Music rights company Reservoir Media has reported a solid jump in revenue for its fiscal Q3 (calendar Q4) ended December 31, 2023, and raised its outlook for the full year.
The New York-headquartered company reported revenue of USD $35.48 million for the quarter ending December 31, 2023, an increase of 14% YoY on an organic basis, or 19% YoY when including acquisitions.
Over the past year, those acquisitions included the full catalog of Miami Sound Machine songwriter Enrique “Kiki” Garcia; the catalog of hitmaker Rudy Perez, who has written songs for such artists as Christina Aguilera and Julio Iglesias; and a global publishing deal with Joe Walsh of The Eagles that includes material he wrote for the legendary rock band, solo works and future works.
In Reservoir’s fiscal Q3 (calendar Q4), the company narrowed its net loss to $2.86 million, thanks to “higher revenue and improved gross margins,” the company said in its earnings statement, released on Wednesday (February 7). That compares with a net loss of $4.07 million in the same quarter a year earlier.
Music publishing revenues came in at $23.1 million, up 15% YoY, with digital music leading both revenue and growth, up 30% YoY to $13.9 million. Synch revenue grew 9% YoY to $4.0 million, while performance revenues fell 3% YoY to $4.3 million.
On the recorded music side, Reservoir reported total revenues of $10.0 million, a 32% YoY increase. Digital revenues were the largest segment, up 26% YoY to $6.6 million. Physical revenues came in at $1.7 million, up 51% YoY, while synch revenues more than doubled (up 101% YoY) to $800,000.
Reservoir reported adjusted EBITDA of $13.86 million for the quarter, compared to $10.94 million in the same quarter a year earlier, an increase of about 25% YoY.
“Strong revenue growth from both segments [music publishing and recorded music[ was partially offset by higher administrative expenses, excluding non-cash expenses like stock-based compensation,” the company said.
“Our third quarter results highlight the strength of our business model and our ability to deploy capital to further grow our portfolio,” founder and CEO Golnar Khosrowshahi said in the statement.
On the earnings call, Khosrowshahi said the company’s acquisitions pipeline “remains very active globally and across both business segments. With the support of consistent and predictable cash flows, we anticipate continuing to execute deals well within our expected return profile.”
The company raised its outlook for its fiscal 2024, which ends March 31, 2024. It now expects revenue of between $140 million and $142 million for the year, which would represent a 15% YoY increase at the mid-point.
In its prior quarterly report, the company issued an outlook of $133 million-$137 million in revenue for FY 2024.
Reservoir now sees adjusted EBITDA coming in at $53 million-$55 million for the year (up 17% at the mid-point), from the prior quarter’s estimate of $50 million-$52 million.
On the earnings call, the company touted the Grammy wins racked up by its roster’s producers and songwriters.
“Our roster earned an impressive 39 Grammy nominations across 28 categories and contributed to 10 wins, including Joni Mitchell‘s Best Folk Album, a sweep by Killer Mike across the three rap categories and best R&B song for Khris Riddick-Tynes’ collaboration [on] Snooze by SZA. Their nominations and wins are a testament to the caliber of talent we represent at Reservoir,” Khosrowshahi said.
“We would like to be in a position to be content owners in the international markets on the cusp and ahead of how these markets grow and consumption grows and streaming grows, which will then translate into the associated revenues, and that’s what makes it captivating for us.”
Golnar Khosrowshahi, Reservoir
Khosrowshahi also noted that “as reported by Billboard‘s publishers quarterly, Reservoir earned a hot 100 top 10 market share for the three quarters reported so far for calendar 2023,” adding that SZA’s Snooze alone generated more than 500 million on-demand streams.
The company continues to be focused on international acquisitions, having declared its intention last year to become the world’s “largest holder of Arabic music copyrights.”
“We are able to execute in [international] markets at very attractive pricing, which makes for attractive returns,” Khosrowshahi said on the earnings call.
“There is the promise of future growth that we are intrigued by as subscription numbers grow, as access to platforms develops. So that makes it significantly attractive to us,” she added.
“We would like to be in a position to be content owners in the international markets on the cusp and ahead of how these markets grow and consumption grows and streaming grows, which will then translate into the associated revenues, and that’s what makes it captivating for us.”Music Business Worldwide