Operator: Greetings and welcome to Reservoir Media’s Fourth Quarter Fiscal Year 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jackie Marcus, Investor Relations. Thank you. Please go ahead.

Jackie Marcus: Thank you, operator. Good morning everyone and thank you for participating in today’s earnings conference call. Reservoir Media issued a press release with results for its fourth quarter and fiscal year 2025 ended March 31, 2025 earlier this morning. If you did not receive a copy of our earnings press release, you may access it from the Investor Relations section of our website at investors.reservoir-media.com. With me on today’s call are Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, Chief Financial Officer. As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website. Before I turn the call over to Golnar and Jim, I’d like to note that today’s discussion will contain forward-looking statements that reflect the current views of Reservoir Media about our business, financial performance and future events and as such involve certain risks and uncertainties.

Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our earnings press release and our filings with the Securities and Exchange Commission for more information on the specific risks, uncertainties and other factors that could cause our actual results to differ materially from our expectations, beliefs and projections described in today’s discussion. Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events except to the extent required by applicable law.

In addition to the financial results presented in accordance with Generally Accepted Accounting Principles, we plan to present during this call certain financial measures that do not conform to US GAAP if we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release. I would now like to turn the call over to Golnar.

Golnar Khosrowshahi: Thank you, Jackie. Good morning everyone and thank you for joining us today. Reservoir’s fiscal 2025 performance exceeded both guidance and expectations. At a high level, this year’s results are hallmarked by top-line annual revenue growth of 10%, an 18% improvement in adjusted EBITDA and significant capital deployment with over $115 million towards acquisitions and advances. Our accomplishments in the fiscal year are a testament to the strength of our strategy, the team and expertise we have at Reservoir and the quality of our portfolio. We are meeting our objectives as a public company and are well-positioned to continue doing so in fiscal 2026. Strategic off-market M&A continued to drive the company’s growth.

We signed notable publishing deals with legendary artists this year such as Snoop Dogg and k.d. lang, and acquired and ingested large catalogs and assets accretive to the portfolio as a whole. Earlier this calendar year, we announced the acquisition of Lastrada Entertainment’s full publishing catalog of more than 5,600 compositions spanning multiple generations and genres. Lastrada was a pioneer in understanding the importance and value of increasing the longevity of compositions via sampled music and syncs. Its assets have contributed to such mega hits as Tupac’s California Love, Mariah Carey’s We Belong Together, and Will Smith’s Miami. Through the acquisitions of Chrysalis Records in 2019 and Tommy Boy Records in 2021, Reservoir grew and diversified our business, establishing a deep well of recorded music expertise on our team and a solid infrastructure that has enabled us to support the addition of many more assets in that vertical.

In February, we acquired UK dance and electronic label New State and its entire recorded music catalog of over 13,000 tracks. Included in the transaction were the rights to continue to market and release new music by New State artists. The recorded music segment of our business showed continued growth in both the fourth quarter and the full fiscal year. We believe there is considerable operational leverage in the segment to help us drive organic growth from our value enhancement efforts and easily integrate additional acquisitions into our catalog in the future. Alongside our successful investment philosophy, is our commitment to organic growth. We have the necessary rights and infrastructure to aggressively market our portfolio and the relationships to secure opportunities with strong ROIs. For example, in the fourth quarter, we had four Super Bowl sync placements, including Papa Loves Mambo in a Michelob ULTRA ad, This Is America in a him and her spot, Mama Said Knock You Out in a Pfizer ad and Take Me Home, Country Roads for Rocket Mortgage.

Within the full year, our evergreen hit Day-O by Harry Belafonte featured prominently in the feature film Beetlejuice, while also driving a resurgence in listenership across DSPs. We also saw tremendous commercial success for Reservoir’s active songwriters, earning a top 10 US market share in the last four quarters according to Billboard’s Publishers Quarterly, with our talent co-writing and contributing to chart topping records by Sabrina Carpenter, Dasha, SZA and more. While North America has historically driven much of the music industry’s growth, we have long focused on building our business in emerging markets in recognition of the massive opportunities in these territories, particularly as Internet connectivity and consequently listenership is on the rise.

