Q1 2025 Reservoir Media Inc Earnings Call

Jacqueline Marcus: However, there can be no assurance that our expectations, beliefs, and projections will result or be achieved. 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. 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.

However, there can be no assurance that our expectations beliefs, and projections will result or be achieved.

Operator: 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 can cause our actual results to differ materially from our expectations, beliefs, and projections described in today's discussion. 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: 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.

Speaker Change: Or future events, except to the extent required by applicable law.

Operator: In addition to financial results presented in accordance with the generally accepted accounting principles, we plan to present during this call certain financial measures that do not conform to U.S. gaps if we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliation of these non-DAP financial measures to the nearest comparable GAAP measures is included in our earnings press release.

Jacqueline Marcus: In addition to financial results presented in accordance with the Generally Accepted Accounting Principles, we plan to present during this call certain financial measures that do not conform to US 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. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release. I would now like to turn the call over to Golnar.

Speaker Change: In addition to financial results presented in accordance with generally accepted accounting principles.

Speaker Change: 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.

Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release, I would now like to turn the call over to Omar.

Operator: I would now like to turn the call over to Golnar.

Golnar Khosrowshahi: Thank you, Jackie. Good morning, everyone, and thank you for joining us today to review our results for the first quarter of fiscal year 2025. Just a few days ago, we marked Reservoir's third anniversary of our listing on NASDAQ. In this time, we have attracted an increasingly high caliber of talent and assets to the company while also maintaining our reputation as a partner of choice for those creators who already call Reservoir home.

Golnar Khosrowshahi: Thank you, Jackie. Good morning, everyone, and thank you for joining us today to review our results for the first quarter of fiscal year 2025. Just a few days ago, we marked Reservoir's third anniversary of our listing on the NASDAQ. In this time, we have attracted an increasingly high caliber of talent and assets to the company, while also maintaining our reputation as a partner of choice for those creators who already call Reservoir home. We continue to represent music in all corners of the world and have grown our team into an ever more global, diverse, and experienced group.

Omar: Thank you Jackie and good morning, everyone and thank you for joining us today to review our results for the first quarter of fiscal year 2025.

Speaker Change: Just a few days ago remarked reservoirs third anniversary of our listing on the NASDAQ and this time, we have attracted an increasingly high caliber of talent and assets to the company. While also maintaining our reputation as a partner of choice for those creators who already call reservoir huh.

Golnar Khosrowshahi: We continue to represent music in all corners of the world and have grown our team into an ever more global, diverse, and experienced group. And we have accomplished these foundations in concert with exceeding full-year revenue and adjusted EBITDA guidance and posting year-over-year organic growth every quarter since our listing. These last three years are evidence that we not only set goals for ourselves, but we also consistently achieve them. Reservoir has only just started its journey as a public company, and we believe we have significant future value to drive for all of our stakeholders as we move forward. We're off to a good start in fiscal 2025 and remain on track to, again, hit our annual targets.

Speaker Change: We continue to represent music in all corners of the world and have grown our team into an ever more global diverse and experienced group.

Golnar Khosrowshahi: And we have accomplished these foundations in concert with exceeding full year revenue and adjusted EBITDA guidance and posting year-over-year organic growth every quarter since our listing. These last three years are evidence that we not only set goals for ourselves, but we also consistently achieved them. Reservoir has only just started our journey as a public company, and we believe we have significant future value to drive for all of our stakeholders as we move forward. We're off to a good start in fiscal 2025 and remain on track to again hit our annual targets. For the first quarter, we posted total revenue of 34.3 million, which was up 8% when including our acquisition and up 6% on an organic basis when compared to the year-ago period.

Speaker Change: And we have accomplished these foundations in concert with exceeding full year revenue and adjusted EBITDA guidance and posting a year over year organic growth in every quarter since our listing.

Speaker Change: These last three years are evidence that we not only set goals for ourselves, but we also consistently achieve them reservoir has only just started our journey as a public company and we believe we have significant future value to drive for all of our stakeholders as we move forward.

Speaker Change: We're off to a good start in fiscal 2025 and remain on track to again hit our annual targets for the first quarter. We posted total revenue of $34 3 million, which was up 8% when including our acquisition and up 6% on an organic basis when compared to the year ago period at a segment level we saw.

Golnar Khosrowshahi: For the first quarter, we posted total revenue of $34.3 million, which was up 8% when including our acquisitions and up 6% on an organic basis when compared to the year-ago period. At a segment level, we saw strength in our music publishing business, which helped us drive a 25% increase in our adjusted EBITDA. Music publishing generated healthy top-line growth, particularly from digital and performance-based revenues, which benefited from price increases at multiple music streaming services, despite the reclassification of Spotify's primary subscription tier as a bundled service. We also saw a 17% gain in digital revenues for our recorded music business, driven by the continued growth of the DSBs.

Golnar Khosrowshahi: At a segment level, we saw strength in our music publishing business, which helped us drive a 25% increase in our adjusted EBITDA. Music publishing generated healthy top line growth, particularly from digital and performance-based revenues, which benefited from price increases at multiple music streaming services despite the reclassification of Spotify's primary subscription here as a bundle service. We also saw a 17% gain in digital revenues for a recorded music business driven by the continued growth of the DSPs. Synchronization revenue and recorded music grew 87% with some standout placements, including Shenato Connors' "Never Gets Old," in the trailer for The Watchers and Generation Access. One of Reservoir's unique strengths is our ability to not only build a diverse and high-quality catalog of assets, but also identify and partner with active songwriters and producers who are shaping the music landscape with chart-topping collaborations across genres.

Speaker Change: Strength in our music publishing business, which helped US drive a 25% increase in our adjusted EBITDA music publishing generated healthy top line growth, particularly from digital and performance based revenues, which benefited from price increases and at multiple music streaming services. Despite the reclassification of Spotify.

Speaker Change: Mary subscription tier of the bundled service.

Speaker Change: We also saw a 17% gain in digital revenues for a recorded music business driven by the continued growth of the DSP.

Golnar Khosrowshahi: Synchronization revenue in recorded music grew 87% with some standout placements, including Sinead O'Connor's Never Gets Old in the trailer for The Watchers and Generation X's Dancing with Myself in a Comcast ad. One of Reservoir's unique strengths is our ability to not only build a diverse and high-quality catalog of assets but also identify and partner with active songwriters and producers who are Reservoir writer Steph Jones continues to reach meteoric heights with her co-write of Sabrina Carpenter's Espresso, which many media outlets have deemed the song of the summer.

Speaker Change: <unk> revenue in recorded music grew 87% with some standout placements, including Sinead O'connor is never gets old and the trailer for the watchers and generation Xers dancing with myself and our Comcast at one of reservoirs unique strengths is our ability to not only build a diverse and high quality catalog of assets, but.

Speaker Change: Also identify and partner with active song writers and producers who are shaping the music landscape with chart topping collaborations across genres reservoir rider stuff Jones continues to reach media or times with her co right I'm, Sabrina carpenters, espresso, which many media outlets have deemed the song of the summer espresso held the number one.

Golnar Khosrowshahi: Reservoir writer Steph Jones continues to reach media of a kind, with her co-write of Sabrina Carpenter's "Espresso," which many media outlets have deemed the song of the summer. Espresso held the number one position on the UK Singles Chart for six weeks and also topped several US charts. Even more impressive, "Espresso" reached number one on Billboard's Global Excluding US Chart, which tied for the longest run at that spot this year, and it also sits at number six on the top ten global songs for the first half of 2024, calculated by Luminate. We also celebrate the success of Dua Lipa's third studio album, Radical Optimism, which featured Ali Tampo's Espresso, write what you're doing and falling forever.

