Reservoir Posts 46% Quarterly Revenue Boost, Outlines Plans to Drop $100 Million On Catalogs During the Next 12 Months

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Reservoir Media (NASDAQ: RSVR) generated $35.1 million during Q1 2022, according to a newly released earnings report, and the company intends to drop north of $100 million more on its “pipeline of potential deals” in the coming 12 months.

New York City-based Reservoir, which has closed agreements involving the work of Travis Tritt, Oak Felder, Run-DMC producer Larry Smith, Killer Mike, and Detective Pikachu composer Henry Jackman to this point in 2022, just recently unveiled its financials for the year’s opening quarter. The three-month stretch also represents the fourth quarter of Reservoir’s 2022 fiscal year, after the company listed on NASDAQ last summer.

Reservoir’s aforementioned $35.1 million in Q1 2022 revenue marks a 46 percent year-over-year (YoY) boost, including income from acquisitions, and consists of $25.1 million on the publishing side (up 29 percent YoY) as well as $9.8 million or so from recorded music (up 123 percent YoY).

On a quarterly basis, Reservoir previously reported $27.1 million in revenue during Q4 2021, and this sum reflected a 25.9 percent improvement from the same period in 2020.

Back to Q1 2022, though, Reservoir said that its operating income had finished at $8.7 million (up 28 percent YoY), against $8.9 million in net income (a jump of roughly 75 percent from Q1 2021) and $15.4 million for adjusted EBITDA (47 percent YoY growth).

Digging into the revenue specifics of 2022’s opening quarter, Reservoir relayed that publishing had hiked 31 percent YoY in the sync department, totaling $4.7 million at the period’s end. Meanwhile, publishing likewise made $10.9 million from digital, $5.1 million from performance, $3.3 million from other (“primarily due to our growing presence in the Middle East,” CFO Jim Heindlmeyer said), and $1.1 million from mechanical throughout Q1 2022, the document shows.

Nevertheless, publishing operating income ($4 million, down about 30 percent YoY) and OIBDA ($7.8 million, a 10 percent dip from $8.7 million) declined from Q1 2021, besides posting similar decreases on the year. Execs chalked up the OIBDA falloff to “higher administration expenses associated with being a public company.”

Upticks within the comparatively small recorded segment – including a 178 percent YoY gain for digital in 2022’s initial quarter – “were largely driven by the acquisition of Tommy Boy,” per the earnings report of Reservoir, which received a $616,847 Paycheck Protection Program loan, per its 10-K.

For the entirety of the 2022 fiscal year – the 12 months ending on March 31st, 2022, that is – Reservoir reported $107.8 million in revenue (up 34 percent YoY), including $77.1 million from publishing (up 17 percent YoY) and about $29.5 million attributable to recorded music (up 126 percent YoY).

Perhaps the most interesting takeaway from Reservoir’s performance details is the $224 million that the company spent on 110 transactions during the latter fiscal year – and the $100 million more that execs intend to spend during the 2023 fiscal year.

“As we close our first year as a publicly traded company, we are proud to announce that we outperformed relative to our expectations and exceeded our capital deployment growth goals with $224 million deployed across 110 unique transactions,” Reservoir founder and CEO Golnar Khosrowshahi said in part. (Reservoir now owns some 140,000 copyrights and 36,000 masters.)

“Going forward, our focus remains on growth, driven by continued execution against our M&A pipeline, as well as through our industry leading value enhancement initiatives. Our pipeline of potential deals remains robust, and we expect to deploy over $100 million in new capital in fiscal 2023 that will help us broaden and further diversify our portfolio,” continued Khosrowshahi, whose company had $269.9 million in total debt as of March 31st.

Looking forward to FY 2023, Reservoir is banking on $116 million to $121 million in revenue – suggesting, in turn, that income will fall from the Q1 2022 level, which would come out to $140.4 million for the whole year – and an adjusted EBITDA of $44 million to $47 million. At the time of this piece’s writing, Reservoir stock (NASDAQ: RSVR, once again) was down 6.34 percent from yesterday’s close, at $6.42 per share.