We took an early stake in establishing a presence in the Middle East with our subsidiary PopArabia to build relationships with the region’s most influential creators. Our successful boots on the ground approach to building relationships allows us to remain deeply involved in these important markets and participate in off-market deals. In March, we announced our acquisition of the publishing and master rights to Egyptian star Omar Kamal’s catalog, having brought Mahraganat, a new genre of music that mixes Egyptian rhythms, electronic music and rap lyrics to listeners throughout the Arab world. Kamal’s Mahragan Bent El Geran was one of Rolling Stones 50 Best Arabic Pop Songs of the 21st Century. Just last month we continued our international expansion with the launch of our latest subsidiary PopIndia and the opening of a new office in Mumbai.

PopIndia is led by Spek, a longtime member of the Reservoir team with extensive experience in emerging markets including founding and running PopArabia. PopIndia is focused on signing and developing regional talent as well as acquiring catalogs across both publishing and recorded music, while also providing music supervision and sub-publisher services in the country. We are incredibly excited by the signing of PopIndia’s first publishing deal with singer, songwriter, rapper and YouTube star Yohani. With more than 175 million people streaming music across channels and analysts expecting the industry to grow at a 13% CAGR through 2027, India is an ideal market for us to further grow our international roster at attractive valuations. We look forward to the potential partnerships with some of the region’s most celebrated artists and up and coming talent.

I will now turn the call over to Jim to discuss our fourth quarter and full fiscal year financial results as well as our fiscal 2026 guidance in greater detail. Jim?

Jim Heindlmeyer: Thank you, Golnar, and good morning everyone. We closed out our fiscal year 2025 in a position of strength with double-digit top-line growth. We are pleased with the fiscal 2025 results and we look forward to fiscal 2026, during which we expect the combination of high-quality catalog chart-topping new releases and targeted strategic capital deployment will contribute to continued strong results. Let’s first start with the review of the fourth quarter. Revenue for the fourth fiscal quarter was $41.4 million, which was a 6% increase compared to the fourth quarter of fiscal 2024. Strong growth in both segments was led by 6% growth in the Music Publishing segment inclusive of the acquisitions of various catalogs.

With respect to our operating expenses for the quarter, our overall cost of revenue decreased 1% versus the prior year quarter. Our depreciation and amortization costs increased 6% year-over-year due to our continued catalog acquisitions. Company administration expenses saw a 3% increase year-over-year. Turning to operating performance. Fourth quarter OIBDA increased 14% year-over-year to $17.2 million. Adjusted EBITDA increased 14% to $18.2 million. The increase in adjusted EBITDA in the fourth quarter was largely driven by stronger revenue and improved margins, particularly in synchronization within the publishing segment and digital within the recorded music segment. However, this was partially offset by higher administration expenses. Interest expense was $6.1 million for the quarter compared to $5.2 million in the same period last year.

Net income for the fourth quarter of fiscal 2025 was $2.7 million versus $2.9 million in the fourth quarter of fiscal 2024. This resulted in diluted earnings per share for the quarter of $0.04 compared to $0.04 per share in the prior year period. Moving to our full fiscal year 2025 results. Revenue was $158.7 million, a 10% year-over-year increase and above the top end of our previously stated guidance range. This beat was the result of growth in both the Music Publishing and Recorded Music segments, which posted growth of 12% and 4% respectively. Turning to our operating expenses for fiscal 2025. Our overall cost of revenue saw a 4% increase from fiscal 2024. This increase is attributed to a higher revenue base resulting from acquisitions and value enhancement efforts.

The lower increase in cost of revenue as compared to the increase in revenue resulted in a higher gross margin in fiscal year 2025. Administration expenses for fiscal 2025 rose less than 1% from the prior year to $39.9 million, primarily due to the non-recurrence of the write-off of recoupable legal expenses and attorneys fees from the prior year and improved operating leverage, which was partially offset by an increase in cost to support the company’s growth. OIBDA in fiscal 2025 increased 24% year-over-year to $61.4 million, while adjusted EBITDA grew 18% to $65.7 million. These increases were mostly attributable to a higher gross margin and improved operating leverage. As a reminder, we have reconciliations for these metrics in our earnings press release and 10-K filing.