Golnar Khosrowshahi: Espresso held the number one position on the UK Singles Chart for six weeks and also topped several US charts. Even more impressive, Espresso reached number one on Billboard's Global Excluding US chart, which tied for the longest run at that spot this year, and it also sits at number six on the Top 10 Global Songs for the first half of 2024, as calculated by Lumine. We also celebrate the success of Dua Lipa's third studio album, Radical Optimism, which features Ali Tampozzi's co-write Whatcha Doing and Falling Forever.

Speaker Change: Mission on the UK Singles chart for six weeks and also top several U S charts, even more impressive espresso reached number one on Billboard's Global Excluding U S chart, which tied for the longest run at that spot. This year and it also sits at number six on the top 10 global songs for the first half of 'twenty 'twenty four is calculated by illuminate.

Speaker Change: We also celebrated the success of do with Leap a third studio album radical optimism, which featured Alley Champ those east coast right, what you're doing and falling forever.

Golnar Khosrowshahi: The album debuted at number one on the UK album charts and number two on the Billboard 200. Reservoir songwriters Kings of Leon 9th studio album, Can We Please Have Fun, reached number two on the UK album charts and number seven on the US Top Rock and Alternative Albums charts. In addition to those I just mentioned, the work of multiple other reservoir affiliated writers landed in the top ten on the Billboard 200 this past quarter, including music by Shabuzie, Lou Combs, Gunna, Ariana Grande, and SZA. Our early investment in emerging markets, particularly in the Middle East and North Africa, gave us the opportunity to sign some of the most popular regional acts who are proving to be cross-border commercial successes.

Golnar Khosrowshahi: The album debuted at number 1 on the UK Album Charts and number 2 on the Billboard 200. Reservoir Songwriters' Kings of Leon 9th Studio Album, Can We Please Have Fun, reached number 2 on the UK Album Charts and number 7 on the US Top Rock and Alternative Albums Charts.

Speaker Change: Yellow debuted at number one on the U K album charts and number two on the Billboard 200.

Speaker Change: Reservoir songwriters Kings of Leon ninth studio album can we please have fun reached number two on the U K album charts and number seven on the U S top rock and alternative an alternative albums charts.

Golnar Khosrowshahi: In addition to those I just mentioned, the work of multiple other Reservoir-affiliated writers landed in the top 10 on the Billboard 200 this past quarter, including music by Shaboozie, Luke Combs, Gunna, Ariana Grande, and SZA. Our early investment in emerging markets, particularly in the Middle East and North Africa, gave us the opportunity to sign some of the most popular regional acts who are proving to be cross-border commercial successes For example, Champion, the latest album from Moroccan rap star Haliwa, included two singles that reached the number one and number two positions on Spotify's Top 50 Morocco chart.

Speaker Change: In addition to those I just mentioned the work of multiple other reservoir affiliated writers landed in the top 10 on the Billboard 200, this past quarter, including music by ship Uzi, Luke Combs, Ghana, Arizona Grande answer them.

Speaker Change: Our early investment in emerging markets, particularly in the Middle East and North Africa gave us the opportunity to sign some of the most popular regional acts who are proving to be cross border commercial successes for example champion the latest album for Moroccan Rock Star Holywell included choose singles that reached the number.

Golnar Khosrowshahi: For example, Champion, the latest album from Moroccan rap star Halewa, included two singles that reached the number one and number two positions on Spotify's Top 50 Morocco chart. Both tracks also landed in the top ten on the ISPI's official Menna chart, North Africa, and made appearances on Billboard's Arabic Top 100. This past month, we also published the official anthem for the International Cricket Council's T20 World Cup 2024, "Out of This World" by Sean Paul and Kess, with several remixes, including one featuring Indian mega rap star Divine. The increasing global demand for music from emerging markets around the world reiterates our commitment to this growing market and to further expanding our reputation as the partner of choice by today's leading artists in the region.

Speaker Change: One and number two positions on Spotify is top 50, Morocco chart.

Golnar Khosrowshahi: Both tracks also landed in the top 10 on the IFPI's official MENA chart, North Africa, and made appearances on Billboard's Arabic Top 100. This past month, we also published the official anthem for the International Cricket Council's T20 World Cup 2024, Out of This World by Sean Paul and Kess with several remixes, including one featuring Indian mega-rap star Divine.

Speaker Change: Those tracks also landed in the top 10 on the I S. P is official Menno chart, North Africa and made appearances on Billboards.

Speaker Change: Aerobic top 100.

Speaker Change: This past month, we also published the official anthem.

Speaker Change: For the International Cricket Council Che 20 World Cup 'twenty 'twenty four out of this world by Sean Paul in tests with several remixes, including one featuring Indian Mega Rob Starr Divine.

Golnar Khosrowshahi: The increasing global demand for music from emerging markets around the world reiterates our commitment to this growing market and to further expanding our reputation as the partner of choice by today's leading artists in the region. Turning our attention to new Reservoir signings, we recently announced three publishing deals I'd like to highlight. We added the award-winning singer and songwriter, Rabel, to our roster, with the Huffington Post calling him one of pop's unsung talents.

Speaker Change: The increasing global demand for music from emerging markets around the world Reiterates, our commitment to this growing market and to further expanding our reputation as the partner of choice by today's leading artists in the region.

Golnar Khosrowshahi: Turning our attention to new reservoir signings, we recently announced three publishing deals I'd like to highlight. We added the award-winning singer and songwriter Ravel to our roster. With the Huffington Post calling him one of pop's unsung talent, Ravel has co-written for Pink, Cash-Up, Backstreet Boys, and Pentatonix among others. Earlier this month, we announced the addition of platinum-selling songwriter and producer Aaron Zuckerman to our roster. The deal includes Aaron's recent co-write "White Club" by young Ravian Shnaya Twain. He has also partnered with today's top artists across genres, such as Lil Wayne, Bebe Rexha, MGK, Hunter Hayes, and Travis Barker.

Golnar Khosrowshahi: Rabel has co-written for Pink, Kesha, Backstreet Boys, and Pentatonix, among others. Earlier this month, we announced the addition of platinum-selling songwriter and producer Aaron Zuckerman to our roster. The deal includes Aaron's recent co-write, White Claw, by Yung Gravy and Shania Twain. He has also partnered with today's top artists across genres, such as Lil Wayne, Bebe Rexha, MGK, Hunter Hayes, and Travis Barker. And third, songwriter-producer Lewis Thompson joined our roster. With 4 billion streams and 9 top 10 UK hits to his name, Lewis has collaborated with some of the biggest names in pop, and his works have been nominated for the Brit Awards Song of the Year and Ivor Novello PRS for Music Most Performed Work.

Speaker Change: Turning our attention to new reservoir signings, we recently announced three publishing deals I'd like to highlight we added the award winning singer and songwriter Revel to our roster with the Huffington post calling him one of pumps unsung talents Regal has co written for Pink ketchup, Backstreet boys and Petro tonics among others.

Speaker Change: Earlier this month, we announced the addition of platinum selling song writer and producer Aaron's Zuckerman to our roster. The deal includes Aaron's recent co write white claw by young Arabian Schneier Twain. He has also partnered with todays top artists across genres, such as little way in DB Rexam M. G K Hunter Hayes and Travis Barker and.

Golnar Khosrowshahi: And third, songwriter producer, Louis Thompson joined our roster with four billion streams and nine top 10 UK hits to his name. Louis has collaborated with some of the biggest names in pop, and his works have been nominated for the Brit Awards Song of the Year, and I've worn a Velo PRS for music's most performed work. The strength of our portfolio of assets is reflected in our first quarter financial results and is a product of the robust due diligence process we undertake prior to making an offer. As Jim will discuss, our business generates a healthy, predictable cash flow that allows us to continue to invest in our operations, people, and creators.

