Q4 2025 Reservoir Media Inc Earnings Call

Operator: Greetings and welcome to Reservoir Media's 4th Quarter Fiscal Year 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode.

Greetings and welcome to reservoir Media's fourth quarter of fiscal year 2025 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jackie Marcus Investor Relations. Thank you. Please go ahead.

Jacqueline Marcus: It is now my pleasure to introduce your host, Jackie Marcus, Investor Relations. Thank you. Please go ahead.

Jacqueline Marcus: Thank you, Operator.

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 2025 ended March 31, 2025 earlier this morning.

Jacqueline Marcus: Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with results for its fourth quarter and fiscal year 2025 and did March 31st, 2025 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.

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 Dot reservoir Dash media dotcom.

Jacqueline Marcus: With me on today's call are Golnar Khosrowshahi, Founder and Chief Executive Officer, and Jim Heindlmeyer, Chief Financial Officer.

Speaker Change: With me on today's call are Goldmark closer Shah founder and Chief Executive Officer, and Jim handle Mayer Chief Financial Officer.

Jacqueline Marcus: 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: As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website.

Jacqueline Marcus: 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 certain 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: Before I turn the call over to Paul Arndt, 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 certain risks and uncertainties.

Speaker Change: Our expectations beliefs and projections are expressed in good faith and we believe there is a reasonable basis for that.

Speaker Change: 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 discussion.

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.

Jacqueline Marcus: 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: 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.

Jacqueline Marcus: 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. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings pressure.

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.

Golar: 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 Golar.

Golnar Khosrowshahi: I would now like to turn the call over to Golnar. Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Reservoir's fiscal 2025 performance exceeded both guidance and expectations. At a high level, this year's results are hallmarked by top-line annual revenue growth of 10% and 18% improvement in adjusted EBITDA and significant capital deployment with over $115 million towards acquisitions and advances. Our accomplishments in the fiscal year are a testament to the strength of our strategy, the team and expertise we have at Reservoir, and the quality of our portfolio. We are meeting our objectives as a public company and are well positioned to continue doing so in fiscal 2026.

Golar: Thank you Jackie and good morning, everyone and thank you for joining us today reservoir its fiscal 'twenty twenty-five performance exceeded both guidance and expectations at a high level. This year's results are hallmark by topline annual revenue growth of 10% and 18% improvement in <unk>.

Golar: <unk>, EBITDA and significant capital deployment with over $115 million towards acquisitions and advances.

Golar: Our accomplishments in the fiscal year are a testament to the strength of our strategy the team and expertise we have at reservoir and the quality of our portfolio. We are meeting our objectives as a public company and are well positioned to continue doing so in fiscal 2026.

Golnar Khosrowshahi: Strategic off-market M&A continued to drive the company's growth. We signed notable publishing deals with legendary artists this year, such as Snoop Dogg and Katie Lang, and acquired and ingested large catalogs and assets accretive to the portfolio as a whole. Earlier this calendar year, we announced the acquisition of La Strada Entertainment's full publishing catalogue of more than 5,600 compositions spanning multiple generations and genres. Lestrade was a pioneer in understanding the importance and value of increasing the longevity of compositions via sampled music and syncs. Its assets have contributed to such mega-hits as Tupac's California Love, Mariah Carey's We Belong Together, and Will Smith's Miami.

Golar: Strategic off market M&A continue to drive the Companys breath, we signed notable publishing deals with legendary artists. This year, such as Snoop dog and KD Lang and acquired and then adjusted large catalogs and assets accretive to the portfolio as a whole.

Golar: Earlier this calendar year, we announced the acquisition of less Shraddha Entertainment's full publishing catalog of more than 5600 compositions spanning multiple generations and genres.

Golar: <unk> was a pioneer in understanding the importance and value of increasing the longevity of composition by a sampled music and six its assets have contributed to such Mega hits. Its two parks, California Love Mariah Carey's, we belong together and will Smith Miami.

Golnar Khosrowshahi: Through the acquisitions of Chrysalis Records in 2019 and Tommy Boy Records in 2021, Reservoir grew and diversified our business, establishing a deep well of recorded music expertise on our team and a solid infrastructure that has enabled us to support the addition of many more assets in that vertical. In February, we acquired UK dance and electronic label New State and its entire recorded music catalog of over 13,000 tracks. Included in the transaction were the rights to continue to market and release new music by new state artists. The recorded music segment of our business showed continued growth in both the fourth quarter and the full fiscal year.

Golar: Through the acquisitions of Chrysalis Records in 2019, and Tommy Boy Records in 2020, One reservoir grew and diversified our business, establishing a deep well of recorded music expertise on our team and a solid infrastructure that has enabled us to support. The addition of many more assets in that Vern.

Golar: Nickel.

Golar: In February we acquired UK dance and electronic label, New state and its entire recorded music catalog of over 13000 tracks included in the transaction, where the rights to continue to market and released new music by New state artists.

Golar: The recorded music segment of our business showed continued growth in both the fourth quarter and the full fiscal year. We believe there is considerable operational leverage in this segment to help us drive organic growth from our value enhancement efforts and easily integrate additional acquisitions into our.

