On Friday (August 5), New York-based Reservoir Media published the financial results for its fiscal Q1 2023 (calendar Q2, 2022), ended June 30.
According to Reservoir’s SEC filing, the company’s total revenues (including recorded music and publishing), in the three months ended June 30, increased by 46% to $24.3 million.
On an organic basis (i.e. discounting acquisitions), Reservoir says that its overall revenues grew by 14% YoY in calendar Q2.
Speaking with analysts on the company’s earnings call on Friday, Reservoir Founder and Chief Executive Officer, Golnar Khosrowshahi, noted that the company “started fiscal 2023 very strong, carrying over the positive momentum we had last year”.
Khosrowshahi added the company’s fiscal Q1 results “puts us on track to achieve our objectives for the year”.
Reservoir reported in June that it generated $107.8 million in its FY fiscal 2022 (ended March 31) – its first year as a publicly traded company (the firm floated on the NASDAQ via a merger with a special purpose acquisition company in July 2021). Reservoir also revealed in June that it spent over $224 million across 110 deals during the year.
Added Khosrowshahi, on the earnings call: “During the quarter, we remained focused on our goal of building and optimizing our already diversified portfolio through organic growth and strategic M&A.
“This execution against our growth strategy coupled with continued tailwinds from a healthy music industry drove an impressive quarter for the company.”
When Reservoir reported its FY fiscal 2022 results in June, Khosrowshahi revealed that the company expects to deploy “over $100 million in new capital in fiscal 2023 that will help us broaden and further diversify our portfolio”.
According to a statement issued by Reservoir Chief Financial Officer Jim Heindlmeyer on Friday, that’s still the plan. “We remain focused on our capital deployment target of $100 million in strategic M&A for the fiscal year,” said Heindlmeyer.
“We are proud to deliver on our promises to deploy capital toward accretive deals that will bring long-term value to our organization and shareholders.”
According to Reservoir’s financial results, the company’s music publishing revenue in calendar Q2 rose 35% YoY to $16.4 million, compared to $12.2 million in the same quarter in the prior year.
Reservoir reports that this growth was driven by strong performance within the Digital and Synchronization streams.
Digital contributed $8.5 million to the firm’s quarterly publishing revenues (see below), while Sync generated $3.3 million, representing YoY growth of 28% and 70% respectively.
Recorded Music revenues in Reservoir’s fiscal Q1 2023 (calendar Q2) reached $7.6 million, an increase of 80% compared to $4.2 million in the prior year quarter.
Reservoir reports that this increase was largely driven by its acquisition of Tommy Boy Records, as well a strong Digital revenue growth. The company acquired Tommy Boy in June for $100 million.
‘Digital’ contributed $4.6 million to Reservoir’s total Recorded Music revenue tally, growing 63% YoY versus $2.8 million in the same quarter in the prior year (see below).
In terms of profitability, Reservoir reports operating income for its fiscal Q1 2023 (calendar Q2, 2022) of $1.3 million, compared to $200,000 in the Q1 of fiscal 2022.
OIBDA (operating income before depreciation and amortization) in calendar Q2 increased 56% to $6.7 million, compared to $4.3 million in the prior year quarter.
Adjusted EBITDA in Reservoir’s fiscal Q1 2023 (calendar Q2) increased 73% to $7.4 million, compared to $4.3 million last year.
“We are off to a strong start for the fiscal year, exceeding our internal expectations for the first quarter and putting us on track to achieve our goals for the year.”
Golnar Khosrowshahi, Reservoir
Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir, said: “We are off to a strong start for the fiscal year, exceeding our internal expectations for the first quarter and putting us on track to achieve our goals for the year.
Our impressive year-over-year top-line growth of 46% was driven by continued execution of our strategic growth initiatives, as well as the benefits of increasing scale.
Added Khosrowshahi: “Our results also demonstrate our durable business model and ability to deliver consistent financial results as we continue to capitalize on the steady secular growth of the music industry.
“We remain focused on generating significant long-term value through our strategy of building and optimizing a robust, curated, and diversified portfolio of award-winning songwriters’ and artists’ bodies of work.”
“We continue to execute against our strategic initiatives, and we are pleased with the financial performance in our first fiscal quarter results.”
Jim Heindlmeyer, Reservoir
Jim Heindlmeyer, Chief Financial Officer of Reservoir, said: “We continue to execute against our strategic initiatives, and we are pleased with the financial performance in our first fiscal quarter results.
“We achieved double digit growth during the quarter on Revenue and Adjusted EBITDA, and we remain focused on our capital deployment target of $100 million in strategic M&A for the fiscal year.
“We are proud to deliver on our promises to deploy capital toward accretive deals that will bring long-term value to our organization and shareholders.”Music Business Worldwide