Our interest expense was $21.9 million for the full year compared to $21.1 million last year. The higher interest expense was due to an increase in debt resulting from acquisitions of music catalogs and writer signings and an increase in effective interest rates. Net income for fiscal 2025 was $7.7 million versus $800,000 last year. The increase in net income was primarily the result of increased operating income, partially offset by an increase in the loss on fair value of swaps. This resulted in diluted earnings per share for the year of $0.12 compared to $0.01 per share for fiscal 2024. Our weighted average diluted outstanding share count for the full year is 66 million. Turning to our segment breakdown for the fourth quarter. Music Publishing generated revenue of $27.9 million in the quarter, which represents a 6% increase when including acquisitions versus the same period last year.

Our digital revenue increased $600,000 to $13.6 million, or 5%, and performance revenue decreased by 13% to $6.5 million. Synchronization revenue in the publishing segment totaled $5.5 million, a 51% increase from the fourth quarter of last year. This is primarily due to the timing of licenses. Mechanical revenue within the publishing segment posted a 6% decrease year-over-year to $1.2 million. Other revenue within the publishing segment was $1.2 million, an increase of 15% year-over-year. Our Recorded Music segment generated $12 million in revenue in the fourth quarter, representing an increase of 7% versus the prior year quarter. Digital revenue within the recorded segment increased 19%, primarily due to price increases and subscriber growth at DSPs. Physical revenue decreased 26%, largely due to a lighter planned release schedule in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024.

Our synchronization revenue decreased 29% as a result of the timing of licenses, while neighbouring rights increased 15% to $1.1 million, in part due to additional direct affiliations with collection societies. For the full year, our Music Publishing segment revenue rose 12% compared to the prior year. Our improvement is largely a result of price increases of multiple music streaming services as well as the expansion of our catalog through M&A. Additionally, synchronization revenue increased because of the timing of licenses. These factors were partially offset by a decrease in performance revenue driven by the timing of hit songs. Recorded Music revenues increased 4% compared to fiscal 2024. The growth is attributable to continued user growth and price increases of multiple streaming services as well as royalty recoveries related to underreported usage for music catalogs.

These factors were partially offset by a decrease in physical sales after the robust sales of new De La Soul releases in fiscal 2024. Let’s move on to our balance sheet. As of March 31, our credit facility was at roughly $391.8 million. We closed the year with total liquidity of $79.6 million, comprised of $21.4 million of cash on hand and $58.2 million available under our revolver, which gives us the capital to fund our strategic objectives. We ended the year with $388.1 million of total debt, which was net of $3.7 million of deferred financing costs and thus we maintained $366.7 million of net debt, that compares to net debt of $312.7 million as of last fiscal year end. Reservoir had a standout fiscal year, capitalizing on our opportunities to boost our organic revenue thanks to our value enhancement team.

The deals we closed this year were substantial and delivered notable value to the company and profitability was further aided by our internal efforts to control costs. Turning to the 2026 fiscal year. We expect revenue to be in the range of $164 million to $169 million and adjusted EBITDA to be in the range of $68 million to $72 million. We have maintained a strong pipeline of potential acquisitions and are in a solid financial position to continue executing on transactions where we see the greatest ROI. We also have the right tools and teams in place to drive organic growth from our existing catalog. With that, I’ll now pass the call back to Golnar.

Golnar Khosrowshahi: Thank you, Jim. The music industry has a long standing ability to weather broader macroeconomic headwinds as consumers believe in the value that music brings to their daily lives. Our top-line growth is a testament to the demand and resiliency of our catalog from today’s top records to a variety of evergreen classics. We are pleased with the fiscal year 2025 results and we look forward to fiscal year 2026, during which we expect the combination of high-quality catalog, chart-topping new releases and targeted strategic capital deployment will contribute to our performance. In closing, our long-term strategy is rooted in building scale with portfolio accretive M&A and long-term value additive signings to our global roster of artists and songwriters.