Golnar Khosrowshahi: We believe there is considerable operational leverage in the segment to help us drive organic growth from our value enhancement efforts and easily integrate additional acquisitions into our catalog in the future. Alongside our successful investment philosophy is our commitment to organic growth. We have the necessary rights and infrastructure to aggressively market our portfolio and the relationships to secure opportunities with strong ROIs. For example, in the fourth quarter, we had four Super Bowl Sink placements, including Papa Loves Mambo in a Michelob Ultra ad, This is America in a Him and Hers spot, Mama Said Knock You Out in a Pfizer ad, and Take Me Home Country Roads for Rocket Mortgage.

Golar: Catalog in the future.

Golar: Alongside our successful investment philosophy is our commitment to organic growth, we have the necessary rights and infrastructure to aggressively market our portfolio and the relationships to secure opportunities with strong Rois for example in the fourth quarter, we had four Super Bowl zinc.

Golar: Placements, including copper loves Mambo in of Michelob Ultra add this is America and have him and her spot Marmot said knock you out and a Pfizer at and take me home country roads for rocket mortgage.

Golnar Khosrowshahi: Within the full year, our evergreen hit, Deo, by Harry Belafonte, featured prominently in the feature film, Beetlejuice, Beetlejuice. while also driving a resurgence in listenership across DSPs. We also saw tremendous commercial success for Reservoir's active songwriters, earning a top 10 U.S. market share in the last four quarters, according to Billboard's Publishers Quarterly, with our talent co-writing and contributing to chart-topping records by Sabrina Carpenter, Dasha, SZA, and more. While North America has historically driven much of the music industry's growth, we have long focused on building our business in emerging markets in recognition of the massive opportunities in these territories, particularly as internet connectivity and consequently listenership is on the rise.

Golar: Within the full year, our evergreen Hideo by Harry Belafonte featured prominently in the feature film Betelgeuse BEETLEJUICE, while also driving a resurgence in listenership across U S. P. S.

Golar: We also saw tremendous commercial success for reservoirs active song writers.

Speaker Change: Turning a top 10 U S market share in the last four quarters. According to Billboards publishers quarterly with our talent co writing and contributing to chart topping records by Sabrina Carpenter Dasher scissor and more.

Speaker Change: While North America has historically driven much of the music industry. Bruce we have long focused on building our business in emerging markets in recognition of the massive opportunities in these territories, particularly as internet connectivity and consequently listenership is on the rise.

Golnar Khosrowshahi: We took an early stake in establishing a presence in the Middle East with our subsidiary, PopArabia, to build relationships with the region's most influential creators. Our successful boots-on-the-ground approach to building relationships allows us to remain deeply involved in these important markets and participate in off-market deals. In March, we announced our acquisition of the publishing and master rights to Egyptian star Omar Kamal's catalog. Having brought Maraghanat, a genre of music that mixes Egyptian rhythms, electronic music, and rap lyrics to listeners throughout the Arab world, Kamal's Maraghan bent El Gharan was one of Rolling Stone's 50 best Arabic pop songs of the 21st century.

Speaker Change: We took an early stake and establishing a presence in the middle East with our subsidiary pop Arabia to build relationships with the region's most influential creators are successful boots on the ground approach to building relationships allows us to remain deeply involved in these important markets and participate in off market deals.

Speaker Change: In March we announced our acquisition of the publishing and Master rights to Egypt shouldn't start Omar camels catalog.

Speaker Change: Having brought in Morocco, not genre of music that mixes Egyptian rhythms electronic music and rap lyrics to listeners throughout the Arab world come off Amerigon Ben I'll go Ron was one of Rolling Stones 50, Best Arabic pop songs of the 21st century.

Golnar Khosrowshahi: Just last month, we continued our international expansion with the launch of our latest subsidiary, Pop India, and the opening of a new office in Mumbai. Pop India is led by Speck, a long-time member of the Reservoir team with extensive experience in emerging markets, including founding and running Pop Arabia. Pop India is focused on signing and developing regional talent, as well as acquiring catalogs across both publishing and recorded music, while also providing music supervision and sub-publisher services in the country. We are incredibly excited by the signing of Pop India's first publishing deal with singer-songwriter, rapper and YouTube star, Yohani.

Speaker Change: Just last month, we continued our international expansion with the launch of our latest subsidiary pop India and the opening of a new office in Mumbai pop India is led by spec a longtime member of the reservoir team with extensive experience in emerging markets, including founding and running pop Arabia.

Speaker Change: India is focused on signing and developing regional talent as well as acquiring catalogs across both publishing and recorded music, while also providing music supervision and sub publisher services in the country.

Speaker Change: We are incredibly excited by the signing of pop India's first publishing deal with singer songwriter wrapper and Youtube Star Johanning.

Golnar Khosrowshahi: With more than 175 million people streaming music across channels and analysts expecting the industry to grow at a 13% CAGR through 2027, India is an ideal market for us to further grow our international roster at attractive valuations. We look forward to the potential partnerships with some of the region's most celebrated artists and up-and-coming talent.

Speaker Change: With more than 175 million people streaming music across channels and analysts expecting the industry to grow at a 13% CAGR through 2027, India is an ideal market for us to further grow our international roster at attractive valuations.

Speaker Change: We look forward to the potential partnerships with some of the region's most celebrated artists and up and coming talent.

