Q1 2026 Reservoir Media Inc Earnings Call
Greetings, and welcome to the reservoir media, q1, fiscal year, 2026 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 should require operator assistance during the conference, please press star zero on your telephone keypad,
Please note this conference is being recorded.
I would now like to turn the conference over to your host Jackie Marquez. Please go ahead.
Thank you, operator. Good morning, everyone. And thank you for participating in today's earnings conference. Call Reservoir media issued a press release with results. For its first quarter of fiscal year 2026 and did June 30th 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.com Reservoir, media.com
With me on today's call are golden nusr. Shahi founder and chief executive officer and Jim heindel, Meyer Chief Financial Officer. As a reminder this call is being simultaneously webcast and will be recorded and archived on the investor relations section of our website.
Before I turn the call over to golnar and Jim, I'd like to note that today's discussion will contain forward-looking statements that reflect the current views of reservoir media about our business financial performance and future events. And as such involves 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.
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.
In addition to financial results presented in accordance with generally accepted accounting principles, we plan to present during this call certain financial measures that do not conform to U.S. GAAP. We believe they are useful to investors or that they will help investors 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 Bonnar.
Morning everyone and thank you for joining us today. Our financial results in the first fiscal quarter put us in line with our full year projections with Topline growth of 8% 5% coming organically.
We continue to see healthy demand for our portfolio across music. Publishing and recorded music.
Fiscal 2026 is shaping up to be an important year for Reservoir.
We are actively advancing a robust pipeline of acquisition opportunities and continuing to diversify our portfolio in ways. That enhance long-term value.
This positions us well to execute on our strategic growth objective.
Just last month, we announced an investment in london-based entertainment company, Lightroom.
Which develops an exhibits ip-led immersive entertainment experiences.
Since its Flagship, London venue opened in February of 2023.
Lightroom has stood out as a premier provider of immersive entertainment combining exceptional storytelling with a scalable it-driven product model.
Lightroom programming to date, has featured an impressive slate of A-list collaborators including Tom Hanks, Cole play, David hockney, ano Andor and Han Zimmer.
The global immersive entertainment industry as a whole was valued at $133 billion in 2024 and is expected to reach $473 billion by 2030.
This partnership diversifies Reservoir's investment portfolio into the high-growth, immersive entertainment vertical and unlocks additional value from our IP's use as the foundation for future shows.
Immersive experiences built around music or particularly attractive to the growing superfan Market of Highly engaged. Music fans, which has risen to 20% of paid streaming subscribers in the US.
As of the end of 2024.
according to luminate,
We are pleased to be supporting Lightroom's efforts and look forward to helping bring future shows to life.
On the recorded, music side of the business. We furthered our commitment to expanding this segment, with the addition of independent label Fool's Gold Records.
Reservoir required, the master rights to the catalogs of 5 of the labels artists, and will also exclusively market and distribute all other existing, and future recordings on Fool's Gold, including sub-label, atrack and Friends.
Fool's Gold earned its reputation as a tastemaker indie label across dance, electronic, and hip-hop with hits by Kid Cudi, Danny Brown, and a track. The deal includes an era-defining remix of "Yay!" Y's heads will roll, and his duo Ducks off as a viral Grammy-nominated single, "Barber Shand."
this acquisition follows, a recent addition of uk-based label new state, as well as a new partnership with nashville-based label off-road records
Together these moves reflect our Focus strategy to build and strengthen reservoirs recorded, music platform with commercially relevant assets.
These labels are also all notably independent and through these deals we continue to Champion the value in influence of Indie music. On a global scale, we are solidly scaling this segment of our business and we believe it represents a meaningful opportunity for long-term value creation.
Sustained client retention, also continues to be a key driver of our long-term growth and operational stability.
A few weeks ago, we announced the extension of our publishing deal. With Grammy award-winning, songwriter producer, Chris Riddick times.
Who has been a part of the reservoir family since 2020?