Our recent announcements as well as our operational and financial performance in both the fourth quarter and full fiscal year are in lockstep with where we believe our greatest opportunities for growth lie and our ability to drive value for all our shareholders. With that, we will now open the line for questions.

Operator: Thank you. The floor is now open for questions. [Operator Instructions] Today’s first question is coming from Richard Baldry of ROTH Capital Partners. Please go ahead.

Richard Baldry: Thanks. Adding the India operation brings sort of the question to are you seeing markedly better ROIs in international geographies or is it still pretty one-off deals that are driving where you’re making your investments?

Golnar Khosrowshahi: Hi Rich, it’s Golnar. We certainly see better opportunities and along with volume in the emerging markets and that does definitely lead to better ROIs and less competition. So we see that in India as well as in the Middle East.

Richard Baldry: Okay. And then this year the seasonality sort of changed a little bit with third quarter above fourth quarter and there’s some one-time impacts in that. How do you look at sort of revenue seasonality in 2026? Does it sort of get back to your regular cadence most likely?

Jim Heindlmeyer: Yes. I think that we’re obviously always evaluating our accruals and trying to do the best job we can there. We do have some of those one-off type items, but I would expect that we probably get back a little bit to the second and fourth quarter potentially being slightly higher than the first and third quarters just based on the timing of certain things. But we’re doing our best with the accruals to try and reflect revenue accurately by quarter in the quarter that it’s earned.

Richard Baldry: And interest rates have been a little bit volatile lately. Could you talk a little bit about sort of where you’re hedged and what your strategy is on that in the sort of near to intermediate term?

Jim Heindlmeyer: Yes. So we’re still sitting at $150 million hedged, which is where we’ve been for a while and as our debt has ticked up a little bit with our ongoing M&A activity, we are constantly evaluating whether we should put on an additional hedge, we’ll continue to do that. And obviously with some of the volatility right now, it’s — we haven’t seen compelling data to pull the trigger on that yet, but it’s something that we constantly evaluate.

Richard Baldry: Last from me, sir, you talked lightly on, you thought the pipeline looked good. Can you talk a little bit more about sort of how much capital you’re targeting to deploy in 2026? So is there any sort of expected split between the publishing side versus the recorded side? Or again, will that be sort of on an as come deal basis?

Golnar Khosrowshahi: We generally have to be opportunistic around deal flow. So while we may have desires around how much recorded or publishing assets we want to acquire, that’s not really how it always shakes out, because we have to be opportunistic and we’re at the whim of what is in front of us and what we have a high likelihood to execute on. And then I’ll let Jim answer on how the free cash flow goes into our modeling there.

Jim Heindlmeyer: Yes, and on that part, Rich, you can look at our Investor deck, see where we project our free cash flow to be, which is around $50 million as we move into fiscal 2026. And typically what we are looking at with respect to guidance is an assumption around deploying that free cash flow to ongoing M&A, writer signings as we have in the past. It is again something that we constantly evaluate what’s the best use of our capital deployment, but that’s generally how we look at it.

Richard Baldry: Maybe one last one for me. Your capital deployment this year seemed to be a little more heavily weighted in the second half and the revenue sort of reflects sort of a step-up there because of that. If I take that second half and run rate it, it looks pretty close to where your revenues for 2026 would be. So you talk about sort of what factors go into that 2026 guide, if it’s more conservatism or are there some one-time impacts on the second half 2025 that we have to keep in mind as we’re modeling the year out? Thanks.

Jim Heindlmeyer: Yes. So on our end, one of the difficult things with guidance in this business is, we have been fortunate or I’ll say our creative team has done a very good job of signing good writers and we’ve had hits. So when you have a hit like Espresso, over the past year and that generates a significant amount of revenue, we are not necessarily going to project another hit like that in fiscal 2026. We have been fortunate, like I said, to have hits year after year. But it’s not something that we’ve build into our guide. So sometimes those types of things will impact what seems like conservatism in our guide. And I know it makes your job a little bit more difficult, but that’s just probably one of the factors that goes into it that you should be aware of.

Richard Baldry: Great. Thanks.

Golnar Khosrowshahi: Thank you.

