RSVR - Earnings call 2 2024 | Reservoir Media, Inc.

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Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss Reservoir Media's Financial Results for the second quarter of fiscal year 2024 ended September 30, 2023. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to turn the call over to Ms. Jackie Marcus with the Alpha IR Group, who will review our agenda today and the company's forward-looking statements. Jackie?

Jacqueline Marcus

operator. you, Thank and conference everyone, for in participating Good thank earnings call. today's morning, you issued with XXXX, Reservoir second press a Media release fiscal ended morning. quarter results XXXX, September this XX, earlier of its for

Executive you Chief call you access of are Founder release, our Golnar not earnings Relations investors.reservoir-media.com. With Financial at Chief the may a of Khosrowshahi, it copy If our Officer; did me Heindlmeyer, press website Investor Officer. from and Jim section receive on and today's

webcast simultaneously of being will is call this reminder, the section a and recorded Relations on our and archived As be Investor website.

performance call Before views future I current forward-looking such, as turn Jim, to risks events. the will that that statements over of note Reservoir like uncertainties. And today's contain and discussion certain I'd financial involve to Media the and and about reflect Golnar business, our

Our and and for faith, expressed we reasonable in believe expectations, good basis projections a them. is beliefs are there

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

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

Golnar Khosrowshahi

Good thank you, us today. Thank and for you morning, joining Jackie.

Our growth growth was from diversified driven and both strong highlighted period by healthy and value quarter second XX% in reported Recorded executed portfolio. with the that organic fiscal enhancement Music of businesses. topline numerous further our We expanded by deals performances high-quality and Music we capabilities, our Publishing our

thoughtfully in revenue year. our and our business addition managed XX% over both our as enhanced also EBITDA we continuing In grew to prior we QX, the profile growth adjusted by margin

marks XXXX. This close revenues price subscription the entire several in the fiscal entertainment moving year the price and double-digit approach its to against eighth growth. subscription raised XXXX Association, publishing backdrop. for disciplined U.S. fortify our industry's the Apple the within year-over-year economic estimated and backdrop. The price but results ability despite growth what Further, year experienced be financial Publishers capital of Spotify its content. music a increases. to music increase. of Music forward, subscription are Our suggests to These NMPA, of pricing no in or signs capital our for for deals half second forms consecutive the the consumption been stickiness where in services. This music in XX streaming the we with market opportunity drive our the cost amid that occur growth some subscribers consumers and market in market a market benefits management demonstrates allocation any across resiliency to with increased for a not all of of combined allocation, demonstrate of subscriber continues bundled first of cycles, Recently, National year-over-year of double-digit to one there Publishing U.S. us premium should Music activity have complicated slowdown growth calendar only digital services increases months continues price the growth regularity also most expect announced time from and XX% under-monetized and

this We growth the industry, in been has well in will the confident the the to we trajectory are benefit as pleased Reservoir artists continue that work with recognition ecosystem. growing are for particularly and how as undervalued from growth

our [indiscernible] to new [indiscernible] the Rock call some first ever to take Roll want into a act Before mercury celebrated [indiscernible], the client, I we price. Jazz home and management [indiscernible] week, performance, of Hall we take out the moment financial achievements. inductions rosters Last deals into to Fame. became get our and and recent of the

to mainstream This and quarter song, hits country Dance by and making both #X it do electronic [indiscernible] chart-topping across song weeks good, first from the spending saw chart [indiscernible] genres airplay #X [indiscernible] Blue Rock hit on climbing on I'm at song Hot Billboard's a co-written need favor, [indiscernible], to airplay, XX so. to

several Additionally, on helped [indiscernible], writer longest-running our billboard R&B albums weeks billboards [indiscernible] chart at topped a propel become collaboration the #X and snooze the album the charts producer, spending by top. X SOS to

diversifying portfolio eras. Over and few accretive the months, made investments, across past we several our strategic genres

catalog. works. his all one his of Hotel artist from vocalist, of announced home a plus we like to best-selling groups hits are of the legendary Walsh. his be Some and the as James a contributed as deal recently deals honored includes guitarist, Joe Gang albums include member to and publishing and solo California, we to and his time, the catalog songwriter of Eagles support The Joe the high-quality future and

