This week, New York-based Reservoir Media has published the financial results for its fiscal Q3 2022 (calendar Q4 2021), ended December 31, 2021.
Reservoir, which floated on the NASDAQ via a merger with a SPAC (special purpose acquisition company) in July 2021, saw its total revenue in the three months ended December 31 increase by 26% to $27.1 million, compared to $21.6 million in the prior year quarter.
Reservoir’s Music Publishing revenue in calendar Q4 was $18.4 million, an increase of 4% year-over-year.
The firm pins this growth on the performance of its Sync and Other revenue streams, which increased 79% and 502%, respectively.
However, that growth was partially offset by a decline in Digital revenue which Reservoir says can be primarily attributed to a one-time settlement that was received in the prior year quarter.
Excluding the impact of that one-time settlement, Reservoir says that its Music Publishing revenue grew by 22.3%.
Digging deeper into the firm’s publishing revenues reveals that its Digital revenues reached $8.5 million in the three months ended December 31, 2021, which decreased 27% compared to the $11.7 million it generated in the prior year quarter.
Meanwhile, the firm’s sync revenue grew 79% from $1.4 million in calendar Q4 2020 to $2.4 million in calendar Q4 2021.
Performance revenue grew 6% from $3.8 million in calendar Q4 2020 to $4 million calendar Q4 2021 (see below).
Reservoir’s Recorded Music revenue in its fiscal Q3 2022 grew 147% to $8.1 million, compared to $3.3 million in the prior year quarter (see below).
Reservoir reports that this improvement was primarily driven by strong Digital revenue growth of 217%, as well as 1220% growth in Synchronization revenues, which the firm says came largely as a result of “the recovery in the film and television industry from the impacts of the COVID-19 pandemic and the acquisition of Tommy Boy“.
Reservoir acquired acquired Tommy Boy for $100 million in June 2021
The firm’s Digital revenues from recorded music hit $4.9 million in calendar Q4 2021, up from $1.5 million in the prior year quarter, while Physical revenue grew 9% from $1.2 million in calendar Q4 2020 to $1.3 million calendar Q4 2021.
Elsewhere, Reservoir reports that its operating income in fiscal Q3 2022 was $4 million, a decrease of 19%, compared to operating income of $4.9 million in the prior year quarter.
Reservoir pins this decrease in operating income on a rise of $1.3 million “for share-based compensation and approximately $1 million in costs associated with being a public company”.
Meanwhile, OIBDA (operating income before depreciation and amortization) increased 11% to $9 million, compared to $8.1 million in the prior year quarter.
Adjusted EBITDA was $10.2 million, compared to $8.1 million in the prior year quarter (see below).
Alongside Reservoir’s latest earnings release, Founder and Chief Executive Officer Golnar Khosrowshahi stated that the firm expects “to deploy over $200 million in strategic M&A during our first year as a public company”.
Since Reservoir successfully floated on the NASDAQ in July 2021, the firm has acquired:
- A raft of songs from country songwriter Stephony Smith for an undisclosed fee (in November).
- Hit songs by Platinum-selling songwriter and producer Dallas Austin (November).
- A stake in the publishing catalog of Fred Parris, the writer, lead vocalist and founder of doo-wop group The Five Satins (December).
- The publishing catalog of Grammy-winning DJ, songwriter, and producer Fred Rister (in January 2022).
- The publishing and recorded music catalogs of country star Travis Tritt (January 2022).
Additionally, Khosrowshahi revealed that the firm has “$3 billion worth of deals in the pipeline”.
Commenting further on this multi-billion dollar sum during the firm’s earnings call, Khosrowshahi noted that, “We have a $3 billion pipeline of potential deals that we are actively exploring”.
She added: “We’re proud to be delivering on our promises and are even more proud that these incredibly talented artists and creators have entrusted us to be the stewards of their life’s work.
“We also believe that our M&A success shows the power of relationship driven targeting, which helps us identify off radar deals will bring long-term value to the organization.”
“As we look forward, our pipeline remains robust and the cash generating power of our business will continue to fuel these high growth, high operating leverage opportunities.
“We are executing on our strategy through a steady cadence of acquisitions, coupled with an intense focus on execution.
“Our strong third fiscal quarter financial performance demonstrates how we are capitalizing on the growth in the music industry.”
Golnar Khosrowshahi, Reservoir
In a media statement, Golnar Khosrowshahi, said: “Our strong third fiscal quarter financial performance demonstrates how we are capitalizing on the growth in the music industry and generating significant value by executing on our strategy of building a robust, curated, and diversified portfolio of award-winning songwriters’ and artists’ bodies of work.
“As part of this, we expect to deploy over $200 million in strategic M&A during our first year as a public company.
“We are proud to deliver on our promises to deploy capital toward accretive deals that will bring long-term value to our organization and our shareholders.
“We are honored that these incredibly talented artists and creators entrusted us to be stewards of their life’s work. We have $3 billion worth of deals in the pipeline, and the cash generating nature of this business will continue to fuel these high growth, high operating leverage opportunities as we move forward.”
“Our team utilized value enhancing opportunities for our creators while our portfolio of assets continues to grow through our acquisition strategy.”
Jim Heindlmeyer, Reservoir
Jim Heindlmeyer, Chief Financial Officer of Reservoir, added: “We continued to execute against our strategy which drove double-digit growth on both a top- and bottom-line basis in the third fiscal quarter.
“Our team utilized value enhancing opportunities for our creators while our portfolio of assets continues to grow through our acquisition strategy.
“We raised our fiscal year guidance to better reflect our strong organic financial performance and momentum with acquisitions over the past three quarters.”
Music Business Worldwide