James Heindlmeyer: I will now turn the call over to Jim to discuss our fourth quarter and full fiscal year financial results as well as our fiscal 2026 guidance in greater detail. Thank you, Golnar, and good morning, everyone. We close out our fiscal year 2025 in a position of strength with double-digit top-line growth. We are pleased with the fiscal 2025 results, and we look forward to fiscal 2026, during which we expect the combination of high-quality catalog, chart-topping new releases, and targeted strategic capital deployment will contribute to continued strong results.

Speaker Change: I will now turn the call over to Jim to discuss our fourth quarter and full fiscal year financial results as well as our fiscal 2026 guidance in greater detail Jim.

Jim: Thank you Omar and good morning, everyone. We closed our fiscal year 2025, and a position of strength with double digit topline growth.

Jim: We're pleased with the fiscal 2025 results and we look forward to fiscal 2026 during which we expect the combination of high quality catalog chart topping new releases and targeted strategic capital deployment will contribute to continued strong results.

James Heindlmeyer: Let's first start with a review of the fourth quarter. Revenue for the fourth fiscal quarter was $41.4 million, which was a 6% increase compared to the fourth quarter of fiscal 2024. Strong growth in both segments was led by 6% growth in the music publishing segment, inclusive of the acquisitions of various catalogs. With respect to our operating expenses for the quarter, our overall cost of revenue decreased 1% versus the prior year quarter. Our depreciation and amortization costs increased 6% year over year due to our continued catalog acquisition. Company administration expenses saw a 3% increase year over year.

Jim: Let's first start with a review of the fourth quarter.

Jim: Revenue for the fourth fiscal quarter was $41 4 million, which was a 6% increase compared to the fourth quarter of fiscal 2024.

Jim: Strong growth in both segments was led by 6% growth in the music publishing segment inclusive of the acquisitions of various catwalks.

Jim: With respect to our operating expenses for the quarter, our overall cost of revenue decreased 1% versus the prior year quarter, our depreciation and amortization costs increased 6% year over year due to our continued catalog acquisitions.

Jim: Company administration expenses saw a 3% increase year over year.

James Heindlmeyer: Turning to operating performance, fourth quarter OIBDA increased 14% year-over-year to $17.2 million. Adjusted EBITDA increased 14% to $18.2 million. The increase in adjusted EBITDA in the fourth quarter was largely driven by stronger revenue and improved margins, particularly in synchronization within the publishing segment and digital within the recorded music segment. However, this was partially offset by higher administration expenses. Interest expense was $6.1 million for the quarter compared to $5.2 million in the same period last year. Net income for the fourth quarter of fiscal 2025 was $2.7 million versus $2.9 million in the fourth quarter of fiscal 2024.

Jim: Turning to operating performance fourth quarter, OIBDA increased 14% year over year to $17 2 million adjusted EBITDA increased 14% to $18 2 million the increase in adjusted EBITDA in the fourth quarter was largely driven by stronger revenue and improved margins, particularly in synchronization.

Jim: Within the publishing segment and digital within the recorded music segment. However, this was partially offset by higher administration expenses.

Jim: Interest expense was $6 1 million for the quarter compared to $5 2 million in the same period last year.

Jim: Net income for the fourth quarter of fiscal 2025 was $2 7 million versus $2 9 million in the fourth quarter of fiscal 2024. This resulted in diluted earnings per share for the quarter of <unk> compared to <unk> <unk> per share in the prior year period.

James Heindlmeyer: This resulted in diluted earnings per share for the quarter of 4 cents compared to 4 cents per share in the prior year period.

James Heindlmeyer: Moving to our full fiscal year 2025 results, revenue was $158.7 million, a 10% year-over-year increase and above the top end of our previously stated guidance revenue. This beat was the result of growth in both the music publishing and recorded music segments, which posted growth of 12% and 4% respectively. Turning to our operating expenses for fiscal 2025, our overall cost of revenue saw a 4% increase from fiscal 2024. This increase is attributed to a higher revenue base resulting from acquisitions and value enhancement efforts. The lower increase in cost of revenue as compared to the increase in revenue resulted in a higher gross margin in fiscal year 2025.

Jim: Moving to our full fiscal year 2025 results revenue was $158 7 million or 10% year over year increase and above the top end of our previously stated guidance range. This beat was the result of growth in both the music publishing and recording music segments, which posted growth of 12.

Jim: <unk> and 4% respectively.

Jim: Turning to our operating expenses for fiscal 2025, our overall cost of revenue saw a 4% increase from fiscal 2020 for this increase is attributed to a higher revenue base, resulting from acquisitions and value enhancement efforts.

Jim: Lower increase in cost of revenue as compared to the increase in revenue resulted in a higher gross margin in fiscal year 2025.

James Heindlmeyer: Administration expenses for fiscal 2025 rose less than 1% from the prior year to $39.9 million, primarily due to the non-recurrence of the write-off of recoupable legal expenses and attorney's fees from the prior year and improved operating leverage, which was partially offset by an increase in cost to support the company's growth. AWIBDA in fiscal 2025 increased 24% year-over-year to $61.4 million, while adjusted EBITDA grew 18% to $65.7 million. These increases were mostly attributable to a higher gross margin and improved operating leverage.

Jim: Administration expenses for fiscal 2025 rose less than 1% from the prior year to $39 9 million, primarily due to the non recurrence of the write off of Recoupable legal expenses and attorney's fees from the prior year and improved operating leverage which was partially offset by an increase in costs to support the companys.

Jim: Growth.

