Reservoir Media Revenue Up 26% in Fiscal Third Quarter

Reservoir Media rode a recovering music market and a string of acquisitions to improve revenue 26% to $27.1 million in the fiscal third quarter ending Dec. 31, 2021, the company announced Tuesday (Feb. 8). Revenue grew 15% organically from primarily gains at digital services and a buoyant synchronization market.

In the nine-month period ending in its third fiscal quarter, revenue improved 32% to $74.3 million and adjusted earnings before interest, taxes, depreciation and amortization rose 28% to $27.4 million.

Reservoir slightly raised its guidance for the fiscal year ending March 31, 2022. It expects revenue to be $103 million to $105 million, up from $100 million to $104 million, and adjusted EBITDA to be $40 million to $41 million, up from $37 million to $40 million. Its shares fell as much as 11.5% and ended trading at $5.52, down 8.3% following the earnings release.

Its acquisition of Tommy Boy Music in June 2021 helped drive Reservoir’s recorded music revenue up 147% to $8.1 million. Synchronization revenue skyrocketed over 12 times to $1.2 million. Digital royalties, the largest category, climbed 217% to $4.9 million. Physical revenue improved 9% to $1.3 million and neighboring rights rose 57% to $700,000.

Music publishing revenue increased 4% to $18.4 million, a 22% improvement if a one-time settlement were removed from the prior-year quarter. Synchronization revenue jumped 79% to $2.4 million. Performance royalties grew 6% to $4 million. Digital revenue, the largest publishing segment, was $8.5 million.

The company expects to invest $200 million in strategic M&A in its first year as a public company and has “$3 billion worth of deals in the pipeline,” Golnar Khosrowshahi, founder and CEO, said in a statement.

Q3 Highlights (Year-Over-Year)

• Total revenue:  $27.1 million, up 26%
• Recorded music revenue: $8.1 million, up 147%
  • Digital: $4.9 million, up 217%
  • Synchronization: $1.2 million, up 1220%
• Music publishing revenue: $18.4 million, up 4%
  • Digital: $8.5 million, down 27%
  • Synchronization: $2.4 million, up 79%
• Operating income: $4 million, down 18.7%
• Net income: $2.4 million, no change y/y
• Revenue guidance for fiscal 2022: $103-105 million