Latin genre and Fame. his defining the Academy, The a impressive acquisition and roster. Latin catalog, Christina his Grammys includes co-founder Rudy works, Latin hits Latin leveraging deal producer, Aguilera, his Songwriters also to the the deal the legacy. Rudy of welcomed the writer publishing by the of more also as Perez well We performed including as future is for Reporting of [indiscernible] Hall

hitmaker distribution an we rap to be we're such deals catalog creators. established pleased opportunity of roster and decorated international production company, thrilled and making additions Remedia the [indiscernible]. with region proud were for Bremer, music while as country these in new our important in presence These and country We hit regions duo grow cross producer, globally. catalog grow untapped our music and bolstered both conjunction our also [indiscernible] genre We genre [indiscernible], Pop titles further to and of class and We writer-producer, the the to steward of of for to an on our the business with history roster in Arabia, locally additions collaborator, country Egyptian and the developing in creators. executed build the emerging its [indiscernible]. We're [indiscernible], see expanded writer content with with are

[indiscernible] a Gomez, albums Disco. for also Pink, future her Celine platinum Dion, works of by of has And Panic garnered signed publishing throughout at We to the #X Jones. the Selena selling collectively discography. songwriter deal Step contributed and Death streams billions

Looking robust ahead, that continuing exceed pipeline deals objective working are of expectations. of the with to our a through we return complete transactions

profile. As record a ultimately and a accretive underwriting our that process, a margin deploying track of rigorous acquisitions, rooted business becomes we capital strong we to have have in

have our we deals, slowdown a no value for pipeline and $X see in prospective in opportunities. We billion of off-market total roughly

detail. continues believe catalog, reflected a with rostering stewards grow. enhancement trusted also our of differentiated reputation we music to as with We We that our value see each approach as to build quarter, that in greater us discuss explore like Jim? quarter With I'd in turn we second numbers over the to opportunities. come to [indiscernible] who the artists to our that, as call to Jim

Jim Heindlmeyer

results. Thank you, Golnar, announcing good and of strong everyone. Today, we're morning, another financial quarter

grow consistently and coupled competencies. from to Reservoir to revenue operating of the ability expertise the and team's Our business model durability is a leverage testament quarter-to-quarter improve core our with

both Revenue led driven $XX.X second business XX% in a million, year results. Turning fiscal XX% quarter for fiscal music quarter. prior This a to versus was growth quarter. second the segments, by most notably compared increase the to was prior the by recorded our increase year quarter in

for Looking the operating expenses at quarter. our

item depreciation acquisitions. we to bit years of settled versus that expenses that write-off a on our XX% Company Amortization of that increased during quarter. nonrecurring legal a the requiring prior occurred XX% This XXXX more resolution versus the million. $X.X in expenses. I'd add $X.X mediation, to expenses that a the to cost due administration expected of write-off in year X% like a of million recoupable to color year-over-year saw overall recoupable relates legal year, from of revenue Our through had the to expense largely quarter. write-off prior catalog previously resulting increased onetime prior recoup, to began which fees us continued matter, a due legal and increase costs noncash we

the in increased year. The EBITDA the million second the notwithstanding Interest EBITDA of higher and $XXX,XXX excluding adjusted while of million increase partially to Net XXXX to approximately expenses. year. by As compared versus in it This expense quarter $X.X in second OIBDA driven resulted OIBDA the year-over-year prior year diluted quarter. the increased second was and a just $XX.X from operating in for million per versus impact prior $XX.X interest but million $X.X adjusted quarter, as was does fiscal including $X.XX. The In are the for by was was income for quarter administrative earnings revenue income offset last write-off XX% same period by discussed of I offset growth, it strong income administrative mentioned, primarily net $X.X the higher and amortization result, EBITDA OIBDA. higher we revenue decrease the partially higher improved gross expense, adjusted margins. quarter, million, X% and expenses, by driven write-off share in the as I well

outstanding quarter average the diluted count weighted $XX.X our Lastly, million. share during was

Publishing the offset an breakdown last review a same Music revenue I'll increase from the due with increased revenue quarter, Music to year growth by $X.X year-over-year starting digital quarter, decrease strong to in of in second the which Publishing XX% in revenue. Mechanical segment period $XX.X segment generated the performance represents mechanical partially revenue, million. Now within million and for our X% Publishing.

