Reservoir Media's revenue rose 19% as the company raises guidance for full-year results

Gains in recorded music and improved digital rights helped Reservoir Media's revenue rise 19% to $35.5 million in the fiscal third quarter ended Dec. 31, the company said on Wednesday (Feb. 7).

The quarter's strong results allowed Reservoir Media to raise its guidance for the full fiscal year ended March 31. Full-year revenue guidance was increased from $133 million to $137 million to $140 million to $142 million, implying 15% year-over-year growth at the midpoint. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance was increased from a range of $50 million to $52 million to a range of $53 million to $55 million, which would be a 16.5% year-over-year improvement year. Reservoir Media also raised its guidance when it released its previous earnings in November.

The results “demonstrate our ability to manage the business and deploy capital to further grow our portfolio,” CEO Golnar Khosrowshahi he said during Wednesday's earnings call. “Along these lines during the quarter, we continued to invest in our business, focusing on further diversifying our portfolio across different genres of music.”

Recorded music revenue rose 32% to $10 million, including catalog acquisitions. The division's digital revenue rose 26% to $6.6 million, while physical revenue rose 51% to $1.7 million. Synch revenue doubled to $800,000 and neighboring rights gained 16% to $1 million.

Publishing revenue dominated overall revenue, however, improving 15% to $23.1 million. Digital publishing revenue increased 30% to $13.9 million and sync revenue increased 9% to $4 million. Performance, engineering and other revenues were down from the previous quarter.

Sync revenue from both divisions was impacted by writer's and actors' strikes in 2023, CFO explained Jim Hendlmeyer. A “very promising” ad market helped synchronize revenue during delays in TV and film production, he added.

The quarter was also helped by numerous Reservoir Media signings and acquisitions, including Theo Katzman, a founding member of Vulfpeck and collaborator of artists such as Carly Rae Jepsen and Teddy Geiger. In December, Reservoir signed singer-songwriter grentperez, for whom he handles administrative and creative aspects with his Australian sub-publisher, Mushroom Music. In October, the company signed a worldwide publishing deal with Joe Walsh. Its last announced acquisition was Arthur “Boogie” Smith's catalog in November.

Reservoir highlighted Grammy success for the songwriters and producers on its roster. Winners included Best Pop album winner Joni Mitchell, who signed a publishing deal with the label in 2021. Killer Mike, who signed with Reservoir in 2022, won in three rap categories: Best Rap Song (” Scientists & Engineers”), Best Rap album (Michael) and Best Rap Performance (“Scientists & Engineers”). Elsewhere, Khris Riddick-Tynes' collaboration with SZA, “Snooze,” won best R&B song, and Blue Raincoat Music client Phoebe Bridgers was up for four awards, including best rock song, with the boygenius band.

Shares of Reservoir Media rose 6.1% to $7.26 early Wednesday morning before falling to $6.49, down 5.1%, by midday.