additionally, Robert Golf, Cisco right need a favor by jelly roll became the first song ever to reach the top 10 on the Billboard country. Our play chart and the mainstream Brock airplay chart going onto claimed the top spot on multiple other charts.
Golnar Khosrowshahi: Our strategy to work with hit-making creators across genres provides for more revenue-generating opportunities and access to diverse listening audiences. We finished out the year with a strong fourth quarter with healthy organic revenue growth of 8% or 12%, including acquisition. This year's Super Bowl was a standout moment in Q4 with the Halftime Entertainment Show featuring Usher's performance of several Reservoir-owned assets, including Yeah and Get Low.
Speaker Change: Our strategy to work with him, making creators across genres provides for more revenue generating opportunities and access to diverse listening audiences.
Speaker Change: We finished out the year with a strong fourth quarter with healthy organic revenue growth of 8% or 12% including acquisition.
Speaker Change: This year's Super Bowl was a standout moment in Q4 with the halftime Entertainment show featuring Usher its performance of several reservoir owned assets, including yeah and get low.
Golnar Khosrowshahi: Between the halftime performance and advertisements featuring syncs by our roster and catalogue, including David Guetta, De La Soul, Creed Fruedman, Scott Stapp, and Lil Jon, our music reached an estimated 123.7 million viewers, the largest audience for a single network telecast to date. While we always strive to find new opportunities for our existing catalogue and add new talent to our portfolio, we also want to be at the forefront of how music is created, consumed, and analyzed to help increase the ROI on our investments.
Speaker Change: Between the halftime performance and advertisements featuring <unk> by our roster and catalog, including David get out there a lot so create frontline Scott stopped and little Jon Our music reached an estimated $123 7 million viewers the largest audience for a single network Telecaster date.
Speaker Change: We always strive to find new opportunities for our existing catalog and add new talent to our portfolio. We also want to be at the forefront of how music has created consumed and analyzed to help increase the ROI on our investments.
Golnar Khosrowshahi: Early on, our team recognized the value artificial intelligence and machine-based learning could bring to our business, and we have made investing in these areas part of our general operating practice over the past few years. To date, we have successfully used AI to increase revenue by tracking and identifying more uses of our copyrights across digital platforms. We are now able to detect works that have been covered or altered and then monetize these songs in a scalable way.
Speaker Change: Early on our team recognized the value artificial intelligence and machine based learning could bring to our business and we have made investing in these areas as part of our general operating practice over the past few years.
Speaker Change: To date, we have successfully used AI to increase revenue by tracking and identifying more uses of our copyrights across digital platforms. We are now able to detect works that have been covered or altered and then monetize these songs in a scalable way AI has also opened up an opportunity for us to rework existing archival.
Golnar Khosrowshahi: AI has also opened up an opportunity for us to rework existing archival audio and repurpose it in new and imaginative ways. Moreover, we are capturing and gleaning insights from large volumes of detailed metadata, thereby improving efficiency. For example, our SYNC team is using AI to automatically generate more descriptive metadata to surface new ways to promote our catalog.
Speaker Change: Oreo and repurpose it in new and imaginative ways. Moreover, we are capturing and gleaning insights from large volumes of detailed metadata, thereby improving efficiencies.
Speaker Change: For example, our <unk> team is using AI to automatically generate more descriptive metadata to surface new ways to promote our catalog.
Golnar Khosrowshahi: Additionally, our marketing teams are utilizing platforms with enhanced AI capabilities to create marketing collateral. We are also seeing our songwriters explore this technology to help expedite and enhance their own creative processes in the studio. All of these align with our common priority to use AI tools to capture more revenue by automating previously time-consuming tasks, freeing up our human resources to focus on higher-value work.
Speaker Change: Additionally, our marketing teams are utilizing platforms with enhanced AI capabilities to create marketing collateral.
Speaker Change: We are also seeing our song writers explore this technology to help expedite and enhance their own creative process in a studio all of these aligned with our common priority to use AI tools to capture more revenue by automating previously time consuming tasks freeing up our human resources to focus on higher value.
Golnar Khosrowshahi: We will continue to make investments in AI-enabled tools, and as caretakers of our roster's body of work, we will ensure our artists and assets are protected and fairly compensated as this technology continues to evolve. Turning to other industry trends, we have seen user engagement remain high despite recent price increases by global streaming platforms. The market still added 83 million new paid subscribers in 2023, according to the latest IFPI report. Looking forward, we are poised to benefit from what we believe will become a regular cadence of price increases across streaming platforms.
Speaker Change: Work.
Speaker Change: We will continue to make investments and AI enabled tools and as caretakers of our rosters body of work, we will ensure our artists and assets are protected and fairly compensated as this technology continues to evolve.
Speaker Change: Turning to other industry trends, we are seeing user engagement remained high despite recent price increases by global streaming platforms. The market's still added 83 million new paid subscribers in 2023. According to the latest <unk> report looking forward, we are poised to.
Speaker Change: Benefit from what we believe will become a regular cadence of price increases across streaming platforms. However, we remain focused on the impact of Spotify as recent accounting change as a result of their bundled subscription reclassification to that end, we are steadfast in ensuring our roster is.