Lastly, in booked other synchronization digital Copyright revenue in Royalty was onetime down revenue million was to of period. the prior compared year by up decrease was prior The the retroactive period, while nonrecurrence $X.X the year X%. the adjustment Board driven revenue X%

were the revenue we to for QX would revenue If of out have affirmed last a result CRB rates we XX% be the call, we year-over-year QX last recorded total in the XX%. would shared of the year. on As up grown retroactive publishing last year's revenue figures, that muted adjust is of adjustment and comparison that in X as

the in $XX.X segment quarter the results to Recorded with Our Music of revenue strong an compared increase second of second representing delivered XX% of quarter XXXX. fiscal million,

Music respectively. segment pause writer X%, SAG the which revenue, neighboring Recorded increased increases. physical resulting revenue driven all quarter XXX% strikes at the our segment $XXX,XXX, Recorded revenue synchronization, by of which created and the decrease increased a XX% This Music rights types sync segment and fiscal a year. Digital from in driven Growth by XX% second the in was the of year-over-year opportunities. Music Recorded versus Excluding in the came in Synchronization and within delivered was primarily production-based film prior XXXX. in and television timing skilled revenue

XXXX. Moving objectives. million which net available under total bringing sheet. million debt debt of compares million million That debt total on million, to of capital net strategic million, our balance $XX.X the $XXX.X of hand the closed as of costs cash financing million. We our quarter of ended revolver, liquidity XX, net us with $X.X with $XXX.X which We comprised $XXX.X of gives of on quarter to our the to to of fund $XXX.X deferred $XXX.X March was and

help elevated, interest hedge debt we of at rates that exposure highly rates as nearly coming half our rates, continue I'd to rise. attractive to months Finally, will interest like limit you our which interest rate remind in expense to to remain managed have should

our the XXXX. back fiscal to turn spend Golnar, discussing few outlook minutes I'd to I over Before like a for call

to a successful and the better-than-expected by back driven second of year. expect led to $XXX the In consecutive of from catalog million, raising half of results, quarter to in represents our of revenue writer to $XXX half $XX first the the revenue second of million first as we're of product. and the the a XX% at return the XXXX adjusted release to half XX% the we guidance after $XXX cadence the $XX the notably most through work be on schedule, our down [indiscernible] year, million, slightly which range strikes the EBITDA strong $XXX $XX which growth million also previous million, physical a we to million normalized range implies versus SAG guidance release of million million release results versus Following to impact scale range from We're to a $XX increase midpoint. A to midpoint. raising strong at fiscal

year, first of genres. growth be will the well weighted across While we opportunities heavily our revenue half positioned and fiscal capture are to to more categories the

continue growth progress strategic growth. prioritizing our we accretive As against organic while plan, acquisitions to we will make

will our responsible adjusted we the and deployment line profile, We Golnar. financial I'll new that, to and now meet in for continue EBITDA. follow capital to our strong pass of ranges sight our to With to call revenue are strategy maintain our both back confident guidance

Golnar Khosrowshahi

Thank you, Jim.

As Jim mentioned, guidance are year EBITDA. adjusted revenue raising fiscal both we on our and

will We business optimizing while pursuing our the growth on continue high-quality on existing inorganic by focus operations our to executing deals. strategy of

competitive to we broader anticipate slowdown no positioning. confident we industry, Regarding the and in music growth, our are

to second against for strong. Reservoir our along this, the With that, that model half questions. will with year now fiscal and positions open of of the we supports All predictable flows, targets our line start highly the business execute cash

Operator

first Riley Day Instructions] from the Dan with of Securities. comes Our line question [Operator B.