Jim: With that in fiscal 2025 increased 24% year over year to $61 4 million, while adjusted EBITDA grew 18% to $65 7 million. These increases were mostly attributable to a higher gross margin and improved operating leverage as a reminder, we have reconciliations for these metrics and are.

James Heindlmeyer: As a reminder, we have reconciliations for these metrics in our earnings press release and 10-K final. Our interest expense was $21.9 million for the full year compared to $21.1 million last year. The higher interest expense was due to an increase in debt resulting from acquisitions of music catalogs and writer signings and an increase in effective interest rates. Net income for fiscal 2025 was $7.7 million versus $800,000 last year. The increase in net income was primarily the result of increased operating income, partially offset by an increase in the loss on fair value of swap. This resulted in diluted earnings per share for the year of $0.12 compared to $0.01 per share for fiscal 2024.

Jim: Earnings press release, and 10-K filing.

Jim: Our interest expense was $21 9 million for the full year compared to $21 1 million last year.

Jim: The higher interest expense was due to an increase in debt, resulting from acquisitions of music catalogs and writer signings and an increase in effective interest rates.

Jim: Net income for fiscal 2025 was $7 7 million versus 800000 last year. The increase in net income was primarily the result of increased operating income partially offset by an increase in the loss on fair value of swaps.

Jim: This resulted in diluted earnings per share for the year of 12 cents compared to <unk> per share for fiscal 2024.

James Heindlmeyer: Our weighted average diluted outstanding share count for the full year is 66 million.

Jim: Our weighted average diluted outstanding share count for the full year is $66 million.

James Heindlmeyer: Turning to our segment breakdown for the fourth quarter, music publishing generated revenue of $27.9 million in the quarter, which represents a 6% increase when including acquisitions versus the same period last year. our digital revenue increased $600,000 to $13.6 million or 5%. and Performance revenue decreased by 13% to $6.5 million. Synchronization revenue in the publishing segment totaled $5.5 million, a 51% increase from the fourth quarter of last year. This is primarily due to the timing of licensing. Mechanical revenue within the publishing segment posted a 6% decrease year-over-year to $1.2 million. Other revenue within the publishing segment was $1.2 million, an increase of 15% year-over-year.

Jim: Turning to our segment breakdown for the fourth quarter music publishing generated revenue of $27 9 million in the quarter, which represents a 6% increase when including acquisitions versus the same period last year.

Jim: Our digital revenue increased 600000 to $13 6 million or 5%.

Jim: The performance revenue decreased by 13% to $6 5 million synchronization revenue in the publishing segment totaled $5 5 million or 51% increase from the fourth quarter of last year. This is primarily due to the timing of licenses.

Jim: Mechanical revenue within the publishing segment posted a 6% decrease year over year to $1 2 million other.

Jim: Other revenue within the publishing segment was $1 2 million, an increase of 15% year over year.

James Heindlmeyer: A recorded music segment generated $12 million in revenue in the fourth quarter, representing an increase of 7% versus the prior year quarter. Digital revenue within the recorded segment increased 19%, primarily due to price increases and subscriber growth at DSM. Physical revenue decreased 26% largely due to a lighter planned release schedule in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024. Our synchronization revenue decreased 29% as a result of the timing of licenses, while neighboring rights increased 15% to $1.1 million, in part due to additional direct affiliations with Collection Society.

Jim: Our reported music segment generated $12 million in revenue in the fourth quarter, representing an increase of 7% versus the prior year quarter.

Jim: Digital revenue within the reporting segment increased 19%, primarily due to price increases and subscriber growth at <unk>.

Jim: Physical revenue decreased 26% largely due to a lighter planned release schedule in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024.

Jim: Our synchronization revenue decreased 29% as a result of the timing of licenses, while neighboring rates increased 15% to $1 1 million in part due to additional direct affiliations with collection societies.

James Heindlmeyer: For the full year, our music publishing segment revenue rose 12% compared to the prior year. Our improvement is largely a result of price increases at multiple music streaming services, as well as the expansion of our catalog through M&A. Additionally, synchronization revenue increased because of the timing of licensing. These factors were partially offset by a decrease in performance revenue driven by the timing of hits. Recorded music revenues increased 4% compared to fiscal 2024. The growth is attributable to continued user growth and price increases at multiple streaming services, as well as royalty recoveries related to underreported usage for music catalogs.

Jim: For the full year, our music publishing segment revenue rose, 12% compared to the prior year.

Jim: Our improvement is largely a result of price increases that multiple music streaming services as well as the expansion of our catalog to M&A. Additionally, synchronization revenue increase because of the timing of licenses. These factors were partially offset by a decrease in performance revenue driven by the timing of hit songs.

Jim: Recorded music revenues increased 4% compared to fiscal 2020 for the growth is attributable to continued user growth and price increases of multiple streaming services as well as royalty recoveries related to underreported usage for music catalogs.

James Heindlmeyer: These factors were partially offset by a decrease in fiscal sales after the robust sales of new Della Sol releases in fiscal 2024.

Jim: Factors were partially offset by a decrease in physical sales after the robust sales of new del Sol releases in fiscal 2024.