Chris Co wrote and co-produced siza single snooze which took home. The 2024 Grammy for Best, R&B song, and contributed to the success of her 6-time Platinum selling. And number 1 album, SOS,
earlier this spring, the album broke the record for most total weeks at number 1, on Billboard's, top R&B hip hop albums, chart beating out the long-standing record holder, Michael Jackson's Thriller
More recently, Chris Co wrote Kalani's hit single "Folded," which debuted at number 7 on Billboard's Hot R&B Songs and marks the biggest debut of her career to date.
Mitchell Reservoir entered into an administration agreement with Joanie in 2021, and it has been an incredible few years, witnessing new generations of fans discovering Jan's magic through her triumphant return to the stage. We have been honored to support her during this time.
Being in business with creators, whose music is culturally. Impactful continues to be a hugely rewarding aspect of our business and we look forward to our ongoing Partnerships with them. I will now turn the call over to Jim to discuss our first fiscal quarter Financial results in Greater detail. Jim
Thank you, go and good morning, everyone.
Our first fiscal quarter results, met our internal expectations and demonstrate both the existing portfolio and our success with our Acquisitions of new assets.
Revenue for the first fiscal, quarter was 37.2 million.
A 5% year-over-year Improvement on an organic basis.
And an 8% increase when, including acquisitions.
this was led by the 8% growth in our recorded music segment and the 4% increase, we had in music publishing
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 16% and 15% respectively versus the prior year.
Looking at operating performance for the first quarter, aiba was 12.8 million. An increase of 12% year-over-year and adjusted ibida was up 10% to 13.9 million compared to our q1 and fiscal 2025.
The increase is in a whydah and adjust ibida were due to higher revenues and stronger gross margins. Partially offset by an increase in administration expenses impacted by inflationary pressures and higher expenses associated with increase management Revenue.
Interest expense was 6.3 million for the quarter versus 5.1 million in the prior year driven primarily by a higher debt. Balance due to the use of funds and Acquisitions of Music catalogs, and writer signings, as well as an increase in effective interest rates.
Net loss for the first quarter was approximately 600,000 compared to a net loss of 500,000 in the first quarter of fiscal 2025.
the decrease was impacted by the higher loss, on the fair value of our interest rate, hedges
This resulted in a diluted loss per share for the quarter of 1 cent, the same as the prior year quarter.
Our weighted average diluted outstanding share count during the quarter was approximately 65 million.
Now, let's dive into our segment review, for the quarter.
Music publishing had a 4% increase in Revenue versus the prior year quarter at 24.9 million largely due to an increase in synchronization, Revenue driven by the timing of licenses. And an increase in other publishing Revenue, primarily attributable to acquired stage rights.
These increases were partially offset by a decrease in performance Revenue. Resulting from the timing of hit songs and a decrease in digital Revenue. Due to the timing of receipts from various Revenue sources.
Moving to our recorded music segment. We had an 8% increase to 10.4 million in Revenue, compared to our q1 last year.
This was driven by an increase in digital Revenue due to the continued growth, that music streaming services and the acquisition of catalogs.
The increase in digital Revenue was partially offset by a decrease in synchronization Revenue driven by the timing of licenses, as well as a decrease in physical Revenue.
Turning to our balance sheet.
As of June 30th 2025 cash provided by operating activities was 6 million which was a decrease of 2.5 million compared to the year ago, quarterly due to the timing of royalty payments.
We had a total available liquidity of 173 million consisting of 14.8 million of cash on hand and 158.2 million available under our revolver.
We entered the quarter with total debt of 387.4 million, which was net of 4.5 million of deferred financing costs and thus, we maintained 372.5 million of net debt.
that compares to that debt of 366.7 million as of March, 31st 2025
I would also like to note that in early June, we amended our senior credit facility to increase our revolving credit commitment from $450 million to $550 million, giving us greater flexibility to execute on transactions as opportunities arise.