Golnar Khosrowshahi: However, we remain focused on the impact of Spotify's recent accounting change as a result of their bundled subscription reclassification. To that end, we are steadfast in ensuring our roster is compensated both accurately and justly, and we will continue to work toward achieving solutions with all entities that use our app.
Speaker Change: Both accurately and justly and we will continue to work toward achieving solutions with all entities that use our assets.
Golnar Khosrowshahi: The audience's relationship with music extends beyond casual listenership, and people around the world are re-engaging with old favorites, discovering new artists, and uniting in niche superfan communities. Goldman Sachs' 2024 Music in the Air report estimates these superfan communities to be a $4.5 billion market, with 20% of paid streaming subscribers willing to spend two times more on music than the average person. With this, we have seen an increase in demand for concerts and music festivals, particularly from Gen Z and millennials.
Speaker Change: The audience is relationship with music extends beyond casual listenership and people around the world are re engaging with old favorites, discovering new artists and uniting in niche superfan communities.
Goldman Sachs 2020 for music in the Air report estimates these super fan communities to be a $4 $5 billion market with 20% of paid streaming subscribers willing to spend two times more on music than the average person.
Speaker Change: With this we have seen an increase in demand for concerts and music festivals, particularly from Gen Z and millennials.
Golnar Khosrowshahi: In the calendar year 2023, the global live music market generated $9 billion in revenue per the IFBI. Our total performance revenue, which includes live performances as well as other public performance sources, in fiscal 2024 rose 37% year-over-year. This engagement solidifies fans' relationships with music and impacts continued listenership and familiarity. Before Jim dives into our financials, I'd like to take a moment to discuss some of our signings and important acquisitions over the past year, all of which further demonstrate a resounding commitment to building a catalog across musical genres, geographies, and eras. These include five-time Grammy-winning rock legend Joe Walsh, including the publishing rights to his hits as both a solo artist and with era-defining bands The Eagles and The James Gang, as well as future works.
Speaker Change: In the calendar year 2023, the global live music market generated $9 billion in revenue per the <unk>.
Speaker Change: Our total performance revenue, which includes live performances as well as other public performance sources in fiscal 2024 rose 37% year over year.
Speaker Change: This engagement solidified fan relationship with music and impact continued listenership and familiarity.
Golnar Khosrowshahi: We announced a catalogue acquisition and go-forward deal with Latin hitmaker and Latin Grammy Awards founder Rudy Perez. We welcomed four-time Grammy Award-winning rock band, Kings of Leon, to the roster. We acquired the catalogs of four members of legendary R&B and pop vocal group The Spinners, who were inducted into the Rock and Roll Hall of Fame in November.
Speaker Change: Before Jim dives into our financials I'd like to take a moment to discuss some of our signings and important acquisitions over the past year, all of which further demonstrate our resounding commitment to building a catalog across musical genres geographies and areas.
Speaker Change: These include five time Grammy winning rock legend, Joe Walsh, including the publishing rights to his hit as both a solo artist and with Euro defining Vance the Eagles and the James gang as well as future works.
Speaker Change: We announced the catalog acquisition and go forward deal with Latin Hitmaker and Latin Grammy Awards founder Rudy Perez, We welcomed four time Grammy Award, winning rock band Kings of Leon to the roster.
Speaker Change: We acquired the catalogs are four members of legendary RMB and pop vocal group the spinners, who were inducted into the rock and Roll Hall of Fame in November.
Golnar Khosrowshahi: We expanded our presence in emerging markets this year, in conjunction with our partner, Paparabia. We added the catalogue of Cairo-based content production and distribution company, Ari Media, which included over 6,000 recordings and compositions. We also secured the Master in Publishing Rights for the catalogue of Egyptian rap duo El Saweri. We announced the acquisition of and joint venture with Saudi Arabian hip-hop label Mashreq. And in January, we announced a deal with Intamusica, the label, publisher, and production house of Lebanese pop star Nancy Ajram, known as the Queen of Arab Pop, to bring her full catalog to Reservoir.
Speaker Change: We expanded our presence in emerging markets. This year in conjunction with our partner pop Arabia, We added the catalog of Cairo based content production and distribution company <unk> media, which included over 6000 recordings and composition. We also secured the master and publishing rights for the catalog of Egyptian rap duo L salaries.
Speaker Change: We announced the acquisition of a joint venture with Saudi Arabia, and hip hop label Mashraq and in January we announced the deal with Intermune Zika the label publisher and production House of <unk> Pops Darden NCR from known as the Queen of Arab pop to bring her full catalog to reservoir Goldman.
Golnar Khosrowshahi: The Goldman Sachs 2024 Music in the Air report stated emerging markets accounted for 60% of net subscriber additions in 2023 and are expected to make up 70% of additions by 2030. These new subscribers are expected to grow emerging markets revenues to 22% of global streaming revenue by 2030. This anticipated growth reinforces our investments in these markets. And we were also the new home of artists and songwriters who are reshaping today's music landscape, one hit at a time, including Steph Jones, who is one of the co-writers of Sabrina Carpenter's hit record, Espresso, which has already been dubbed the Song of the Summer by outlets like Time, Business Insider, Pitchfork, Vox, Nylon, and more.
