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Reservoir Media Revenue Up 34% in Fiscal Year as Acquisition Activity Continues

The company plans to spend $100 million on new deals this fiscal year after deploying $224 million last year.

Reservoir Media’s revenues grew 34.4% to $107.8 million in the fiscal year ending March 31, 2021, the company announced on Tuesday (June 21). Adjusted earnings before interest, taxes, depreciation and amortization improved 29.5% to $41.3 million.

Music publishing revenue grew 16.1% to $77.1 million. The biggest gain came from synchronization royalties, which improved 41.9% to $13.2 million. Digital royalties grew 7.5% to $37.4 million. Performance royalties fell 4.3% to $15.6 million.

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Recorded music revenue improved 125.2% to $29.5 million driven mainly by Reservoir Media’s acquisition of Tommy Boy Music in June 2021. Most of recorded music gains came from a 152.1% increase in digital royalties to $18.4 million. Physical sales rose 64.1% to $6.4 million. Synchronization royalties climbed nearly fivefold to $2.6 million.

“We exceeded our original expectations for the year both financially and strategically,” said CEO Golnar Khosrowshahi during Tuesday’s earnings call. “This included 15% organic growth in fiscal 2022 which was complimented by the deployment of over $224 million of capital above the original $200 million goal.” Reservoir media made “over 110 separate transactions” in fiscal 2022, including 87 catalog acquisitions, according to Khosrowshahi. The company plans to deploy $100 million this fiscal year.

Reservoir Media’s guidance for the fiscal year ending March 31, 2023 is 10% revenue growth to $116 to $121 million and 10% growth in adjusted EBITDA to $44 to $47 million.

Noting the growing clouds of economic uncertainty, Khosrowshahi repeatedly emphasized that Reservoir’s business model is based on predictable cash flows from music assets that are widely considered to be recession-proof. “The monetization opportunities remain vast,” she said. “The streaming services are not showing signs of saturation in more mature markets and new, global markets are catching up quickly. The value one gets for a $9.99-a-month subscription service is pretty incredible.”

Reservoir Media shares rose 4.6% to $6.86 on Tuesday. The Nasdaq composite gained 2.5%. Universal Music Group rose 0.7% while Warner Music Group’s improved 1.2%.

 

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