Speaker Change: Third song writer producer Louis Thompson joined our roster with 4 billion streams of nine top 10 U K hits to his name Lewis have collaborated with some of the biggest names in Pompe and his words have been nominated for the Brit Awards song of the year and I've learned a L. O P. R. S for music most perform.

Speaker Change: Work.

Golnar Khosrowshahi: The strength of our portfolio of assets is reflected in our first quarter financial results and is a product of the robust due diligence process we undertake prior to making an offer. As Jim will discuss, our business generates a healthy, predictable cash flow that allows us to continue to invest in our operations, people, and creators. With that said, I'd like to turn the call over to Jim to discuss our first quarter numbers in greater detail.

Speaker Change: The strength of our portfolio of assets is reflected in our first quarter financial results and as a product of the robust due diligence process. We undertake prior to making an offer as Jim will discuss our business generates a healthy predictable cash flow that allows us to continue to invest in our operations.

Speaker Change: People and creators with that I'd like to turn the call over to Jim to discuss our first quarter numbers in greater detail Jim.

Operator: With that, I'd like to turn the call over to Jim to discuss our first quarter numbers in greater detail.

Jim Heindlmeyer: Jim? Thank you, Golnar, and good morning, everyone. Our results this quarter were in line with our internal expectations and are a testament to the strong portfolio of assets we have at Reservoir. Revenue for the first fiscal quarter was $34.3 million, a 6% year-over-year improvement on an organic basis, and an 8% increase when including acquisitions. This was led by the 15% growth in our music publishing segment, which offset the 7% decrease we had in recorded music. Turning to our operating expenses, the total cost of revenue decreased 1% compared to the prior year quarter, while our administration expenses and amortization and depreciation costs grew 6% and 5%, respectively, versus the prior year.

Jim Heindlmeyer: Thank you, Golnar, and good morning, everyone. Our results this quarter were in line with our internal expectations and are a testament to the strong portfolio of assets we have at Reservoir. Revenue for the first fiscal quarter was $34.3 million, a 6% year-over-year improvement on an organic basis and an 8% increase when including acquisitions. This was led by 15% growth in our music publishing segment, which offset the 7% decrease we had in recorded music.

Jim: Thank you Donna and good morning, everyone.

Jim: Our results this quarter were in line with our internal expectations and are a testament to the strong portfolio of assets, we have a reservoir.

Jim: Revenue for the first fiscal quarter was $34 3, million% to 6% year over year improvement on an organic basis, and an 8% increase when including acquisitions. This was led by the 15% growth in our music publishing segment, which offset the 7% decrease we had in recorded music.

Jim Heindlmeyer: Turning to our operating expenses, the total cost of revenue decreased 1% compared to the prior year quarter, while our administration expenses and amortization and depreciation costs grew 6% and 5%, respectively, versus the prior year. Looking at operating performance for the first quarter, OIBDA was $11.3 million, an increase of 23% year-over-year, and adjusted EBITDA was up 25% to $12.6 million compared to our Q1 in The increase in OIVDA and adjusted EBITDA was due to effective cost management and efficiencies achieved on higher revenues for the quarter.

Jim: Turning to our operating expenses, the Tony cost of revenue decreased 1% compared to the prior year quarter, while our administration expenses.

Jim: <unk> and depreciation costs grew 6% and 5% respectively versus the prior year.

Jim Heindlmeyer: Looking at operating performance for the first quarter, the Web deal was $11.3 million, an increase of 23% year-over-year, and adjusted EBITDA was up 25% to $12.6 million compared to our Q1 in fiscal 2024. The increase in Olivia and adjusted EBITDA were due to effective cost management and efficiencies achieved on higher revenues for the quarter. Interest expense was $5.1 million for the quarter versus $4.7 million in the prior year, driven primarily by an increase in silver from the prior year quarter to the current year quarter. Net loss for the first quarter was approximately 500,000, compared to net income of 200,000 in the first quarter of fiscal 2024.

Jim: Looking at operating performance through the first quarter OIBDA was $11 3 million, an increase of 23% year over year and adjusted EBITDA was up 25% to $12 6 million compared to our Q1 and fiscal 2024.

Jim: The increase in OIBDA and adjusted EBITDA were due to effective cost management and efficiencies achieved on higher revenues for the quarter.

Jim Heindlmeyer: Interest expense was $5.1 million for the quarter versus $4.7 million in the prior year, driven primarily by an increase in SOFR from the prior year quarter to the current year quarter. Net loss for the first quarter was approximately $500,000 compared to net income of $200,000 in the first quarter of fiscal 2024. The decrease was primarily due to a quarterly loss on the fair value of our interest rate at $2,000. This resulted in a diluted loss per share for the quarter of one cent compared to zero in the prior year quarter. Lastly, our weighted average diluted outstanding share count during the quarter was $65 million. Now, let's dive into our Segma review for the quarter.

Jim: Interest expense was $5 1 million for the quarter versus $4 7 million in the prior year, driven primarily by an increase in silver from the prior year quarter to the current year quarter.

Jim: Net loss for the first quarter was approximately 500000 compared to net income of 200000 in the first quarter of fiscal 2024. The decrease was primarily due to a quarterly loss on the fair value of our interest rate hedges.

Jim Heindlmeyer: The decrease was primarily due to a quarterly loss on the fair value of our interest rate edges. This resulted in the diluted loss per share for the quarter of 1 cent compared to zero in the prior year quarter. Lastly, our weighted average diluted outstanding share count during the quarter was 65 million.

Jim: This resulted in a diluted loss per share for the quarter of one cents compared to zero in the prior year quarter Lastly, our weighted average diluted outstanding share count during the quarter was 65 million.

Jim Heindlmeyer: Now let's dive into our segment review for the quarter. Music publishing had a 15% increase in revenue versus the prior year quarter at $24 million, and was driven by acquisitions of catalogs and revenue from existing catalogs, which benefited from price increases at multiple music streaming services and led to increases in digital revenue, performance revenue, and mechanical revenue. Moving to our recorded music segment, we had a 7% decline to 9.6 million in revenue compared to our Q1 last year. Last spring, in addition to bringing Dailassoles' catalog to digital platforms for the first time ever, we also released their music to fans on vinyl, CD, and cassette formats, which caused the significant shift in fiscal revenue in the prior year quarter.

Jim: Now, let's dive into our segment review for the quarter.

Jim Heindlmeyer: Music publishing had a 15% increase in revenue versus the prior year quarter, at $24 million, and this was driven by acquisitions of catalogs and revenue from existing catalogs, which benefited from price increases at multiple music streaming services and led to increases in digital revenue, performance revenue, and mechanical revenue. Moving to our recorded music segment, we had a 7% decline to $9.6 million in revenue compared to our Q1 last year. Last spring, in addition to bringing De La Soul's catalog to digital platforms for the first time ever, we also released their music to fans on vinyl, CD, and cassette formats, which caused a significant shift in physical revenue in the prior year quarter.

Speaker Change: Music publishing at a 15% increase in revenue versus the prior year quarter of $24 million and was driven by acquisitions of catalogs and revenue from existing catalogs, which benefited from price increases multiple music streaming services and led to increases in digital revenue.

Speaker Change: <unk> revenue I'm, a chemical revenue.

Speaker Change: Moving to our recorded music segment, we have a 7% decline to $9 6 million in revenue compared to Q1 last year.

Speaker Change: Last spring in addition to bringing <unk> catalog to digital platforms for the first time ever. We also released their music defense on vinyl CD and cassette formats, which caused a significant shift in physical revenue in the prior year quarter.