Speaker Change: Goldman Sachs 2020 for music in the Air report stated emerging markets accounted for 60% of net subscriber additions in 2023 and are expected to make up 70% of additions by 2030.
Speaker Change: These new subscribers are expected to grow emerging markets revenues to 22% of global streaming revenue by 2030. This anticipated growth reinforces our investments in these markets.
Speaker Change: And we were also the new home of artists and songwriters who are reshaping todays music landscape one hit at a time, including Steph Jones, who is one of the co writer of Sabrina Carpenters hit record espresso, which has already been dubbed the song of the summer by outlets like time business Insider Pitchfork box <unk>.
Golnar Khosrowshahi: And we signed viral rapper Armani White to a publishing deal. Armani's popularity rose meteorically with his global hit, Billie Eilish, and his star has only continued to rise with follow-up releases, prominent sync placements, and performances on stage and screen.
Speaker Change: <unk> and more.
Speaker Change: And we signed viral wrapper Armani white to a publishing deal our money's popularity rose meteoric Lee with his global hit Billy Irish and his star has only continued to rise with follow up releases prominence in placements and performances on stage and screen.
Golnar Khosrowshahi: We look to build on the success of our fiscal 2024 with the addition of more genre-defining artists while helping to foster the next generation of creators. Our pipeline remains robust with over a billion dollars in consideration, and as Jim will discuss, we are in a solid financial position to continue executing on transactions where we see the greatest ROI. We have the right tools and teams to drive organic growth from our existing catalog, and we will continue to make technology investments to help us better understand our data, usage trends, and revenue capture. With that, I'd like to turn the call over to Jim to discuss our fourth quarter and fiscal year results, as well as our fiscal 2025 guidance, in greater detail. Jim?
We look to build on the success of our fiscal 2024 with the addition of more genre defining artist while helping to foster the next generation of creators our pipeline remains robust with over $1 billion in consideration and as Jim will discuss we are in a solid financial position to continue executing on transaction.
Jim: Where we see the greatest ROI, we have the right tools and team to drive organic growth from our existing catalog and we will continue to make technology investments to help us better understand our data usage trends and revenue capture.
Speaker Change: With that I'd like to turn the call over to Jim to discuss our fourth quarter and fiscal year results as well as our fiscal 2025 guidance in greater detail Jim.
Jim Heindlmeyer: Thank you, Golnar, and good morning, everyone. We closed out our fiscal year 2024 in a position of strength, with double-digit top-line growth across both segments of the business. We also made many acquisitions and signed numerous artists and songwriters over the course of the fiscal year, which we believe will be a healthy source of future revenue growth. Let's start with the fourth quarter.
Jim: Thank you Omar and good morning, everyone. We closed out our fiscal year 2024, and a position of strength with double digit topline growth across both segments of the business. We also made many acquisitions and so on numerous artisan songwriters over the course of the fiscal year, which we believe will be a healthy source of future revenue growth.
Jim Heindlmeyer: Revenue for the fourth fiscal quarter was $39.1 million, which was a 12% increase compared to the fourth quarter of fiscal 2023, driven by strong growth in both segments and highlighted by 14% growth in the 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 16% versus the prior year quarter. Our depreciation and amortization costs increased year over year due to our continued catalog acquisition. Company administration expenses saw a 19% increase from the prior year.
Speaker Change: Let's start with the fourth quarter.
Speaker Change: Revenue for the fourth fiscal quarter was $39 1 million, which was a 12% increase compared to the fourth quarter of fiscal 2023, driven by strong growth in both segments and highlighted by 14% growth in the music publishing segment inclusive of the acquisition of various Catwalks.
Speaker Change: With respect to our operating expenses for the quarter, our overall cost of revenue increased 16% versus the prior year quarter, our depreciation and amortization cost increased year over year due to our continued catalog acquisitions.
Speaker Change: Any administration expenses saw a 19% increase from the prior year.
Jim Heindlmeyer: From an operating performance perspective, in the fourth quarter, WIBDA increased 5% year-over-year to $15.1 million, and adjusted EBITDA increased 6% to $16 million. The increase in adjusted EBITDA in the fourth quarter was largely driven by stronger revenue, particularly performance and digital within the publishing segment, but was also partially offset by higher administrative expenses from our artist management business. Interest expense was $5.2 million for the quarter compared to $4.2 million in the same period last year.
Speaker Change: From an operating performance perspective in the fourth quarter, OIBDA increased 5% year over year to $15 1 million.
Speaker Change: Adjusted EBITDA increased 6% to $16 million increase in adjusted EBITDA in the fourth quarter was largely driven by stronger revenue, particularly in performance in digital within the publishing segment was also partially offset by higher administrative expenses from our artist management business.
Speaker Change: Interest expense was $5 2 million for the quarter compared to $4 2 million in the same period last year.
Jim Heindlmeyer: Net income for the fourth quarter of fiscal 2024 was $2.9 million versus $2.3 million in the fourth quarter of fiscal 2023. This resulted in diluted earnings per share for the quarter of 4 cents, which is the same as the prior year period.