James Heindlmeyer: Let's move on to our balance sheet. As of March 31st, our credit facility was at roughly $391.8 million. We closed the year with total liquidity of $79.6 million, comprised of $21.4 million of cash on hand and $58.2 million available under our revolver, which gives us the capital to fund our strategic objectives. We ended the year with $388.1 million of total debt, which was net of $3.7 million of deferred financing costs, and thus we maintained $366.7 million of net debt. That compares to net debt of $312.7 million as of last fiscal year end. Reservoir had a standout fiscal year, capitalizing on our opportunities to boost our organic revenue thanks to our value enhancement.

Jim: Let's move onto our balance sheet.

Jim: As of March 31, our credit facility was at roughly $391 8 million, we closed the year with total liquidity of $79 6 million comprised of $21 4 million of cash on hand, and $58 2 million available under our revolver, which gives us the capital to fund our strategic objectives.

Jim: We ended the year with $388 1 million of total debt, which was net of $3 7 million of deferred financing costs.

Jim: Thus, we maintained $366 7 million of net debt.

Jim: That compares to net debt of $312 7 million as of last fiscal year end.

Jim: Reservoir had a standout fiscal year capitalizing on our opportunities to boost our organic revenue thanks to our value enhancement team.

James Heindlmeyer: The deals we closed this year were substantial and delivered notable value to the company, and profitability was further aided by our internal efforts to control costs.

Jim: The deals we closed this year were substantial and delivered notable value to the company and profitability was further aided by our internal efforts to control costs.

James Heindlmeyer: Turning to the 2026 fiscal year, we expect revenue to be in the range of $164 million to $169 million, and adjusted EBITDA to be in the range of $68 million to $72 million. We have maintained a strong pipeline of potential acquisitions and are in a solid financial position to continue executing on transactions where we see the greatest ROI. We also have the right tools and teams in place to drive organic growth from our existing catalog.

Jim: Turning to the 2026 fiscal year, we expect revenue to be in the range of 164 million to $169 million and adjusted EBITDA to be in the range of $68 million to $72 million.

Jim: We've maintained a strong pipeline of potential acquisitions and I were in a solid financial position to continue executing on transactions, where we see the greatest ROI.

Golar: We also have the right tools and teams in place to drive organic growth from our existing catalog with that I'll now pass the call back to Golar.

Golnar Khosrowshahi: With that, I'll now pass the call back to Golnar. Thank you, Jim. The music industry has a long-standing ability to weather broader macroeconomic headwinds as consumers believe in the value that music brings to their daily lives. Our top-line growth is a testament to the demand and resiliency of our catalog, from today's top records to a variety of evergreen classics.

Golar: Thank you Jim the music industry has a longstanding ability to whether broader macroeconomic headwinds as consumers believe in the value that music brings to their daily lives. Our topline growth is a testament to the demand and resiliency of our catalog from today's top records show a variety of evergreen classics.

Golnar Khosrowshahi: We are pleased with the fiscal year 2025 results, and we look forward to fiscal year 2026, during which we expect the combination of high-quality catalog, chart-topping new releases, and targeted strategic capital deployment will contribute to outperformance.

Golar: We are pleased with the fiscal year 2025 results and we look forward to fiscal year 2026 during which we expect the combination of high quality catalog chart chopping new releases and targeted strategic capital deployment will contribute to outperformance in.

Golnar Khosrowshahi: In closing, our long-term strategy is rooted in building scale with portfolio accretive M&A and long-term value-additive signings to our global roster of artists and songwriters. Our recent announcements, as well as our operational and financial performance in both the fourth quarter and full fiscal year, are in lockstep with where we believe our greatest opportunities for growth lie and our ability to drive value for all our shareholders.

Golar: In closing our long term strategy is rooted in building scale with portfolio accretive M&A and long term value additive signings to our global roster of artists and songwriters.

Golar: Recent announcements as well as our operational and financial performance in both the fourth quarter and full fiscal year are in lockstep with where we believe our greatest opportunities for growth lie and our ability to drive value for all our shareholders with that we will now open the line for questions.

Operator: With that, we will now open the line for questions. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time.

Golar: Thank you the floor is now open for questions. If he would like to ask a question. Please press star one on your telephone keypad at this time, a confirmation tone will indicate that your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.

Operator: A confirmation email will be sent to you at this time. Press Star 2. Again, that's star 1 to register a question at this time.

Golar: Again, Thats Star one to register a question at this time.

Speaker Change: Today's first question is coming from Richard Baldry of Roth Capital Partners. Please go ahead.

Richard Baldry: Partners, please go ahead. Thanks. You know, adding the India operation brings sort of the question to, are you seeing, you know, markedly better ROIs in international geographies? Or is it still pretty, you know, one-off deals that that are driving sort of where you're making your investments?

Speaker Change: Thanks.

Speaker Change: Now, adding the India operation brings sorry. The question two are you seeing markedly better rois in international geographies or is it still pretty one off deals that they're driving sort of where youre, making your investments.

Golnar Khosrowshahi: Hi Rich, it's Golnar. We certainly see better opportunities and along with volume in the emerging markets, and that does definitely lead to better ROIs and less competition. So we see that in India as well as in the Middle East.

Rich: Hi, rich its going are we.

Golar: We certainly see better opportunities and.

Golar: Hum along with volume in the emerging markets and that does definitely lead to better rois and less competition.

Golar: So we see that in India as well as in the Middle East.