Consistent with our prior first quarter earnings calls. We are maintaining our recently announced full-year guidance ranges
Range stands at 164 million to 169 million.
and at the midpoint implies growth of 5% versus fiscal 2025
We similarly, reiterate our adjusted ibida guidance range of 68, million to 72 million, which signals growth of 7% over the prior year at the midpoint of that range.
We continually review our forecast for the full year and look forward to providing an update during our Q2 earnings call.
as we look forward to the rest of fiscal 2026, we will remain disciplined, and our Capital deployment strategy and value enhancement efforts that will enable us to achieve our forecasted revenue and adjusted ibida guidance for the full year,
With that, I'll now pass the call back to golmar.
Thank you, Jim. The investments made in just the first quarter are a strong start to what will be an important year ahead for Reservoir.
From our entry into a new vertical with Lightroom to the addition of fool's gold and the re-signing of our valued clients. We have a well-earned reputation as an Innovative music company that believes in the value and importance of our creators work.
Our financial performance in the first fiscal quarter is the best indicator that our strategy is working. And with a deal pipeline of over a billion dollars, we are excited about what is to come with that. We will now open the line for questions.
Thank you.
We will now be conducting a question and answer session.
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And our first question comes from Griffin boss with B Riley securities.
Hi, good morning, thanks for taking my questions. So first, I want to dig into the uh, Lightroom investment. Is there any more color you could provide uh, about the size of this investment or your stake in adventure and and also related to did you go into this with any certain IP in mind that you knew you would want to monetize through these immersive experiences? Or is it more so opportunistic to uh, to enter this? This this industry
Uh, good morning Griffin. Um, I'll answer the second part of your question. First, I think uh there is there are a number of targets uh that we would like to collaborate with light work on around which we can develop content um that are existing clients or catalogs that are represented here. Uh but at the same time, what you said is accurate in that this is an opportunistic Endeavor such that we foresee future content development based on future m&a and, uh, deals that we do there. Uh, so that's how we're approaching that and I will let Jim answer the first part of your question. Yeah. You, you'll see a little bit more detail on that I suppose, in the, the 10 Q when it comes out later today. But, um, you know, this is an investment that puts us at, you know, a, a a single digit Equity stake in the business. We are not a majority owner of the business, um, but it's a a business that as gumar said, we believe is very synergy.
Just to um, to our asset base and we look forward to working with them.
Okay, got it. Thank you and then searching gears to the digital Revenue. Um I just want to confirm um I know Jim you discussed that that was primarily due to timing of receipt. So I just want to confirm that that that wasn't a result of any you know particular weakness at at at certain uh certain dsps or anything like that.
No, not not at all. It's not something that's indicative of a trend that we see going forward. This is really the result of, you know certain uh dsps that from time to time make adjustments. Maybe that is a benefit in 1 quarter. In this case benefit, let's say in the prior year quarter and it doesn't repeat again in this quarter. These things aren't always um, uh, routine in terms of every quarter. Every year, you get the same types of adjustments or cleanups and that's really 1 of the things, that's impacting it in this quarter. It's nothing that we see as um, as being a trend that's concerning for us.
Okay, I understood that. That makes sense. And then, uh, just last for me, and I'll, I'll hand it over. But for the administrative expenses, um, I I understand that those were higher given the, the, the higher management Revenue. Um, but in, in terms of the inflationary pressures there, so should we think of those as kind of structurally higher, uh, going forward, given those inflationary pressures
You know, I think that largely the inflationary pressures were were talking about, you know, the our normal compensation and and the, the increases that folks get annually. Um, as well as our vendors and different technology that we use and maybe inflationary pressures on those costs. Um, the the reality is that the, the bulk of that increase is driven by The increased management Revenue. I think that on our our largest segment, um, being music, publishing our increases in administration expenses were about 5%. So, uh, we're we're doing what we can to control those costs.
Okay. Great, thanks for taking my questions. Good to see the progress.