Jim Heindlmeyer: The resulting decrease in physical revenue in this quarter was offset by an 87% increase in synchronization revenue, a remarkable metric in the face of lingering impacts of the actor and writer strikes from last year. We also saw 17% growth in digital revenue, due in part to price increases at multiple music streaming services, as well as an increase in neighboring rights rates.

Jim Heindlmeyer: The resulting decrease in physical revenue in this quarter was offset by an 87% increase in synchronization revenue, a remarkable metric in the face of the lingering impacts of the actor and writer strikes from last year. We also saw 17% growth in digital revenue, due in part to price increases at multiple music streaming services, as well as an increase in neighboring rights revenue. [inaudible] As of June 30, 2024, cash provided by operating activities was $8.6 million, which was an improvement of $9.4 million compared to the year-ago quarter.

Speaker Change: The resulting decrease in physical revenue in this quarter was offset by an 87% increase in synchronization revenue a remarkable metric in the face of lingering impacts of the actor and writer strikes from last year. We also saw 17% growth in digital revenue due in part to price increases at multiple news extreme.

Speaker Change: <unk> services as well as an increase in neighbouring rights revenue.

Jim Heindlmeyer: Ltd. Turn to our balance sheet. As of June 30, 2024, cash provided by operating activities was $8.6 million, which was an improvement of $9.4 million compared to the year-ago quarter. We had total available liquidity of $137.6 million, consisting of $16.4 million of cash on hand and $121.2 million available under our revolver. We ended the quarter with total debt of $324.1 million, which was net of $4.7 million of deferred financing costs, and thus we maintained $307.8 million of net debt. That comparison net debt of $312.7 million as of March 31, 2024. Consistent with our prior first quarter calls, we are maintaining our full year revenue guidance range, which stands at $148 million to $152 million and, at the midpoint, implies growth of 4% versus fiscal 2024.

Speaker Change: Turning to our balance sheet.

Speaker Change: As of June 32024, cash provided by operating activities was $8 6 million, which was an improvement of $9 4 million compared to the year ago quarter.

Jim Heindlmeyer: We had total available liquidity of $137.6 million, consisting of $16.4 million of cash on hand and $121.2 million available under our revolver. We ended the quarter with total debt of $324.1 million, which was net of $4.7 million of deferred financing costs. And thus, we maintained $307.8 million of net debt. That compares to net debt of $312.7 million as of March 31, 2024. Consistent with our prior first quarter calls, we are maintaining our full-year revenue guidance range, which stands at $148 million to $152 million and, at the midpoint, implies growth of 4% versus fiscal 2024.

Jim: We have total available liquidity of $137 6 million consisting of $16 4 million of cash on hand, and $121 2 million available under our revolver.

Jim: We ended the quarter with total debt of $324 1 million, which was net of $4 7 million of deferred financing costs and thus we maintained $307 8 million of net debt.

Jim: That compares to net debt of <unk>.

Jim: $312 7 million as of March 31, 2024.

Jim: Consistent with our prior first quarter calls, we are maintaining our full year revenue guidance range, which stands at $148 million to $152 million at the midpoint implies growth of 4% versus fiscal 2024.

Jim Heindlmeyer: We similarly reiterate our adjusted EBITDA guidance range of $58 million to $61 million, which signals growth of 7% over the prior year at the midpoint of the range. We continually review our forecast for the full year and will provide updates, one appropriate to do so. For the remainder of fiscal 2025, we're focused on executing our strategy to continue delivering consistent and predictable cash flows that will allow us to achieve our forecasted top line and adjusted EBITDA guidance for the year.

Jim Heindlmeyer: We similarly reiterate our Adjusted EBITDA guidance range of $58 million to $61 million, which signals growth of 7% over the prior year at the midpoint of the range. We continually review our forecast for the full year and will provide updates when appropriate to do so. For the remainder of fiscal 2025, we're focused on executing our strategy to continue delivering consistent and predictable cash flows that will allow us to achieve our forecasted top line and adjusted EBITDA guidance for the year. I'll now pass the call back to Golnar for his closing remarks.

Jim: Similarly, reiterate our adjusted EBITDA guidance range of $58 million to $61 million, which signals growth of 7% over the prior year at the midpoint of the range.

Jim: We continually review our forecast for the full year and we'll provide updates when appropriate to do so.

Jim: For the remainder of fiscal 2025, we're focused on executing our strategy to continue delivering consistent and predictable cash flows that will allow us to achieve our forecasted top line and adjusted EBITDA guidance for the year.

Golnar Khosrowshahi: I'll now pass the call back to Gollar for closing remarks. Thank you, Jim. We are confident in the value of reservoir assets and the portfolio we have built. As the music industry continues to grow and build momentum, the M&A marketplace has remained strong as evidence by recent large scale transactions ranging between approximately 16 to 18 times multiples on NPS and L.S. We believe our track record and the quality of our portfolio reflects our long-term growth potential. We remain focused on building upon our momentum and increasing visibility to capture more value over the long term. We appreciate your continued support and look forward to sharing our progress with you.

Jim: I'll now pass the call back to Golar for closing remarks.

Golnar Khosrowshahi: Thank you, Jim. We are confident in the value of Reservoir's assets and the portfolio we have built. As the music industry continues to grow and build momentum, the M&A marketplace has remained strong, as evidenced by recent large-scale transactions ranging between approximately 16 to 18 times the multiple on NPS and LF. We believe our track record and the quality of our portfolio reflect our long-term growth potential. We remain focused on building upon our momentum and increasing visibility to capture more value over the long term. We appreciate your continued support and look forward to sharing our progress with you. We will now open the line for questions.

Golar: Thank you Jim we are confident in the value of reservoirs assets in the portfolio we have built.

Speaker Change: As the music industry continues to grow and build momentum. The M&A marketplace has remained strong as evidenced by recent large scale transactions ranging between approximately 16 to 18 times multiples on N. P. S N O S.

Golar: We believe our track record and the quality of our portfolio reflects our long term growth potential we remain focused on building upon our momentum and increasing visibility to capture more value over the long term. We appreciate your continued support and look forward to sharing our progress with you. We will now open the line.

Operator: We will now open the line for questions. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, let us start in one.

Speaker Change: For questions.

Operator: At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 if you would like to ask a question. We'll take our first question from Griffin Boss. With O'Reilly Securities, your line is now open.

Speaker Change: At this time, if you would like to ask a question. Please press the star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star to once again start you'd want if he would like to ask a question. We will take our first question from Christian Buss with B Riley Securities. Your line is now open.

Operator: If you would like to ask a question, we'll take our first question from Griffin Boss.

Griffin Boss: What the Riley Securities line is now open. Hi, thanks for taking my questions. So I don't see the queue posted yet, so can you just give some more color, Jim, maybe on the magnitude of catalog purchases and additions to royalty advances in the quarter? Yeah, sure. Thanks for the question, Griffin. This was a relatively quiet quarter for us, with respect to both catalog acquisitions and advances. Having said that, it's not indicative of our run rate for the year.

Griffin Taylor Boss: Hi. Thanks for taking my questions. I don't see the queue posted yet, so can you just give some more color, Jim, maybe on the magnitude of catalog purchases and additions to royalty advances in the quarter?

Christian Buss: Hi, Thanks for taking my questions. So I don't see the Q posted yet so can you just give some more color Jim maybe on the on the magnitude of catalogue purchases. In addition to royalty advances in the quarter.

Jim Heindlmeyer: Yeah, sure. Thanks for the question, Griffin.

Jim: Yeah sure. Thanks for the question Griffin.

Jim: A relatively quiet quarter for us with respect to both catalog acquisitions and advances.