Speaker Change: Net income for the fourth quarter of fiscal 2024 was $2 9 million versus $2 3 million in the fourth quarter of fiscal 2023. This resulted in diluted earnings per share for the quarter of <unk>, which is the same as the prior year period.
Jim Heindlmeyer: Moving to our full fiscal year 2024 results, revenue came in at $144.9 million, an 18% year-over-year increase and above the top end of our guidance range. This beat was the result of strong performance in both the music publishing and recorded music segments, which posted growth of 15% and 22%, respectively. Turning to our operating expenses for fiscal 2024, our overall cost of revenue saw a 16% increase from fiscal 2023. This increase is attributed to a higher revenue base resulting from acquisitions and value enhancement efforts and a change in the mix of revenue by type within the segment. As Golnar mentioned, we have made some investments in AI tools and machine-based learning over the past several quarters and expect to continue to do so, although the level of investment will fluctuate.
Speaker Change: Moving to our full fiscal year 2024 results revenue came in at $144 9 million, an 18% year over year increase and above the top end of our guidance range.
Speaker Change: <unk> was the result of strong performance in both the music publishing and recording music segment, which posted growth of 15% and 22% respectively.
Speaker Change: Turning to our operating expenses for fiscal 2024, our overall cost of revenue saw a 16% increase from fiscal 2023. This increase is attributed to a higher revenue base, resulting from acquisitions and value enhancement efforts and a change in the mix of revenue by type within the segments as Goldman mentioned, we've made some invest.
Speaker Change: And so the AI tools and machine based learning over the past several quarters and expect to continue to do so although the level of investment will fluctuate.
Jim Heindlmeyer: Administration expenses for fiscal 2024 increased 28% from the prior year to $39.8 million, primarily due to a write-off of recoupable legal expenses and return fees and inflationary cost increases. WIBDA in fiscal 2024 increased 15% year-over-year to $49.6 million, while adjusted EBITDA grew 20% to $55.6 million. These increases were largely from higher revenues across the business and effectively managing operating expenses. As a reminder, we have reconciliations for these metrics in our earnings press release and 10-K filing.
Speaker Change: Administrative.
Speaker Change: <unk> expenses for fiscal 2024 increased 28% from the prior year to $39 8 million, primarily due to a write off of Recoupable equal expenses I'm sure in fees and inflationary cost increases.
In fiscal 2024 increased 15% year over year to $49 6 million, while adjusted EBITDA grew 20% to 55 6 million. These increases were largely from higher revenues across the business and effectively managing operating expenses as a reminder, we have reconciliations for these.
Speaker Change: Metrics in our earnings press release, and 10-K filings.
Jim Heindlmeyer: Our interest expense was $21.1 million for the full fiscal year, which was an increase of 43% compared to $14.8 million last year. This increase was largely the result of a higher debt balance due to the use of funds and acquisitions of music catalogs and writer signings, an increase in SOFR, as well as interest paid in connection with the settlement of a royalty dispute. Net income for fiscal 2024 came in at $800,000 versus $2.8 million last year.
Speaker Change: Our interest expense was $21 1 million for the full fiscal year, which was an increase of 43% compared to $14 8 million last year.
Speaker Change: This increase was largely the result of a higher debt balance due to the use of funds and acquisitions of music catalogs underwriters signings and increase in sulfur as well as interest paid in connection with the settlement of a royalty dispute.
Speaker Change: Net income for fiscal 2024 came in at 800000 versus $2 8 million last year. The decrease in net income for the year was due to losses on the fair value of interest rate swaps and the write off of Recoupable legal fees and increased interest expense. However, those factors were partially offset by a decrease in income tax expense and improved.
Jim Heindlmeyer: The decrease in net income for the year was due to losses on the fair value of interest rate swaps, the write-off of recoupable legal fees, and increased interest expense. However, those factors were partially offset by a decrease in income tax expense and improved operating income.
Jim Heindlmeyer: This resulted in diluted earnings per share for the year of $0.01 compared to $0.04 per share for fiscal 2023. Lastly, our weighted average diluted outstanding share count for the full year was 65.3 million. Turning to our segment breakdown for the fourth quarter, music publishing generated revenue of $26.4 million in the quarter, which represents a 14% increase when including acquisitions made in Q4 versus the same period last year. Our performance revenue increased $3.2 million, or 73%, and digital revenue increased $1.3 million, or 11%, to $13 million.
Speaker Change: Operating income.
Speaker Change: This resulted in diluted earnings per share for the year of one <unk> compared to <unk> <unk> per share for fiscal 2023.
Speaker Change: Lastly, our weighted average diluted outstanding share count for the full year is $65 3 million.
Jim Heindlmeyer: Synchronization revenue in the publishing segment totaled $3.6 million, a 14% decrease from the fourth quarter of last year. This was primarily due to the writer and actor strikes last fall, which caused production delays in the television and film industries.
Speaker Change: Turning to our segment breakdown for the fourth quarter music publishing generated revenue of $26 4 million in the quarter, which represents a 14% increase when including acquisitions made in Q4 versus the same period last year.