Operator: Thank you. [Operator Instructions] Our next question is coming from Griffin Boss of B. Riley Securities. Please go ahead.

Griffin Boss: Hi, good morning, and thanks for taking my question. So, just wanted to jump back on the capital deployed. I just want to make sure that I heard that correctly? When you mentioned $150 million number, was that for the year or was that for the fourth quarter? And I’m sure we’ll see it in the 10-K, but maybe talk about how much of that was allocated to Lastrada in the fourth quarter?

Golnar Khosrowshahi: Sure. Good morning. It was $115 million and it was for the year. 1-1-5.

Griffin Boss: Okay, thank you. Great. And then in terms of the PopIndia initiative there, could you just help us handicap how India stacks up to other regions? You mentioned the 13% expected taker growth through 2027 for that region, but maybe if you could just dig into how that stacks up to other regions like the US and maybe if you could talk a little bit more about monetization in that region, particularly on the digital side, how that compares to a market like the US?

Golnar Khosrowshahi: Sure. I mean, the market like the US and Western Europe, for example, are advanced and just don’t have the same saturation as far as the DSPS go. And the subscription numbers and the growth on that is not as significant as what is happening in the emerging markets just because of the population and the number of people and that opportunity that exists to get people converted to becoming paying subscribers. As far as the growth rates go, it varies country by country. But the growth rate in India is pretty significant given both the size of the population and the opportunity for just the number of people to become streamers of music. So the monetization in the regions works similarly to other regions. There are differences in how performance royalties are modified — monetized, and again, that varies country by country.

And so we just anticipate that there is a future across the Middle East in India where there is going to be significant growth on a subscription basis, where there’s going to be significant growth in listenership and number of subscribers and where there’s going to be convention around the monetization of public performance.

Griffin Boss: Got it. Okay. Thanks, Golnar. And I know you touched on it in the last question as well in terms of the revenue guide, Jim, but just curious if you can — I mean you had $115 million deployed for acquisitions, M&A, royalty advances this year and the guide for 2026. I just — is that an organic growth rate that we should expect for the current catalog, call it mid-single-digit going forward? It seems conservative given the amount of additions you had coming into fiscal 2026?

Jim Heindlmeyer: Yes.

Griffin Boss: And I know you talked about hit, but yeah, yeah, maybe elaborate a little bit more?

Jim Heindlmeyer: Again, there’s a — there’s a couple things that are difficult for — to compare from year-to-year, right? So I touched on the fact that — we’ve had hits in the past year, and while we hope to expect to continue to have quality music, continued hits, we don’t project for that. We’re not going to project that this writer is going to write another number one song that’s going to perform in this way. We’re going to be a little bit more conservative around that kind of stuff. So that goes against us a little bit in our guide. We obviously evaluate that as we move through the year and we will update our guidance when we get to Q2. We had a couple of things that we called out in Q3 and you’ll see it in the 10-K around audit recoveries and revenue that that generated in fiscal 2025.

We don’t project for that kind of stuff in the coming year. So those types of things, one can call it conservatism or just being prudent with respect to how we project and guide for the coming fiscal year. But those are some of the types of things that will make that comp look a little bit more conservative than maybe it is. We have consistently outperformed in our time as a public company and we look forward to continuing to do that. And we’ll update our guidance as we move through the year and have better information.

Griffin Boss: Got it. Understood. Thanks Jim, for the color. Appreciate it. Thanks for taking my question.

Golnar Khosrowshahi: Thank you.

Operator: Thank you. At this time, I’d like to turn the floor back over to Ms. Khosrowshahi for closing comments.

Golnar Khosrowshahi: Thank you, operator. This has been another incredible fiscal year for Reservoir. As we added legendary talent to our roster, grew our publishing and recorded catalog with high-quality music and further expanded our global presence, I believe we are well positioned to drive top-line growth and further improve our bottom-line. We appreciate your interest and look forward to sharing our first fiscal quarter results with you this summer. Thank you.

Operator: Ladies and gentlemen, this concludes today’s event. You may disconnect your lines or log-off the webcast at this time and enjoy the rest of your day.

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Q4 2025

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