Jim Heindlmeyer: This was a relatively quiet quarter for us with respect to both catalog acquisitions and advances. Having said that, it's not indicative of our run rate for the year. We have a really robust pipeline, and we have a number of deals that we're very excited about that will be closing in the coming quarter.

Jim: Being said that it's a it's not indicative of a run rate for the year. We have we have a really robust pipeline and we have a number of deals that that we're very.

Jim Heindlmeyer: We have a really robust pipeline, and we have a number of deals that we're very excited about that will be closing in the coming quarter.

Speaker Change: Excited about that will be that will be closing in the coming quarters.

Golnar Khosrowshahi: Hi, Griffin. I would also add that there is a certain cyclicality to deal flow, and the cadence at which we deploy capital isn't always going to spread out evenly, quarter-over-quarter or year-over-year. Okay, got it. That's super helpful. So, just making sure I hear that right. So, the pipeline still, we can still think of that as, you know, a billion, billion dollars and, you know, call it 120 plus opportunities that you're looking at right now. Yes, it's slightly over a billion dollars, and as Jim said, there are a few opportunities that we are extremely excited about in this sort of near term.

Jim Heindlmeyer: Hi Griffin, I would also add that there is a certain cyclicality to deal flow, and the cadence at which we deploy capital isn't always going to be spread out evenly quarter over quarter or year over year.

Griffin: Hi, Griffin I would also add that there is a certain cyclicality to deal flow and the cadence at which we deploy capital.

Griffin: Isn't always going to.

Griffin: Spread out evenly quarter over quarter or year over year.

Jim Heindlmeyer: Okay, got it. That's super helpful. So just making sure I hear that right. So the pipeline, we still think of that as, you know, a billion, billion dollars and, you know, call it 120 plus opportunities that you're looking at right now.

Griffin: Okay got it that's super helpful. So I'm, just making sure I heard that right. So the pipeline still.

Speaker Change: Well, we can still think of that as you know a 1 billion $1 billion and you know call. It 120, plus opportunities that you're looking at right now.

Jim Heindlmeyer: Yes, it's slightly over a billion dollars, and as Jim said, there are a few opportunities that we are extremely excited about in the sort of near term.

Griffin: Yes, it's slightly over $1 billion and as Jim said, there are a few opportunities that we are extremely excited about them.

Speaker Change: And is this sort of near term.

Griffin Boss: Okay, great. And then, so jumping over, obviously you talked about the really strong growth in publishing, particularly in digital, and you mentioned the price increases from DSPs. Were there any other one-time items that contributed to the first quarter outperformance in digital, or was that basically all attributable to the price increases? Yeah, there weren't any particular one-time things that we felt needed to be called out for this quarter. It was, it was really, you know, business as usual. We benefited from those price increases and kind of nothing in particular to add beyond that with respect to one-time items. Okay, got it.

Jim Heindlmeyer: Okay, great. And then, so jumping over, obviously you talked about the really strong growth in publishing, particularly in digital. And you mentioned the price increases from DSPs. Were there any other one-time items that contributed to the first quarter outperformance in digital? Or was that basically all attributable to the price increases?

Speaker Change: Okay, Great and then so jumping over a obviously you've talked about the really strong growth in publishing, particularly.

Speaker Change: Particularly in digital and you mentioned the price increases for <unk> were there any other one time items that contributed to the to the first quarter outperformance and digital or was that.

Speaker Change: Basically all attributable to the price increases.

Jim Heindlmeyer: Yeah, there weren't any particular one-time things that we felt needed to be called out for this quarter. It was really business as usual. We benefited from those price increases, and there was kind of nothing in particular to add beyond that with respect to one-time items.

Speaker Change: Yeah, there weren't any particular, one time things.

Speaker Change: We felt needed to be called out for this quarter. It was it was really business as usual we benefited from those price increases and in kind of nothing in particular to add beyond that with respect to one time items.

Griffin Taylor Boss: Okay, got it. And then last one for me, and I'll jump back in the queue.

Speaker Change: Okay got it and then last one for me and I'll jump back in the queue can you just talk a bit more broadly about the growth characteristics, you're seeing internationally versus the U S today, and and how you look at those going forward.

Griffin Boss: And then, last one for me, and I'll jump back in the queue.

Griffin Boss: Can you just talk a bit more broadly about the growth characteristics you're seeing internationally versus the US today, and how you look at those going forward? Can you say sort of in what sense, in what sense of growth characteristics? Yeah, so just more broadly, you know, in the quarter, how you saw growth internationally versus the United States, and then, you know, going, but we'll call it through the rest of the year, how you're anticipating growth to play out internationally and domestically. Yeah, I think that we are, well, we remain very optimistic about the opportunities internationally. You know, but when we say internationally, that's, it's a pretty big territory that we're covering, right?

Speaker Change: Can you say sort of in what sense, what kind of in what sense of growth characteristics.

Griffin Taylor Boss: Can you just talk a bit more broadly about the growth characteristics you're seeing internationally versus the U.S. today and how you look at those going forward?

Speaker Change: Yeah, So just more broadly.

Speaker Change: In the quarter, how you how you saw growth internationally versus the United States.

Speaker Change: And then you know going but we'll call out through the rest of the year, how you're anticipating growth to play out internationally and domestically.

Griffin Taylor Boss: Can you say sort of in what sense, what kind, in what sense of growth characteristics?

Speaker Change: Yeah, I think that we are well we remain very optimistic about the opportunities internationally.

Griffin Taylor Boss: Yeah, so just more broadly, you know, in the quarter, how you saw growth internationally versus the United States, and then, you know, going, we'll call it, through the rest of the year, how you're anticipating growth to play out internationally and domestically.

Speaker Change: But when we say internationally, that's a pretty big.

Speaker Change: That's a territory that we're covering right.

Jim Heindlmeyer: You know, there's certainly mature markets in there, where we continue to perform well, whether it's in the UK, Europe, those types of markets, but we also see a lot of opportunities, whether it's with our sub-publishing partners throughout Southeast Asia and South Asia, or the work that we're doing through Paparabia to take advantage of opportunities in the Middle East and India, where, like I said, we remain very optimistic about where that's heading. As we've said on prior calls, it remains a part of our business that is not the biggest part of our business, but the growth that we are anticipating there in the coming years, we think we'll really ramp up.

Jim Heindlmeyer: Yeah, I think that we are, well, we remain very optimistic about the opportunities internationally. You know, but when we say internationally, that's, it's a pretty big territory that we're covering, right? You know, there are certainly mature markets where we continue to perform well, whether it's in the UK, Europe, those types of markets. But we also see a lot of opportunities, whether it's with our sub-publishing partners throughout Southeast Asia and South Asia or the work that we're doing through Paparabia to take advantage of opportunities in the Middle East and India, where, like I said, we remain very optimistic about where that's heading.

Speaker Change: Certainly mature markets in there, where we continued to perform well whether it's in the U K Europe those types of markets, but we also see a lot of opportunities whether it's with our publishing partners throughout southeast Asia, and South Asia or the work that we're doing.

Jim Heindlmeyer: Through pop Arabia to take advantage of opportunities in the middle East and India.

Speaker Change: <unk>.

Speaker Change: Where we're like I said, we remain very optimistic about where that's heading.

Jim Heindlmeyer: As we've said on prior calls, it remains a part of our business that is not the biggest part of our business, but the growth that we are anticipating there in the coming years, we think will really ramp up.

Speaker Change: As we've said on prior calls it remains.

Speaker Change: A part of our business that is.

Speaker Change: Is not the biggest part of our business, but the growth that we are anticipating there in the coming years, we think will really ramp up.