Speaker Change: Our performance revenue increased $3 2 million or 73% and digital revenue increased $1 3 million or 11% to $13 million.
Speaker Change: Synchronization revenue in the publishing segment totaled $3 6, Million% to 14% decrease from the fourth quarter of last year. This is primarily due to the writers and actors strikes last fall, which caused production delays in the TV and film industries.
Jim Heindlmeyer: Mechanical revenue within the publishing segment posted an 11% decrease year-over-year to $1.2 million. Other revenue within the publishing segment was $1 million, a decrease of 35% compared to the prior year period, which included one-time revenue from the FIFA World Cup. The recorded music segment generated $11.2 million in revenue in the fourth quarter, representing an increase of 3% versus the prior year quarter. Digital revenue within the recorded segment increased 9%, primarily due to recent price increases and subscriber growth at DSPs. Physical revenue decreased 34% largely due to the release of De La Sol's album, Three Feet High and Rising, in Q4 of fiscal 2023.
Speaker Change: <unk> revenue within the publishing segment posted an 11% decrease year over year to $1 2 million.
Speaker Change: Other revenue within the publishing segment was $1 million, a decrease of 35% compared to the prior year period, which included onetime revenue from the FIFA World Cup.
Speaker Change: A recorded music segment generated $11 2 million in revenue in the fourth quarter, representing an increase of 3% versus the prior year quarter.
Speaker Change: Digital revenue within the recorded segment increased 9%, primarily due to the recent price increases and subscriber growth at <unk>.
Speaker Change: Physical revenue decreased 34% largely due to the release, Dave muscles album, three feet high and rising in Q4 of fiscal 2023, our synchronization revenue increased 147%. Thanks in part to strong 2024 Super Bowl activity.
Jim Heindlmeyer: Our synchronization revenue increased 147% thanks in part to strong 2024 Super Bowl sync activity. For the full year, our music publishing segment revenue rose 15% compared to the prior year. Our improvement is largely derived from higher royalty rates and price increases at multiple music streaming services, as well as the expansion of our catalogue through M&A. We saw a decrease in other revenue, which was impacted by the non-recurrence of World Cup-related activities that occurred during fiscal 2023, and we had slightly lower synchronization revenue due to the writer and actor strikes and outlays. Recorded music revenue increased 22% compared to fiscal 2023.
Speaker Change: For the full year, our music publishing segment revenue rose, 15% compared to the prior year.
Speaker Change: Our improvement is largely derived from higher royalty rates and price increases at multiple music streaming services as well as the expansion of our catalog through M&A. We saw a decrease in other revenue, which was impacted by the non recurrence of World Cup related activities that occurred during fiscal 2023, and we had slightly lower synchronization revenue.
Speaker Change: Due to the writer and actor strikes in Hollywood.
Speaker Change: Recorded music revenue increased 22% compared to fiscal 2023. This game from continued subscriber growth and music streaming services the price increases at several of those streaming services and the timing of our release schedule for physical product.
Jim Heindlmeyer: This came from continued subscriber growth at music streaming services, price increases at several of those streaming services, and the timing of our release schedule for fiscal products. Now, let's move on to our balance sheet. At year end, our credit facility was at roughly $335.8 million. We closed the year with total liquidity of $132.3 million, comprised of $18.1 million of cash on hand and $114.2 million available under our revolver, which gives us the capital to fund our strategic objective.
Jim Heindlmeyer: We ended the year with $330.8 million of total debt, which was net of $5 million of deferred financing costs, and thus, we maintained $312.7 million of net debt. That compares to net debt of $296.6 million as of last fiscal year end. Also of note, in February 2024, we entered into an additional interest rate swap of $50 million with an effective date of September 30, 2024. We will pay a fixed rate of 3.96 percent and receive a floating interest from our counterparty based on SOFR.
Speaker Change: Let's move onto our balance sheet at year end, our credit facility was at roughly $335 8 million. We closed the year with total liquidity of $132 3 million comprised of $18 1 million of cash on hand, and $114 $2 million available under our revolver, which gives us the capital to fund.
Speaker Change: Our strategic objectives.
Speaker Change: We ended the year with $330 8 million of total debt, which was net of $5 million of deferred financing costs and thus we maintained $312 7 million of net debt that compares to net debt of $296 6 million as of last fiscal year end.
Speaker Change: Also of note in February 2024, we entered into an additional interest rate swap of $50 million with an effective date of September 32024, we will pay a fixed rate of 396% and receive a floating interest from our counterparty based on silver.
Jim Heindlmeyer: We're comfortable with our debt levels, revolver, and cash on hand to continue to fund both the business and any acquisitions we choose to make. This past fiscal year was remarkable for Reservoir, with multiple unique opportunities to drive organic revenue generation through our value enhancement efforts. We executed several immediately accretive deals while exercising prudent cost management despite an inflationary environment. Turning to the 2025 fiscal year, we expect revenue to be in the range of $148 million to $152 million and adjusted EBITDA to be in the range of $58 million to $61 million.