Thank you, thanks.
Our next question comes from Richard. Baldry with Ross, Capital partners.
Thanks. Your blended gross margins were near, you know, sort of an all-time record in what is seasonally typically a slow quarter. Can you talk about any underlying trends there? Whether that's mixed-driven or the different international geographies you're moving into? How sustainable are those trends or extensible? That is, thanks.
Yeah, there's a a little bit there, you know, you, you see lower, uh, physical revenue on the recorded side. That's a pretty, um, high cost Revenue stream for us. So is, is that's a little lower. We we have a little bit of of margin benefit there, um, and then beyond that, it's, it really comes down to the, the mix of assets. That's that's driving the, uh, the revenue. So, you know, in this quarter we had uh, a little bit of improvement. I think in in both segments, recorded part really, as I touched on with the with the fiscal Revenue coming down as a percentage of the total and on the publishing side, it really comes down to the mix of catalogs that uh are driving that that Revenue
And I, I think a lot of the, the Rev and Rec in the first quarter tends to be sort of, uh, discretionary on the part of your end, customers, they're sort of estimating where maybe second and fourth quarter are really audited. So, do you think over the course of the year, does the, the digital growth sort of mirror, the rest of the business? So we probably see sort of call it catch up in the second quarter when they actually have to audit and come up with, you know, pretty hard hard and fast numbers as opposed to the looser numbers in the first quarter.
yeah, well I I do think that um,
In the first quarter here, certainly on the, on the publishing side. Um, this is not a, a trend, the fact that digital was was down a couple points there. Um,
we do expect that to, um,
to move back to growth as we move through the rest of the year. Um,
And beyond that.
I, I would say that, you know, there's a lot of
Good news happening. You saw the Spotify news yesterday with price increases in the number of markets. And, and that will certainly benefit us on the digital side on, on both segments of the business as we move through the rest of this year.
Maybe last for, maybe, you know, looking into the m&a pipeline are there any, you know, notable changes there? Whether that's, you know, Geographic, genres, whatever, where, you know, you think you'll be headed or, you know, between publishing or recording sides of business? Thanks.
Um, it's an even.
Volume is still.
Able to just having that robust volume is, uh, is a good indicator for us as far as what the opportunities are before us between now and the end of the fiscal year. Uh, I think looking backwards, um, we've been a little bit more focused on the recorded side, uh, but that hasn't been less a strategic for focus and more a result of the best.
Deals that we are presented with. And we have to be opportunistic about that. Um, other than that, I would say that the pipeline is strong, the mix is even and we are going after the transactions that provide us with the highest returns.
And maybe last uh again for me it remind us you know how many of your deals really sort of are organically sourced from the relationship side of the table versus how much you find yourself sort of like open market bidding type situations.
Um, I think I'd add another category in that uh I'd say organically sourced um processes.
Places that us out of an auction process. Uh I don't have the exact figures in front of me but I would say that are more substantial deals. Uh are a result of off-market relationships.
And a very small portion of the transactions that we complete are through auction processes. Uh we try to stay away from those and then um
The organic transactions, they may be higher in number but not necessarily translating into higher-end dollar amount. And that's just because there are a lot of organic deals that we do with, um,
People who are presently represented on the roster. Uh, so if I were to sort of split these up and assign numbers, I'd say, the majority, share is definitely off Market on a value basis.
Great, thanks.
Thank you, rich.
Just now concludes our question and answer session. I would like to turn the floor back over to gulnar clothes for Shahi for closing comments.
Thank you operator. Uh fiscal fiscal year, 2026 is progressing in line with our expectations. Putting us firmly on track to achieve our full year guidance. I'm optimistic about the coming quarters and I'm confident that the best is still to come for our organization. We appreciate your support and interest in Reservoir and I look forward to sharing our second fiscal quarter results with you. This fall. Thank you very much.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference, you may disconnect your lines and have a wonderful day.