Richard Baldry: Okay, and then, you know, this year, the seasonality sort of changed a little bit with third quarter above fourth quarter, and there's some one time impacts in that. How do you look at sort of revenue seasonality in 2026? Does it sort of get back to your regular cadence, most likely? Yeah, I think that, you know, we're obviously always evaluating our accruals and trying to do the best job we can there. We do have some of those one-off type items, but I would expect that we probably get back a little bit to the second and fourth quarter, potentially being slightly higher than the first and third quarters, just based on the timing of certain things.

Golar: Okay and then.

Golar: This year, the seasonality sort of changed a little bit with third quarter above fourth quarter and there was some one time impacts in that how do you look at sort of revenue seasonality in 2026, sorry to get back to a regular cadence most likely.

Golar: Yeah I think.

Golar: We're obviously always evaluating our accruals and trying to do the best job. We can there we do have some of those one off type items, but I would expect that.

Golar: We'd probably get back a little bit to the second and fourth quarter potentially being slightly higher than.

Golar: The first and third quarters, just based on the timing of certain things, but we're doing our best with the accruals to try and.

Richard Baldry: But, you know, we're doing our best with the accruals to try and reflect revenue accurately by quarter in the quarter that we're in.

Golar: Reflect revenue accurately by quarter in the quarter that is earned.

Richard Baldry: And, you know, interest rates have been a little bit volatile lately. Could you talk a little bit about, you know, sort of where you're hedged and what your strategy is on that in the sort of near to intermediate term? Yeah, so we're still sitting at $150 million hedged, which is where we've been for a while. And as our debt has ticked up a little bit with our ongoing M&A activity, we are constantly evaluating whether we should put on an additional hedge. We'll continue to do that. And obviously, with some of the volatility right now, we haven't seen compelling data to pull the trigger on that yet, but it's something that we constantly evaluate.

Speaker Change: And interest rates have been a little bit volatile lately could you talk a little bit about sort of where you are hedged and what your strategy is on that in a sort of near to intermediate term.

Golar: Yes, so we're still sitting at a $150 million hedged, which is where we've been for a while and as our debt has.

Golar: Ticked up a little bit with our ongoing M&A activity we are constantly.

Golar: Constantly evaluating whether we should put on an additional hedge will continue to do that and you know obviously with some of the volatility right now, which we haven't.

Golar: What we haven't seen compelling data to to pull the trigger on that yet, but it's something that we constantly evaluate.

Richard Baldry: Last for me, sir, you talked lightly on, you know, you thought the pipeline looked good. Can you talk a little bit more about sort of how much capital you're targeting to deploy in 26? So is there any sort of expected split between, you know, the publishing side? versus the recorded side? Or again, will that be sort of on an outcome deal base? We generally have to be opportunistic around deal flow. So while we may have desires around how much recorded or publishing assets we want to acquire, that's not really how it always shakes out because we have to be opportunistic and we're at the whim of what is in front of us and what we have a high likelihood to execute on.

Speaker Change: Last for me, Sir you talk lately on the pipeline looks good.

Speaker Change: Can you talk a little bit more about how much capital you're targeting to deploy in 26, I'm sorry is there any sort of expected split between the publishing side.

Speaker Change: Sorry versus the recorded side are again will that be sort of on an AD com deal basis.

Speaker Change: We generally have to be opportunistic around deal flow. So while we may.

Speaker Change: Have desires around how much recorded our publishing assets, we want to acquire them, that's not really how it always shakes out because we have to be opportunistic and we were at the window of what is in front of us and what we have a high likelihood to execute on them and then I'll, let Jim answer on.

James Heindlmeyer: And then I'll let Jim answer on how the free cash flow goes into our modeling there. Yeah, and on that part, Rich, you know, you can look at our investor dexie where we project our free cash flow to be, which, you know, is around fifty million dollars as we as we move into fiscal twenty-six. And typically what we are looking at with respect to guidance is, you know, an assumption around deploying that free cash flow to ongoing M&A, writer signings, as we have in the past. It is, you know, again something that we constantly evaluate.

Speaker Change: How the free cash flow goes into our into our modeling there yeah.

Speaker Change: Part rich.

Speaker Change: You can look at our investor deck see where we are.

Speaker Change: Project or our free cash flow to be which is around $50 million as we as we move into fiscal 'twenty six and.

Speaker Change: Typically what we are looking at with respect to guidance as you know an assumption around deploying that free cash flow to ongoing M&A writer signings as we have in the past. It is again something that we constantly evaluate what's the best use of our capital deployment, but.

James Heindlmeyer: What's the best use of our capital deployment? But that's that's generally how we look at it.

Speaker Change: So that's generally how we look at it.

Richard Baldry: If maybe one last one for me, your capital deployment this year seemed to be a little more heavily weighted in the second half, and the revenues sort of reflect sort of a step up there because of that. If I take that second half and run rate it, it looks pretty close to where your revenues for twenty six would be. So you talk about sort of what factors go into that twenty six guide. If it's more conservatism, are there some one time impacts on the second half of twenty five that we have to keep in mind as we're modeling the year out?

Speaker Change: Maybe one last one for me.

Speaker Change: Your capital deployment this year seem to be a little more heavily weighted in the second half and the revenue sort of reflect sort of a step up there because of that.

Speaker Change: Take that second half run rate it looks pretty close to where your revenues for 2006 would be so can you talk about.

Speaker Change: What factors go into that 26 guide.

