Reservoir’s revenues grew 13% YoY to $122.3m in its full fiscal year ending March 31 – Music Business Worldwide

Reservoir Media has today (May 31) published the financial results for its fiscal Q4 2023 (calendar Q1 2023) and FY fiscal 2023, ended March 31, 2023.

The results for New York-based Reservoir come two years after the company floated on the NASDAQ via a merger with a SPAC (in July 2021).

FULL-YEAR RESULTS

According to Reservoir’s SEC filing, the company’s total revenues (including recorded music and publishing) in its FY fiscal 2023 grew 13% to $122.3 million.

On an organic basis (i.e. discounting acquisitions), Reservoir says that its overall revenues grew by 8% in the 12 months to end of March.

CALENDAR Q1 / FISCAL Q4 RESULTS

Reservoir’s total revenues in its fiscal Q4 (calendar Q1 2023) declined 1% to $34.8 million, compared to $35.1 million in the prior year quarter.

Reservoir says that this overall decrease in the quarter “was due to the decline in the Music Publishing segment, which was driven by lower Performance, Synch, and Other Revenue”.

The company notes that “lower sales in the Music Publishing segment were partly offset by higher sales in the Recorded Music segment”.

Music Publishing

Reservoir’s music publishing revenues in FY fiscal 2023 (the 12 months to end of March) reached $83.8 million, an increase of 9% compared to $77.1 million in FY fiscal 2022.

Music publishing revenue in the company’s fiscal Q4 (calendar Q1 2023) was $23.2 million, a decrease of 8% compared to $25.1 million in the prior year quarter (see below).

Reservoir notes that the decline in revenue was largely driven by lower Performance, Synch, and Other Revenue.

Within music publishing, Reservoir generated ‘Digital’ revenues of $11.7 million in calendar Q1, up 7% YoY.

Mechanical revenues grew 28% YoY to $1.4 million in calendar Q1 (fiscal Q4).

Recorded Music

Reservoir’s recorded music revenues for its FY fiscal 2023, ended March 31, increased by 18% YoY to $34.8 million, versus $29.5 million in FY fiscal 2022 (see below).

The company’s recorded music revenues in calendar Q1 2023 reached $10.8 million, an increase of 10% compared to $9.8 million in the prior year quarter.

Reservoir notes that growth in both periods “was driven by strong results within its Digital Revenue as streaming across platforms globally continues to ramp”.

Within the Recorded Music segment, Digital grew 7% to $6.8 million in calendar Q1 2023.

Physical revenues in calendar Q1 grew 69% YoY to $2.8 million (see below).

Elsewhere in Reservoir’s latest filing, the company reports that its Operating Income in FY fiscal 2023 was $21.1 million, an increase of 9% compared to Operating Income of $19.4 million in the prior year.

OIBDA (Operating Income Before Depreciation & Amortization) in FY fiscal 2023 increased 12% to $43.1 million, compared to $38.4 million in the prior year.

Adjusted EBITDA in FY fiscal 2023 increased 12% to $46.3 million, compared to $41.3 million in the prior year.

Reservoir says that the increase in Operating Income, OIBDA, and Adjusted EBITDA for the year was driven by higher revenues across the business and “effectively managing operating expenses despite having a full year of public company costs in fiscal 2023”.

“We remain singularly focused on our strategy of bolstering our roster of talented artists and capturing more value enhancement opportunities, while concurrently strengthening our financial profile to benefit all stakeholders.”

Golnar Khosrowshahi, Reservoir

Commenting on the company’s results, Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir, said: “We continue to deliver on our goals and are encouraged by the momentum in our business and the broader music industry over the past fiscal year. We remained steadfast in our disciplined approach to capital deployment with strategic investments to drive our future growth as well as creating value for our roster of artists.

“Bringing Grammy-winning hip-hop trio De La Soul’s iconic catalog to all streaming platforms for the first time ever showcased our effective value enhancement initiatives, as we deployed our team and resources to drive value through multiple avenues.

“We continue to be the preferred partner of outstanding legacy artists, including recently announced deals with jazz legend Sonny Rollins, Rock and Roll and Grammy Hall of Fame inductee Dion, and multi-Platinum hip-hop producer Mannie Fresh, which will bring significant growth opportunities for their catalogs and create new listeners and fans.

“Our team’s ability to partner with both legacy and emerging artists to drive value-additive deals is fundamental to our success and reputation as a caretaker of our artists’ bodies of work.

Khosrowshahi added: “Our Recorded Music segment showed continued strength in the fourth quarter; generating double-digit growth while our broader business performed well despite a difficult year-over-year comparable due to an exceptional fourth quarter in fiscal 2022. Looking ahead, we are confident and excited by the opportunities for us in a competitive market landscape, and we take pride in our growing position as an industry leader representing artists who entrust us to manage their catalogs.

“We remain singularly focused on our strategy of bolstering our roster of talented artists and capturing more value enhancement opportunities, while concurrently strengthening our financial profile to benefit all stakeholders.”

“We are pleased to close the year ahead of our guided range for Revenue and within our guided range for Adjusted EBITDA.”

Jim Heindlmeyer, Reservoir

Jim Heindlmeyer, Chief Financial Officer of Reservoir, said: “We are pleased to close the year ahead of our guided range for Revenue and within our guided range for Adjusted EBITDA.

“We executed numerous accretive deals in fiscal year 2023 as we progressed our company initiatives and effectively deployed capital. Looking ahead, we expect to build upon the growth we achieved in fiscal 2023 and anticipate 6% growth for Revenue and 9% growth for Adjusted EBITDA in fiscal 2024 at the midpoint of our guidance ranges.

“Our outlook includes strong top-line growth expectations and margin expansion across our business segments as we continue to see a positive impact on profitability from our strategic acquisitions and benefit from secular tailwinds across the music industry.”

Music Business Worldwide