Speaker Change: We're comfortable with our debt levels revolver and cash on hand to continue to fund both the business and any acquisitions, we choose to make.
Speaker Change: This past fiscal year was remarkable for reservoir with multiple unique opportunities to drive organic revenue generation through our value enhancement efforts, we executed several immediately accretive deals while exercising prudent cost management, despite an inflationary environment.
Turning to the 2025 fiscal year, we expect revenue to be in the range of $148 million to $152 million and adjusted EBITDA to be in the range of 58 million to $61 million in ESCO and I said, we have a strong pipeline of potential acquisitions, although we're in a solid financial position to continue executing transactions.
Jim Heindlmeyer: And, as Golnar said, we have a strong pipeline of potential acquisitions and are in a solid financial position to continue executing transactions where we see the greatest ROI. With that, I'll now pass the call back to Golnar.
Speaker Change: Where we see the greatest ROI with that I'll now pass the call back to Golar.
Golnar Khosrowshahi: Thank you, Jim. We are entering the 2025 fiscal year with a strong financial foundation and a robust portfolio of assets. Our financial guidance reflects our confidence in both driving organic growth through our value enhancement efforts and capitalizing on the projected growth of the music industry. We will continue to partner with our roster of award-winning creators to bring their bodies of work to listeners around the world and look forward to playing an important role in the future of music. With that, we will now open the line for questions.
Golar: Thank you Jim we are entering the 2025 fiscal year with a strong financial foundation and a robust portfolio of assets our financial guidance reflects our confidence in both driving organic growth with our value enhancement efforts and capitalizing on the projected growth of the music industry. We will continue to partner with our roster of award winner.
Golar: <unk> creators to bring their bodies of work to listeners around the world and look forward to playing an important role in the future of music with that we will now open the line for questions.
Operator: Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again.
Speaker Change: Thank you, ladies and gentlemen to ask a question you will need to press star one on your telephone and wait plan name to be announced to withdraw your question simply press Star One again, please standby, while we compile the Q&A roster.
Operator: Please stand by while we compile the Q&A roster. Now, the first question coming from the line of the Gripen Bus with B Raleigh Security. C-Line is open.
Speaker Change: Now first question coming from the line of Griffin boss with B Riley Securities. Your line is open.
Gripen Bus: Hi, good morning. Thanks for taking my questions.
Griffin Boss: Hi, good morning, Thanks for taking my questions. So to start off you paid down $11 5 million of debt. It's nice to see the net leverage come down a bit was there anything driving that decision other than just typical capital allocation decisions.
Gripen Bus: So to start off, you paid down $11.5 million in debt. It's nice to see the net leverage come down a bit. Was there anything driving that decision other than just typical capital allocation decisions? So, I guess, said differently, did anything – did that have anything to do with what you're seeing on the catalog acquisition side? Maybe not as many attractive opportunities or higher multiples or getting outbid in certain transactions.
Griffin Boss: I guess said differently did anything does that have anything to do with what youre seeing on the catalog acquisition side.
Griffin Boss: Maybe not as many attractive opportunities or higher multiples or getting outbid in certain transactions just any more color you could provide on that would be helpful.
Golnar Khosrowshahi: Sure. Thanks for the question, Griffin. So, really, it just had to do with our ongoing cash management and management of our balance sheet. It had nothing to do with deal flow or a shortage of opportunities there. It's really just decisions that we make all the time with respect to capital allocation.
Griffin Boss: Sure. Thanks for the question Griffin, So really just had to do with our ongoing cash management management of our balance sheet.
Griffin Boss: It had nothing to do with deal flow or.
Griffin Boss: A shortage of opportunities there.
Griffin Boss: It's really just decisions that we make all the time with respect to capital allocation.
Gripen Bus: Okay, got it. And then, Golnar, did you, just on that front, say the pipeline is a billion now? Is that down from the two billion from last quarter? Did I hear that right? That's correct. Okay, I got it. And then just, is there any color you can give on, you know, your M&A outlook for fiscal year 25, or are there any, do you have any allocation plans for catalog acquisition or royalty advances that you can provide?
Speaker Change: Okay got it and then.
Golar did you just on that front did you say the pipeline is is.
Speaker Change: Billion now.
Speaker Change: Is that down from the $2 billion from last quarter did I hear that right Thats correct. Okay.
Speaker Change: Okay got it and then just is there any color you can give on your.
Speaker Change: Your M&A outlook for fiscal year, 'twenty five or are there any do you have any any allocation plans for for Kellogg acquisition of royalty.
Golnar Khosrowshahi: We're very optimistic about the deal flow. The pipeline is quite robust.
Speaker Change: Answers that you can you can provide.
We're very optimistic about the deal flow of the pipeline is quite robust we have a few very interesting off market opportunities that are available to us and we're excited about that.
Golnar Khosrowshahi: We have a few very interesting off-market opportunities that are available to us, and we're excited about that. So I think it's very much business as usual there, tapping into our expertise and being able to execute on these off-market opportunities. And I'm generally quite optimistic about what that pipeline looks like. I think we continue to see assets trading in the mid-to-high teens, and we are obviously executing well below that, and that's a good position to be in.