Speaker Change: And it's more conservatism or are there. Some one time impact on the second half of 'twenty five that we have to keep in mind as we're modeling the year out. Thanks.

James Heindlmeyer: Thanks. Yeah, so on our end, you know, one of the difficult things with guidance in this business is, you know, we have been fortunate, or I'll say our creative team has done a very good job of signing good writers, and we've had hits. So when you have a hit like Espresso, you know, over the past year, and that generates a significant amount of revenue, we are not necessarily going to project another hit like that in fiscal 26. We have been fortunate, like I said, to have hits, you know, year after year, but it's not something that we build into our guide.

Speaker Change: Yes, so on Iran. You know one of the difficult things with guidance in this business as you know we have been fortunate.

Speaker Change: Or I'll say, our creative team has done a very good job of signing good writers and we've had hits. So when you have a hit like espresso you know over the past year and generate a significant amount of revenue.

Speaker Change: We are not necessarily going to project another hit like that in fiscal 'twenty. Six we have been fortunate like I said to have its you know year after year, but it's not something that we built into our guide so sometimes those types of things will impact what seems like conservatism.

Richard Baldry: So sometimes those types of things will impact what seems like conservatism in our guide. And I know it makes your job a little bit more difficult, but that's, you know, just probably one of the factors that goes into it that they should be aware of.

Speaker Change: In our guide and I know it makes your job a little bit more difficult, but that's just probably one of the factors that goes into it that.

Speaker Change: So you should be aware of.

Speaker Change: Okay.

Richard Baldry: Great, thanks.

Speaker Change: Great. Thanks.

Operator: Thank you.

Speaker Change: Thank you.

Operator: Once again, that is star one if you would like to register a question at this time.

Speaker Change: Thank you once again that is star one if he would like to register a question at this time.

Griffin Boss: Our next question is coming from Griffin Boss. Hi, good morning, and thanks for taking my question. So I just wanted to jump back on the capital deployed. I just want to make sure that I heard that correctly when you mentioned $150 million number. Was that for the year, or was that for the fourth quarter?

Griffin Boss: Our next question is coming from Griffin boss of B Riley Securities. Please go ahead.

Griffin Boss: Hi, good morning, and thanks for taking my question so.

Griffin Boss: Just wanted to jump back on the capital deployed I just want to make.

Griffin Boss: Sure.

Griffin Boss: Directionally we need.

Griffin Boss: Mentioned.

Griffin Boss: $50 million number or was that for the year.

Griffin Boss: Or was that for the fourth quarter and I'm sure we'll see it in the 10-K, but maybe talk about how much of that was allocated to the strata in the fourth quarter.

James Heindlmeyer: And I'm sure we'll see it in the 10K, but maybe talk about how much of that was allocated to Lestrata in the fourth quarter. Sure, good morning. It was $115 million and it was for the year, 1-1-5. Okay, thank you. Great.

Griffin Boss: Sure. Good morning, It was 115 million and it was for the year 115.

Speaker Change: Okay. Thank you Craig.

Griffin Boss: And then in terms of the POD India initiative there, could you just help us handicap how India stacks up to other regions? You mentioned the 13% expected data growth through 2027 for that region, but maybe if you could just dig into how that stacks up to other regions like the U.S. and maybe if you could talk a little bit more about the modernization in that region, particularly on the digital side, how that compares to a market like the U.S. Sure. I mean, the markets like the U.S. and Western Europe, for example, are advanced and just don't have the same saturation as far as the DSPs go, and the subscription numbers and the growth on that is not as significant as what is happening in the emerging markets just because of the population and the number of people in that opportunity that exists to get people converted to becoming paying subscribers.

Speaker Change: And then in terms of the pot.

Griffin Boss: The initiatives there.

Griffin Boss: Could you just help us handicap, how India stacks up to.

Griffin Boss: Other regions, you mentioned, the 13% expected CAGR through 2027 for that region, but.

Griffin Boss: Maybe if you could just dig into how that stacks up to other regions like the U S.

Griffin Boss: Maybe if you could talk a little bit more about monetization in that in that region, particularly on the digital side.

Griffin Boss: How that compares to a market like the U S.

Griffin Boss: Sure I mean, the market like the U S and Western Europe for example, our advanced and just don't have the same saturation as far as the Asp's go and the subscription numbers and the growth on that is not.

Griffin Boss: Not as significant as what is happening in the emerging markets just because of the population and the number of people in that opportunity that exists to get people converted to becoming paying subscribers.

Golnar Khosrowshahi: As far as the growth rates go, it varies country by country, but the growth rate in India is pretty significant given both the size of the population and the opportunity for just the number of people to become streamers of music. So The monetization in the regions works similarly to other regions. There are differences in how performance royalties are monetized, and again, that varies country by country, and so we just anticipate that there is a future. across the Middle East, in India. where there's going to be significant growth on a subscription basis, where there's going to be significant growth in listenership and number of subscribers, and where there's going to be convention around the monetization of public...

Griffin Boss: As far as the growth rates go it varies country by country, but the growth rate in India is a pretty significant given the size of the population and the opportunity for just the number of people to too big.

Griffin Boss: Become a streamers of music so.

Griffin Boss: The monetization in the regions.

Griffin Boss: Works similarly to other regions.

Griffin Boss: There are differences in how performance royalties or amount to monetize and again that varies country by country.