Griffin Boss: Okay, thanks for the color, Jim. Appreciate it. I'll jump back in the queue. Thanks. Thank you.

Griffin Taylor Boss: Okay, thanks for the color, Jim. I appreciate it. I'll jump back in the queue. Thanks.

Speaker Change: Okay. Thanks for the color Jim appreciate it all Oh I'll jump back in the queue. Thanks.

Operator: Thank you. We'll take our next question from Rich Baldry with Roth Capital. Your line is open.

Speaker Change: Thank you we'll take our next question from Rich Baldry with Roth Capital. Your line is open.

Operator: We'll take our next question from Rich Baldry with Roth Capital. Your line is open. Thanks.

Richard Kenneth Baldry: Thanks. Is there any way to sort of put a bracket around the scope of the impact of the Spotify sort of bundling drag? And where do you think that stands in terms of the controversy being played out either legally or settled, so we can get an idea of how much of a headwind that was?

Speaker Change: Thanks.

Rich Baldry: There are any way to sort of look at bracket around the scope of the impact of this Spotify sort of bundling drag and where do you think that stands in terms of the controversy being played out either legally or settled or so you get an idea of how much of a head when that was? Sure.

Richard Kenneth Baldry: Is there any way to sort of.

Greg: Okay bracket around the scope of the impact of the Spotify, So bundling Greg.

Richard Kenneth Baldry: And where do you think that stands in terms of that controversy being played out either legally are settled or.

Speaker Change: So you get an idea of how much of a headwind that was.

Jim Heindlmeyer: Sure, with respect to... The magnitude or the impact of this, you know, we talked on the last call about Billboard estimating it to be about $150 million annually for the industry. And I think we also mentioned on the last call that we estimated, you know, somewhere between 1.2 and 1.5 million to Reservoir on an annual basis. And that's something that we have built into our forecast. And while we, you know, we are very opposed to what Spotify is doing, that's the situation right now, and that's what we have built into our forecast. And maybe I'll turn it over to Golnar for a little bit more color around it. Hi Rich.

Speaker Change: Sure with respect to that.

Jim Heindlmeyer: With respect to the magnitude or the impact of this, we talked on the last call about Billboard estimating it to be about 150 million annually to the industry, and I think we also mentioned on the last call that we estimated that somewhere between 1.2 and 1.5 million to Reservoir on an annual basis. And that's something that we have built into our forecast. And while we are very opposed to what Spotify is doing, that's the situation right now, and that's what we have built into our forecast. And maybe I'll turn it over to go on our for a little bit more color around it.

Speaker Change: The magnitude or the impact of this.

Speaker Change: We talked on the last call about Billboard estimating it to be about $150 million annually to the industry.

Speaker Change: And I think we also mentioned on the last call that we estimated that somewhere between one two and $1 5 million to two reservoir.

Speaker Change: On an annual basis, and that's something that we have built into our forecast and while we.

Speaker Change: We are we are very opposed to what Spotify is doing.

Golar: That's the situation right now and that's what we have built into our forecast and maybe I'll turn it over to Golar for a little bit more color around it yes, hi, rich so I want to add a couple of things first of all we can't really predict where this litigation will go and how long it will take but we will fight the good fight and we will advocate for our son.

Golnar Khosrowshahi: Yes, hi Rich. So I would add a couple of things. First of all, we can't really predict where this litigation will go and how long it will take, but we will fight the good fight, and we will advocate for our songwriters. But, as Jim said, you know, our forecasts and our budgets reflect the reality that we're living in today. The other thing that we also haven't put in our forecast is the numbers around Spotify's premium tier service, which is estimated to be somewhere in the ballpark of $5 more than the current service, with their estimates being pretty significant as far as how many people will convert to that product.

Golnar Khosrowshahi: Yes, hi Rich. So I would add a couple of things. First of all, we can't really predict where this litigation will go and how long it will take, but we will fight the good fight and we will advocate for our songwriters. But, as Jim said, our forecast and our budget reflect the reality that we're living today. The other thing that we also haven't put in our forecast is the numbers around Spotify's premium tier service, which is estimated to be somewhere in the ballpark of $5 more than the current service, with their estimates being pretty significant as far as how many people will convert to that product.

Speaker Change: Writers, but as Jim said, you know are our forecasts that are in our budget.

Speaker Change: Reflect the reality that we're living today. The other thing that we also haven't put in our forecast is the numbers around.

Speaker Change: Spotify premium tier service.

Speaker Change: <unk> is estimated to be somewhere in.

Speaker Change: In the ballpark of $5 more than the current service with their estimates being pretty significant as far as how many people will convert to that product.

Golnar Khosrowshahi: So that's another thing we haven't forecast for, but I think as of today we have a very good handle on what the future looks like here as far as the impact goes, and the advocacy work and the litigation will continue. What we are managing for on this end is that we don't want any surprises on this front, nor do we want to make assumptions around litigation outcomes, and that's something that I think that we are prepared for.

Golnar Khosrowshahi: So that's another thing we haven't forecast for. But I think today we have a very good idea of what the future looks like here as far as the impact goes, and the advocacy work and litigation will continue. What we are managing for on this end is that we don't want any surprises on this front, nor do we want to make assumptions around litigation outcomes, and that's something that I think that we are prepared for.

Golnar Khosrowshahi: So that's another thing we haven't forecast for but I think today, we have a very good handle of what the future looks like here as far as the impact goes.

Golnar Khosrowshahi: And the advocacy work in the litigation will continue.

Speaker Change: And.

Golnar Khosrowshahi: What we are managing for on this and is that we don't want any surprises on this front, nor do we want to make assumptions around litigation outcome and Thats something that I think that we are prepared for it.

Richard Kenneth Baldry: Thanks. And when we look specifically at the recorded music line, while the revenues are down, the profitability contributions are up pretty meaningfully. So when you talk about how often do you run? Or do you think you'll see like one-off events like the Dayless Soul where, you know, arguably, it might actually have been at least break even, maybe even cost a little bit of money as a sort of, I guess, a one-time promotional effort?

Jim Heindlmeyer: When we look at specifically at the recorded music line, well, the revenues are down; the profitability country is up pretty meaningfully.

Speaker Change: And when we look at specifically at the recorded music line, while the revenues were down.

Speaker Change: Profitability countries, it was up pretty meaningfully.

Rich Baldry: How often do you run or do you think you'll see one-off events like the Gala Soul, where arguably it actually might have been breaking into maybe even cost a little bit of money as a sort of, I guess, a one-time promotional effort. Thanks. So I think we can't really predict how frequently that is. The recorded business is obviously, and the front line recorded business is a smaller part of our business. I would say that the Gala Soul launch and activity around that was certainly an outlier event. I don't see us executing on a plan of similar scale and importance in sort of the next one or two quarters as that.

Speaker Change: So you talked about how often do you run or do you think you will see like one off events like the gala solar work.

Speaker Change: Arguably it actually might be.

Speaker Change: At least breakeven or maybe even cost a little bit of money.

Speaker Change: I guess, one time promotional effort.

Speaker Change: Yeah.

Speaker Change: Thanks.

Jim Heindlmeyer: So, I think, you know, we can't really predict how frequently that will happen. The recorded business is obviously, and the frontline recorded business is a smaller part of our business. I would say that the De La Sol launch and activity around that was certainly an outlier event. I don't see us executing on a plan of similar scale and importance in, you know, sort of the next one or two quarters as that. So, for a frontline recorded business of our size, populated by our roster, it's not a frequent occurrence.

Richard Kenneth Baldry: So I think we.

Speaker Change: We can't really predict how frequently that is the recorded businesses. Obviously in the frontline recorded business is a smaller part of our business I would say that the Dallas So launch in activity around that was certainly an outlier event.