Speaker Change: So I think it's very much business as usual there.
Speaker Change: Tapping into our expertise and being able to execute on these off market opportunities.
Speaker Change: And I'm generally quite optimistic about what that pipeline looks like I think we continue to see assets trading.
Speaker Change: In the mid to high teens, and we are obviously executing well below that and.
That's a good position to be in for us.
Gripen Bus: Great. Okay, thanks, Golnar. And if I could just squeeze one more in, coming off a strong year in both publishing and on the recorded side, when you look at the top line growth rate in your guide for fiscal year 25, how are you seeing that breakdown between the two segments? And is there a level of caution built into that guide, given the recent Spotify bundling news?
Speaker Change: Okay.
Speaker Change: Great. Okay, Thanks, and if I could just squeeze one more in.
Speaker Change: Coming off a strong year in both publishing and on the recorded side when you look at the topline growth rate.
Speaker Change: In your guide for fiscal year 'twenty five how are you seeing that breakdown between the two segments.
Speaker Change: And is there a level of caution built into that guide given the recent Spotify bundling news.
Golnar Khosrowshahi: Yeah, I mean, certainly we factor all of those things into our guidance, you know, in addition to the issue with Spotify and how they're treating the bundle. We have things that we look at like the fact that we released De La Soul's entire catalog during fiscal 24 and, you know, how that will impact us as we move into the next fiscal year. Obviously, that's not something that happens every year.
Speaker Change: Yes, I mean, certainly we factor.
Speaker Change: All of those things into our guidance in addition to.
Speaker Change: Two the issue with Spotify and how they're treating the bundle we have things that we look at like the fact that we released <unk> entire catalog during fiscal 'twenty four.
Speaker Change: How that will impact us as we move into the next fiscal year, obviously thats not something that that is recurring every year.
Golnar Khosrowshahi: So we're constantly evaluating those types of one-off items that might be headwinds or, you know, in some years, maybe tailwinds with upcoming plans. And certainly, you know, I think there's a certain amount of conservatism that we operate with with respect to guidance until we get a little bit further into the year.
Speaker Change: So we're constantly evaluating those types of one off.
Speaker Change: Items that might be headwinds or some years, maybe tail winds with with upcoming plans.
Speaker Change: Certainly.
Speaker Change: There's there's.
Speaker Change: Certain amount of conservatism there.
Speaker Change: That we operate with with respect to guidance until we get a little bit further into the year.
Gripen Bus: Okay, understood. Thanks for taking my questions. I appreciate it.
Speaker Change: Okay understood. Thanks for taking my questions I appreciate it.
Operator: And as a reminder, to ask a question, please press star 1-1 on your telephone. And our next question, coming from the line of Richard Baldry with Roth Capital, your line is open. Thanks.
Speaker Change: Thank you.
Speaker Change: And as a reminder to ask a question. Please press star one on your telephone and our next question coming from the line of Richard Baldry with Roth Capital. Your line is open.
Richard Kenneth Baldry: Thanks. Can you dig a little deeper into the change in the pipeline from $2 billion to $1 billion? Are you sort of scrubbing the expected ROIs harder and just pushing them out? Or have a lot of deals just closed and gone in different directions? How do we think about that change over the last quarter?
Richard Kenneth Baldry: Thanks could you dig a little deeper into the change in the pipeline from 2 billion to one or are you sort of scrubbing.
Speaker Change: Expected rois harder than just pushing them out.
Speaker Change: A lot of deals just closed and gone in different directions, how do we think about that that change over the last quarter.
Golnar Khosrowshahi: I think there were a couple of larger deals that have moved, and we are still seeing sort of ample deal flow for us and our appetite, but that's really the dynamic. There is nothing more than that.
Speaker Change: I think there are a couple of larger deals that have.
Speaker Change: Move to and.
Speaker Change: We are still seeing sort of ample deal flow.
Speaker Change: For us and our appetite.
Speaker Change: But that's really the dynamic there nothing more than that.
Richard Kenneth Baldry: And then if you look to next year's full year guide, and I know there are some puts and takes to product cycles and launches and things, but you did organic growth of 8% in the fourth quarter, and 14% for the year. So taking down next year's outlook to 4%, can you talk about maybe how much conservatism you think is built into that? Or, you know, how much product cycles or one-off events drove upside to fiscal 24?
Speaker Change: And then.
Speaker Change: If you look to next year's full year guide and I know, there's some puts and takes to product cycles and launches and things, but you did organic growth of 8% in the fourth quarter 2014 for the year, So taking down next year's outlook to 4%.
Speaker Change: Can you talk about maybe how how much conservatism is built into that or.
Speaker Change: How much product cycles are one off events drove upside to fiscal 'twenty four.
Jim Heindlmeyer: Yeah, well, there's certainly a lot of detail that goes into answering that question. You know, I would say, I already mentioned the fact that, in Fiscal 24, we released Dala Soul's entire back catalog physically and digitally. That was, you know, a great source of revenue for us in Fiscal 24, and it will be an ongoing source of revenue, but not at that level. So that's one of the things we factor in.
Speaker Change: Yes, well, there's there's certainly a lot of detail that goes into to answering that question, but.
