Hipgnosis Songs Fund Posts $168 Million In Net Revenue For the 2022 Fiscal Year — As Net Debt Nears $570 Million

Hipgnosis Acquires Sam Hollander's Music Catalog
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Hipgnosis Songs Fund posted a 24.7 percent year-over-year (YoY) gross revenue improvement during the fiscal year ending on March 31st, 2022. But gross debt rested at $600 million when the period concluded, and the company’s earnings per share finished at -1.65 cents.

Hipgnosis Songs Fund revealed these and a variety of other performance specifics today, in a comprehensive account of its showing during the 2021-22 fiscal year. The fund, it bears noting at the outset, is the publicly traded (LON: SONG) entity that’s dropped billions on song catalogs in recent years.

Said fund’s “investment adviser,” Hipgnosis Song Management, is a separate operation in which Blackstone has a stake. Despite the distinct nature of the businesses’ respective efforts – and the dip in the fund’s catalog purchases – the adviser sources songs and provides “recommendations” to the publicly traded Hipgnosis in exchange for an “advisory fee.”

This advisory fee totaled $16.5 million during the latest fiscal year (up from $11.5 million), whereas a “performance fee” came in at $0 for the newly ended fiscal year (when catalog buyouts were comparatively sparse, once again) but $534,000 for the prior FY.

The heightened advisory fee contributed to $38.4 million in adjusted operating costs, less interest payments on debt, for Hipgnosis on the year (up from $32.4 million), and the fund likewise disclosed that it had spent $1.95 million on ultimately abandoned deals during the year (up from $848,000).

In terms of other expenses – besides the total of $265.1 million fronted for eight catalogs, the most notable being those of Fleetwood Mac’s Christine McVie and the Red Hot Chili Peppers – Hipgnosis relayed that its loan interest had hiked from $7.3 million to $20.4 million this FY, as gross debt maxed out at $600 million. (The company “is in the process of a review of its leverage structure with a view to reducing interest rate risk and control costs.”)

Nevertheless, Hipgnosis also indicated that gross revenue had jumped 24.7 percent YoY to $200.38 million, as net revenue turned in a 21.7 percent YoY improvement to touch $168.3 million. In keeping with the latter, EBITDA during the 12 months ending on March 31st, 2022, achieved a 21.8 percent YoY boost to reach $129.9 million.

Lastly, regarding the precise income details for the fiscal year, “public relations fees” increased from $36,000 to $702,000, and execs chalked up the mentioned EPS dip to “the impact of higher RTI [right to income] in the prior year,” from $66.6 million to $17.97 million in the 2021-22 fiscal year.

Elsewhere in the voluminous report, Hipgnosis founder Merck Mercuriadis touted the perceived long-term potential of streaming even with the difficult economic climate; more than doubling to crack $72.85 million during the 2022 fiscal year, streaming was far and away the highest-earning category for Hipgnosis.

Plus, the company highlighted a number of the sync deals involving its works across the 12-month window, which brought $22.53 million in sync income (down from $28.02 million in the 2020-21 FY).

Additionally, Hipgnosis said that it owned 146 catalogs, encompassing 65,413 songs, as of March 31st. The holdings’ “aggregate fair value” as determined by the company’s “portfolio independent valuer,” Citrin Cooperman, was $2.69 billion on the 31st – a YoY gain of 9.5 percent.