Speaker Change: I don't see us executing.

Speaker Change: Executing on our plan of similar scale.

Speaker Change: An important and.

Speaker Change: Sort of the next one or two quarters is that.

Rich Baldry: So for a front line recorded business of our size populated by our roster, it's not... in terms of seasonality.

Speaker Change: So for a frontline recorded business of our size populated by our roster, it's not a frequent occurrence.

Richard Kenneth Baldry: Great. And then we look forward. You maintain guidance, but in terms of seasonality, is there anything that's changing there? You know, you obviously had an unusual comparison because of De La Soul and part of Q1, but if we look at the rest of the year, maybe international trends are changing any of the typical seasonality we see either on revenue or op-ex? And on the op-ex side, just note that, you know, it was obviously very flat from Q4 to Q1. You know, how much do you think that that, you know, trend will continue, or there are some, you know, meaningful investments you kind of see on there?

Speaker Change: Thanks.

Speaker Change: And then when we look for you maintain guidance, but in terms of seasonality is there anything that's changing there.

Jim Heindlmeyer: Is there anything that's changing there? You know, you obviously had an unusual comparison because of Dala Sol and one part of Q1, but we look at the rest of the year, maybe our international trends changing any of the typical seasonality, we see either on the revenue or the off-ex. And on the off-ex, I just note that it was obviously very flat and Q40, Q1. You know, how much do you think that that trend continues, or are there some meaningful investments you kind of see on the horizon?

Speaker Change: You, obviously had and.

Speaker Change: Unusual comparison because of the Dallas solo one part of Q1, but we look at the rest of the year, maybe our international trends changing any of the typical seasonality you see either on the revenue or the opex on the Opex side I. Just note that it was obviously very flat from Q4 to Q1.

Speaker Change: How much do you think that that.

Speaker Change: Trend continues or there.

Speaker Change: Meaningful investments you kind of see on the horizon.

Jim Heindlmeyer: Yeah, so I think with respect, maybe I'll take it in reverse order and talk about the off-ex first. You know, I think that we are really right-sized with respect to our infrastructure right now. So the run rate that you're seeing is really what I would, where I would expect us to be. We obviously have inflationary pressures, like every other business, so we will continue to see the impact of that. But there's nothing that I'm anticipating going forward that is meaningful in terms of the quarter-over-quarter cadence on off-ex. With respect to cyclicality on revenue, that's an area where I think over the past, you know, handful of years, we have done a good job of improving our approval process and really flattening our, the spikes and valleys that we see quarter to quarter based on the timing of payments.

Jim Heindlmeyer: Yeah, so with respect, maybe I'll take it in reverse order and talk about OPEX first. You know, I think that we are really... right-sized with respect to our infrastructure right now. So the run rate that you're seeing is really where I would expect this to be. We obviously have inflationary pressures like every other business. So we will continue to see the impact of that. But there's nothing that I'm anticipating going forward that is meaningful in terms of the quarter over quarter cadence on Op-Ed.

Speaker Change: Yeah, So I think with respect to maybe I'll take it in reverse order.

Speaker Change: And talk about the Opex first.

Jim Heindlmeyer: That we are really.

Speaker Change: Uh huh.

Jim Heindlmeyer: Right sized with respect to our infrastructure right now so the run rate that Youre seeing is really.

Speaker Change: What I would where I would expect us to be we obviously have inflationary pressures like every other business. So we will continue to see.

Jim Heindlmeyer: The impact of that but.

Speaker Change: There is nothing that I'm anticipating going forward that is <unk>.

Jim Heindlmeyer: Meaning full in terms of the the quarter over quarter cadence.

Speaker Change: Opex.

Jim Heindlmeyer: With respect to cyclicality on revenue, you know, over the past handful of years, we have done a good job of improving our accrual process and really flattening the spikes and valleys that we see quarter to quarter based on the timing of payments. There's still a little bit of that that happens with our September and March quarters probably being a little bit higher typically than our June and December quarters, but it's a little bit flatter than what we have seen if you go back kind of three years.

Jim Heindlmeyer: With respect to cyclicality on revenue.

Jim Heindlmeyer: That's an area, where I think over the past.

Jim Heindlmeyer: Handful of years, we have done a good job of improving our accrual process and really flattening or.

Jim Heindlmeyer: The spikes and valleys that we see quarter to quarter based on the timing of payments there is still a little bit of that that happens with.

Jim Heindlmeyer: There's still a little bit of that that happens with our September and March quarters probably being a little bit higher typically than our June and December quarters. But it's a little bit flatter than what we have seen if you go back kind of three years.

Speaker Change: Our September and March quarters, probably being.

Speaker Change: A little bit higher typically than our June and December quarters, but its a little bit flatter than what we have seen if you go back kind of three years.

Rich Baldry: Right, and last for me is to start asking this every quarter. But when you think about the external environment, can you just talk a little broadly about the M&A pipeline? You know, not necessarily absolutely sizing, but you know, bigger, smaller expectations changing at all with the macro kind of trending a bit sideways. It looks like the stone interest rate world. Thanks.

Richard Kenneth Baldry: All right, and last for me, I'm just going to ask this every quarter, but when you think about the external environment, can you just talk a little broadly about the M&A pipeline, not necessarily absolute sizing, but, you know, bigger, smaller expectations changing at all with our macro kind of trending a bit sideways. It looks like, at least in the interest rate world. Thanks. Sure.

Speaker Change: Alright, and last for me to sort of ask this every quarter, but when you think about the external environment could you just talk a little broadly about the M&A pipeline.

Richard Kenneth Baldry: Not necessarily absolute sizing, but bigger smaller expectations changing at all with our macro.

Richard Kenneth Baldry: Kind of trending a bit sideways it looks like at least on interest rate wise. Thanks.

Jim Heindlmeyer: Sure, we're very excited about the pipeline. It's at least the immediate or short-term deal pipeline. There are the characteristics of deals that we are attracted to in off-market settings that we are able to execute on at, um.., good multiples, attractive returns, diversified assets, set of assets that we're looking at ranging from recorded to publishing to film score, again that's in the short term. Um, I think as far as sizing goes, there's certainly a few larger deals here.

Speaker Change: Oh sure.

Jim Heindlmeyer: Sure. We're very excited about the pipeline. I think it at least the immediate or the short term deal pipeline, there's the characteristic of deals that we are attracted to in off-market settings that we are able to execute on at good multiples, attractive returns, diversified assets, set of assets that we're looking at ranging from recorded to publishing to film score. Again, that's in the short term. I think, as far as sizing goes, there's certainly a few larger deals there. That's not, as you know, really our sweet spot. So this short term pipeline is looking at a number of transactions that are in the seven to eight figures.

Jim Heindlmeyer: We're very excited about the pipeline I think.

Speaker Change: It at least the immediate or the short term deal pipeline bears the characteristic of deals that we are attracted to in off market setting.

Jim Heindlmeyer: That we are able to.

Jim Heindlmeyer: Execute on at.

Jim Heindlmeyer: Good multiples attractive returns.

Jim Heindlmeyer: Diversified assets set of assets that we're looking at ranging from recorded to publishing to film score again, that's in the short term.

Jim Heindlmeyer: I think.

Jim Heindlmeyer: As far as sizing goes there are certainly a few larger deals there.

Jim Heindlmeyer: That's not, as you know, really our sweet spot. So this short-term pipeline is looking at a number of transactions that are in the seven to eight figures, and then, a few interesting opportunities on the Publishing Frontline roster as well that we are entertaining, but a pretty solid mix of assets. We don't. We continue to see no material contraction on pricing, and we have found some opportunities that Purchase at Good Entry Market.