Speaker Change: I would say I already mentioned the fact that in fiscal 'twenty four we released <unk> entire back catalog physically and digitally that was.
Speaker Change: A great source of revenue for us in fiscal 'twenty, four and it will be an ongoing source of revenue, but not at that levels. So thats one of the things we factor and we've talked about the changes with Spotify and Theyre bundling Billboards estimated that will impact the industry at about $150 million a year.
Jim Heindlmeyer: We've talked about the changes with Spotify and their bundling. Billboard estimates that it will impact the industry at about $150 million a year, and, you know, we have factored that into our guide there. So there are certainly some one-off items that I guess I'd classify as headwinds for us as we go into Fiscal 25. And we certainly typically operate with, like I said before, a certain level of conservatism until we get to the September quarter, you know, halfway through our fiscal year and see where we are and update at that point.
Speaker Change: And we we.
Speaker Change: We have factored that into our guide there. So there is there is certainly some one off items that.
Speaker Change: I guess I would classify as headwinds for us as we go into fiscal.
Speaker Change: 25.
Speaker Change: <unk>.
Speaker Change: And we certainly typically operate with like I said before a certain level of conservatism until we get to really the September quarter halfway.
Speaker Change: Halfway through our fiscal year.
Speaker Change: And see where we are an update at that point.
Richard Kenneth Baldry: Then, and last one for me, if you look a little deeper into the AI and machine learning types of investments you're putting in, sort of curious, you know, do you think that's more of a revenue generator because of the ability to look for, I don't want to call it, you know, leakage in people who should be paying but aren't? Or do you think it's more of a cost saver in automating internal or back office functions? How do you think about the payoff for those investments?
Speaker Change: Then the last one for me if you look into a little deeper into the AI and machine learning types of investments you're putting in so I'm curious do you think that's more of a revenue generator because of the ability to look for.
Speaker Change: I call it the leakage in people, who should be paying but arent.
Speaker Change: Or do you think it's more of a cost saver and automating internal or back office functions.
How do you think about the payoff for those investments.
Golnar Khosrowshahi: I think it's a little bit of both. There are certainly efficiencies that are created, freeing up human resources, as we said. The other side of that is that we become better at licensing, we become better at the content that we are licensing and mining the catalog, and that certainly is a direct link to revenue generation. So we look at it really both ways insofar as the tools that we are implementing with existing platforms that we're using as well as new ones that we are assessing.
Speaker Change: I think it's a little bit of both there are certainly efficiencies that are created freeing up human resource as we said.
Speaker Change: The other side of that is that we become better at licensing we become better at the content that we are licensing in mining the catalog and that certainly is a direct link to revenue generation.
Speaker Change: So we look at it really both ways and so far as the tools that we are implementing with existing platforms that we're using as well as new ones that we are assessing.
Richard Kenneth Baldry: Okay, maybe last for me, you know, if interest rates are going to stay higher for longer with that keeps talking about, do you think that overall does sort of put a damper on the pace of M&A? Or are you seeing adequate ROI in the pipeline you're looking at to not really, you know, view that as a material intermediate-term headwind? Thanks.
Speaker Change: Okay, maybe last for me.
Speaker Change: Interest rates are going to stay in this higher for longer we think that keeps talking about do you think that overall does sort of put a damper on the peso M&A or are you seeing adequate ROI in the pipeline you are looking at to not really view that as a material.
Speaker Change: Intermediate term headwind thanks.
Golnar Khosrowshahi: Based on the pipeline and the targets that we are looking at and the diligence that we are doing at this time, we are still seeing opportunities that are giving us ample opportunity or ample return within that deal flow. So for the time being, we're not seeing any kind of change. Great, thanks, and congrats.
Speaker Change: Based on the pipeline and the targets that we're looking at and the diligence that we are doing at this time, we are still seeing opportunities that are giving us ample opportunity.
Speaker Change: <unk> return.
Speaker Change: Within that within that deal flow so for the time being we're not seeing any kind of change there.
Richard Kenneth Baldry: Great, thanks, and congrats on a good year.
Speaker Change: Great Thanks, and congrats on a good year.
Speaker Change: So much.
Operator: And I see there are no further questions in the queue at this time. I will now turn the call back over to Golnar Khosrowshahi for any closing remarks.
Speaker Change: Thank you.
Speaker Change: And I assume there are no further questions in the queue. At this time I will now turn the call back over to Goldman close roosa for any closing remarks.
Golnar Khosrowshahi: Thank you, Operator. We appreciate your interest in Reservoir Media. I wish to thank our talented team for their dedication and our roster of creators who entrust us with their life's work. We look forward to sharing our fiscal first quarter results with you later this summer.
Speaker Change: Thank you operator, we appreciate your interest in reservoir media I wish to thank our talented team for their dedication and to our roster of creators who entrust us with their life's work, we look forward to sharing our fiscal first quarter results with you later this summer. Thank you.
Operator: Thank you all for your participation, and you may now disconnect.
Speaker Change: Please go ahead Sir.
Carl: Carl Thank you all for your participation and you may now disconnect.
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