Griffin Boss: And so we just anticipate that there is a future.

Griffin Boss: Across the middle East in India.

Griffin Boss:

Griffin Boss: Where there's going to be significant growth on a subscription basis, where there's going to be significant growth in listenership in number of subscribers and where theres going to be convention around the monetization of public performance.

Griffin Boss: Got it okay. Thanks, a lot and.

Griffin Boss: I know you touched on it in the last question as well in terms of the revenue guide, Jim, but I'm just curious if you can, I mean, you had $115 million deployed for acquisitions, M&A, royalty advances this year, and the guide for 2026, is that an organic growth rate that we should expect for the current catalog, call it mid-single-digit going forward? It seems conservative given the amount of additions you had coming into fiscal 2026. And I know you talked about it, but yeah, yeah, yeah, maybe you could elaborate a little bit more. Again, there's a couple things that are difficult to compare from year to year, right?

Griffin Boss: I know you've touched on it and the last question as well in terms of the revenue.

Speaker Change: Who died Jim but just.

Griffin Boss: Just curious if you didn't.

Griffin Boss: You had 115 million deployed for.

Speaker Change: <unk> M&A.

Griffin Boss: Royalty advances this year and the.

Griffin Boss: Guidance for 2026.

Griffin Boss: I just I is that inorganic growth rate that we should expect for the current catalog call. It mid single digit going forward.

Griffin Boss: Okay.

Speaker Change: It seems conservative given the amount of additions you had.

Griffin Boss: Coming into fiscal 'twenty.

Griffin Boss: Yeah, and I know you talked about it but yeah, yeah, yeah, maybe elaborate a little bit yet.

Griffin Boss: You know again, there's a there's a couple of things.

Griffin Boss: That are difficult for you to compare from year to year right. So I touched on the fact that you know we've had hits in the past year and while we hope to expect to continue to have quality music.

James Heindlmeyer: So I touched on the fact that we've had hits in the past year, and while we hope to, expect to continue to have quality music, continued hits, we don't project for that. We're not going to project that this writer is going to write another number one song that's going to perform in this way. We're going to be a little bit more conservative around that kind of stuff. So that goes against us a little bit in our guide. We obviously evaluate that as we move through the year, and we will update our guidance when we get to Q2.

Griffin Boss: Continued hits, we don't project for Ford that we're not going to project that.

Griffin Boss: This rider is going to write another number one song that's going to perform in this way, we're going to be a little bit more conservative around that kind of stuff. So that goes against us a little bit in our guide, we obviously evaluate that as we move through the year and we will update our guidance when we get to Q2.

James Heindlmeyer: We had a couple of things that we called out in Q3, and you'll see it in the 10-K around audit recoveries and revenue that that generated in fiscal 25. We don't project for that kind of stuff in the coming year. So those types of things, one can call it conservatism or just being prudent with respect to how we project and guide for the coming fiscal year, but those are some of the types of things that will make that look a little bit more conservative than maybe it is. You know, we have consistently outperformed in our time as a public company, and we look forward to continuing to do that, and we'll update our guidance as we move through the year and have better information.

Griffin Boss: We had a couple of things that we called out and.

Griffin Boss: In Q3, and you'll see it in the 10-K around audit recoveries.

Griffin Boss: Revenue that that generated.

Griffin Boss: In fiscal 'twenty, five we don't project for that kind of stuff in the.

Griffin Boss: The coming year. So those types of things one can call it conservatism or just being prudent with respect to how we project.

Griffin Boss: And guide for the coming fiscal year, but those are some of the types of things that will make that comp look a little bit more conservative than maybe it is.

Griffin Boss: We have consistently outperformed.

Griffin Boss: In our time as a public company and we look forward to continuing to do that.

Griffin Boss: And we will update our guidance as we move through the year and have better information.

Griffin Boss: Got it. Understood. Thanks, Jim, for the call. I appreciate it. Thanks for taking my question. Thank you.

Griffin Boss: Got it understood. Thanks for the color appreciate it thanks for taking my question.

Griffin Boss: Thank you.

Golnar Khosrowshahi: At this time, I'd like to turn the floor back over.

Griffin Boss: At this time I'd like to turn the floor back over to MS. Kosovo Shah for closing comments.

Golnar Khosrowshahi: Khosrowshahi for closing comments. Thank you, Operator. This has been another incredible fiscal year for Reservoir as we added legendary talent to our roster, grew our publishing and recording catalog with high-quality music, and further expanded our global presence. I believe we are well-positioned to drive top-line growth and further improve our bottom line. We appreciate your interest and look forward to sharing our first fiscal quarter results with you this summer. Thank you.

Speaker Change: Thank you operator this has been another incredible fiscal year for reservoir as we added legendary talent to our roster grew our publishing and recorded catalog with high quality music and further expanded our global presence I believe we are well positioned to drive top line growth and further improve our bottom line. We appreciate your interest and look.

Speaker Change: Forward to sharing our first fiscal quarter results with you. This summer. Thank you.

Operator: Operator.

Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your line to log off the webcast at this time and enjoy the rest of the event. © BF-WATCH TV 2021

Speaker Change: Ladies and gentlemen. This concludes today's event you may disconnect your lines log off the webcast at this time and enjoy the rest of your day.

Speaker Change: Okay.

Speaker Change: [music].