Revenues reach $145 million through acquisitions and more

Subscription gains and a string of acquisitions helped Reservoir Media grow its fiscal year revenue 18% to $144.9 million, topping the company’s February forecast of $140 million to $142 million, the company announced on Thursday (May 30). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the period ended March 31 increased 20% to $55.6 million, beating the guidance of $53 million to $55 million.

Organic growth, excluding the impact of acquisitions made during the year, was 14% for the full year. The company’s catalog products purchased during the fiscal year included four members of R&B group The Spinners, Latin music artist Rudy Perez, hip-hop producer Mannie Fresh and 2Pac collaborator Big D Evans. Reservoir also invested in Egyptian company RE Media and Saudi hip-hop label Mashrex.

Reservoir Media’s acquisitions during the year included songwriter Steph Carter, who co-wrote Sabrina Carpenter’s “Espresso,” and Rob Ragosta, co-writer of Jelly Roll’s “Need a Favor.” The company also signed publishing deals with rock band Kings of Leon and rock legend Joe Walsh.

The company said it expects fiscal 2025 revenue of $148 million to $152 million, which would reflect growth of 3.5% at the midpoint. Adjusted EBITDA is expected to be in the range of $58 million to $61 million, representing a 7.0% increase at the midpoint.

“Our financial guidance reflects our belief that growth will be driven by organic growth through our efforts to add value and capitalize on the projected growth of the music industry,” CEO Golnar Khosrowshahi he said during Thursday’s earnings call. She added that some of that organic growth will come from additional price increases for music subscription services: “Looking ahead, we are poised to benefit from what we believe will become a regular cadence of price increases across streaming platforms.”

Reservoir Media shares jumped 15.5% to $9.00 on Thursday morning and fell to $8.26 by late afternoon, a gain of 6.1%.

Elsewhere, the company’s full-year publishing revenue increased 15% to $96.2 million. Digital revenues increased 17% to $51.6 million and performance royalties increased 36% to $22.8 million. Chief Financial Officer Jim Heindlmeyer stated that “the improvement is largely due to higher royalty rates and price increases across many music streaming services, as well as the expansion of our catalog through mergers and acquisitions.”

Recorded music revenue increased 22% to $42.4 million for the fiscal year, primarily due to price increases for subscription services and Reservoir Media’s release schedule, Heindlmeyer said. While physical sales revenues increased 49% to $8.9 million, digital recorded revenues increased 17% to $26.9 million and accounted for the majority of the increase in recorded music revenues of $7.6 million.

Fiscal fourth-quarter revenues increased 12% to $39.1 million. However, operating income increased just 2% to $8.8 million, while adjusted EBITDA increased 6% to $16.0 million.

Reservoir’s pipeline of potential acquisitions dropped 50% to $1 billion, down from $2 billion at the end of December. Khosrowshahi, however, downplayed the change, noting that the company is seeing “strong deal flow” despite moving “several larger deals.” Year-end liquidity of $132.3 million with $18.1 million in cash and $114.2 million in revolving credit facilities “provides us with capital to finance our strategic goals,” Heindlmeyer said. Khosrowshahi added: “Overall, I’m quite optimistic about what this pipeline will look like.”