Jim Heindlmeyer: That's not as you know really our sweet spot.

Jim Heindlmeyer:

Jim Heindlmeyer: So the short term pipeline is looking at a number of transactions.

Jim Heindlmeyer: That are in the.

Speaker Change: Seven to eight figures.

Jim Heindlmeyer: and then a few interesting opportunities on the publishing front-line roster as well that we are entertaining. But a pretty solid mix of assets, we don't, we continue to see no material contraction on pricing, and we have found some opportunities that allow us to purchase that good entry multiple.

Jim Heindlmeyer: And then.

Jim Heindlmeyer: A few interesting opportunities on the publishing frontline roster as well that we are entertaining.

Jim Heindlmeyer: But it was pretty solid.

Jim Heindlmeyer: Mix of assets.

Jim Heindlmeyer: We continue to see no material contraction on pricing.

Jim Heindlmeyer: And we have found some some opportunities that.

Jim Heindlmeyer: Allow us to.

Jim Heindlmeyer: Purchase had good entry multiples.

Operator: Great, thanks very much. And once again, that is start.

Speaker Change: Alright, thanks very helpful.

Thank you Andrew.

Operator: And once again, that is star and one. If you would like to ask a question, we'll take our next question from Alex Fuhrman with Craig Hollum from Capital Group. Your line is open.

Speaker Change: And once again that is star and Duane if you would like to ask a question. We will take our next question from Alex Fuhrman with Craig Hallum Capital Group. Your line is open.

Alex Fuhrman: And one, if you would like to ask a question, we'll take our next question from Alex Fuhrman with Craig Hollum Capital Group.

Alex Fuhrman: Your line is open. Hey guys, thanks very much for taking my question, and congratulations on another quarter of really solid, consistent results. You know, I wanted to ask about the cost of revenue. You know, that was actually down. It looks like, in dollars, year over year, despite pretty healthy revenue growth, both organically and on the top line. Can you talk about what's been driving that? And then, you know, bigger picture, it looks like, you know, at least as a percentage of sales, cost of revenue has been coming down for a couple of years. You know, is that due to the mix of, you know, the type of assets you're managing?

Alex Joseph Fuhrman: Hey guys, thanks very much for taking my question and congratulations on another quarter of really solid, consistent results. You know, I wanted to ask about the cost of revenue. You know, that was actually down, it looks like in dollars year-over-year despite pretty healthy revenue growth both organically and on the top line. Can you talk about what's been driving that, and then, bigger picture? It looks like, at least as a percentage of sales, the cost of revenue has been coming down for a couple years.

Speaker Change: Hey, guys. Thanks, very much for taking my question and congratulations on another quarter of really solid consistent results.

Alex Joseph Fuhrman: Wanted to ask about the cost of revenue.

Alex Joseph Fuhrman: That was actually down it looks like in dollars year over year, despite pretty healthy revenue growth both both organically and on the top line can you talk about what's been driving that and then bigger picture it looks like.

Alex Joseph Fuhrman: At least as a percentage of sales cost of revenue has been coming down for a couple of years.

Alex Joseph Fuhrman: You know, is that due to the mix of the type of assets you're managing? Can you just give us a little bit more color on what's been driving those trends and what we should expect to see the rest of the year?

Speaker Change: Is that due to the mix of.

Speaker Change: The type of assets, you're managing can you just give us a little bit more color on what's been driving those trends and what we should expect to see the rest of the year.

Jim Heindlmeyer: Can you just give us a little bit more color on what's been driving those trends and what we should expect to see the rest of the year?

Jim Heindlmeyer: Sure, thanks, Alex. So, on the cost of revenue, the biggest driver there is going to be the shift away from physical revenue on the recorded side. Obviously, that revenue carries a much higher cost of revenue than digital does. So that was the biggest driver of a 1% decrease in cost of revenue, while we had an 8% increase in overall revenue. I think if you look at the segments, which, you know, you'll be able to do more when the queues filed aftermarket today, but you'll see it in the earnings release as well. We probably had a, I think, a two-point improvement on our publishing gross margin, and some of that does come down to the mix, you know, of the assets that we own.

Jim Heindlmeyer: Sure. Thanks, Alex.

Alex: Sure. Thanks, Alex.

Speaker Change: So on the cost of revenue the biggest driver there is going to be the shift away from physical revenue on the recorded side.

Jim Heindlmeyer: So, on the cost of revenue, the biggest driver there is going to be the shift away from physical revenue on the recorded side. Obviously, that revenue carries a much higher cost of revenue than digital does. So, that was the biggest driver of a 1% decrease in cost of revenue, while we had an 8% increase in overall revenue. I think if you look at the segments, which you'll be able to do more when the Q is filed after market today, but you'll see it in the earnings release as well.

Speaker Change: Do you see that revenue carries a much higher cost of revenue.

Jim Heindlmeyer: Then then digital does so that was the biggest driver of.

Jim Heindlmeyer: A 1% decrease in cost of revenue, while we had an 8% increase in overall revenue I think if you look at the segments.

Jim Heindlmeyer: Which.

Jim Heindlmeyer: Youll be able to do more when when the Q is filed aftermarket today, but youll see it in the earnings release as well, we probably had a I think a two point improvement on.

Jim Heindlmeyer: We probably had, I think, a two-point improvement in our publishing gross margin, and some of that does come down to the mix of the assets that we own. We could have acquired assets that carry a higher margin, and those types of acquisitions will improve our overall gross margin. But it was really pretty minor on the publishing side, and on the recorded side, it's being driven by that shift in physical revenue for the quarter.

Jim Heindlmeyer: Our publishing gross margin and some of that does come down to the mix.

Jim Heindlmeyer: The assets that we own.

Jim Heindlmeyer: You know, potentially, we acquired assets that carry a higher margin, and that type of acquisitions will improve our overall gross margin. But it was really pretty minor on the publishing side, and on the recorded side, it's being driven by that shift in the physical revenue for the quarter.

Jim Heindlmeyer: Potentially we acquired assets.

Jim Heindlmeyer: That carry a higher margin in that type of those types of acquisitions will improve our overall gross margin, but it was really pretty minor on the publishing side and on the reported side, it's being driven by that shift.

Jim Heindlmeyer: And the physical revenue for the quarter.

Alex Fuhrman: Okay, that's, that's really helpful.

Alex Joseph Fuhrman: Okay, that's really helpful. Thanks, Jim.

Speaker Change: Okay. That's really helpful. Thanks, Tim.

Jim Heindlmeyer: Thanks, Jim.

Alex Joseph Fuhrman: Yes.

Alex Joseph Fuhrman: Okay.

Operator: Thank you.

Operator: Thank you. I will now turn the program back over to Golnar Khosrowshahi for any additional closing remarks.

Alex Joseph Fuhrman: Thank you I will now turn the program back over to Gordon our clicks with shiny for any additional or closing remarks.

Golnar Khosrowshahi: I will now turn the program back over to Goldnar, Kirstle Shawnee, for any additional closing remarks. Thank you, operator. We finished the first fiscal quarter in a strong position and look forward to continuing that momentum over the course of the fiscal year.

Golnar Khosrowshahi: Thank you, Operator. We finished the first fiscal quarter in a strong position and look forward to continuing that momentum over the course of the fiscal year. Thank you very much for joining us this morning.

Golnar Khosrowshahi: Thank you operator, we finished the first fiscal quarter in a strong position and look forward to continuing that momentum over the course of the fiscal year.

Operator: Thank you very much for joining us this morning. Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day. Thank you very much.

Golnar Khosrowshahi: You very much for joining us this morning.

Golnar Khosrowshahi: Okay.

Operator: Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.

Speaker Change: Thank you. This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful day.

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