Daniel Paul Day

give now, looks in acquisition you the deals, gross the So was decline more an move given and publishing acquisition on you just exactly a debt on if and I update catalog didn't you've music so multiples maybe dropped market long-awaited right your much could haven't yet, haven't seen pipeline number transaction what us the XX-Q little press that given there what just seeing release now? or the But right finally what for we're not just the concentrated just is. acquisition out like copyrights seen a whether

Golnar Khosrowshahi

tell seeing and certainly I could still the set we infusion fueling wish assets robust, you for of capital The I pricing, have demand. within and that of in but a contraction lot that conclusive of and we're as deals. it pricing contraction, as and in demand It's would recorded the large is pipeline evidence new we're one publishing competitive to Dan, is not much that seeing some really and would balanced between of high-quality within size And assets. the lot environment scarce smaller think from a of subset ranges a it equally assets. drive assets continued

Daniel Paul Day

publishing Understood. Other funds music worse, of handful of over the or couple lately for lot exposure. the associate that your a formed people over the question, them around U.K. just think -- I been royalty headlines in business of with just of last the there's years sometimes better because

seem running covenants. debt all. in, relative Some at to maybe any have like similar seen of had come you've them results challenges disappointing expectations against up It doesn't

you're curve? So age of been? maybe talk than to the about as you're more just to why struggling why point exposed else different? it decay you Is like just bit kind they the of be a not Anything catalog, to have maybe might

Golnar Khosrowshahi

our we we've I We've the very conservatively. and assets. these always taken how value data underwriting compelling diligent Sure. really approach until it -- to mean a have quite growth. approached we future around

to course days Xx of higher multiple certainly then And those benefited a over so XX in that the more anywhere recently. years assets early have having we the today from from purchased past than

same apply very very today. we bought well. to continue simply, rigor that we And So

that and the accruing I conservative to, September, those what that noise and -- new we CRBX was disciplined of that to quarter. the far that then specifically was as last to calculation us again, impact treated they referring up of going and at started our have, royalty as a and for was, And approach to of has that fiscal end that and pretty a for think linear come as third with and rates. that to year the do added were relate lot how had those accruals you're

there. really don't any surprises we so happening have And

Operator

from Baldry Capital. line the Our ROTH with of next comes Richard question

Richard Baldry

risk hedging have do start people or we've plans all their to around that of willing outlooks? feel cap you curious, simpler either taking with the the for leave could of other and industries, thoughts off any at your hedges for it your half to that it's rates of that? sort seen you own Or view Do duration table or just on a be here. Sort some peaking

Jim Heindlmeyer

Yes, Rich.

of and going I And million type the do. that with to hedges, of of September. the is look it risk. leaving our likely to million discussions $XXX position hedges start I think also we've we future the those $XXX always I those us, at through of hedged interest about our another think what taking because we to We've our next we're at certainly managing as that end continue table will we want in taken a we while that hedges, We've and we think through for added about rate approach in to. hedge maturity us, off our for them place look have had be

Richard Baldry

then you fee sequentially. down recoupable onetime the out went of And hit, back a Okay. kind OpEx, if bit little

OpEx? some down we be OpEx the possibly think about So side. do do headwinds half side How of because how the You're the about we the about revenue second on would half? talking on second think in trends

Jim Heindlmeyer

Yes.

I trying think our to manage our we're always best overhead.

we've good typically that. pretty of job a think done I

environment that backing forces course, us I everyone current Having the a our quarter Of macro that, good the rate -- are in said run right think probably that with to same at us. out else is the we're now this affecting point. million that gets $X.X pretty that from

Richard Baldry

months, time of into either that far of much X think a increases, happen think royalty a XX all you don't about the could is run at way under those how those right? be the step-ups Okay. rate of So recent whatever months, frame? they about price increases, the tailwind drop for if your sort And second recognizing to you are, there P&L, that how kind

Jim Heindlmeyer

very reporting We basis a significant a Yes. that but those that. little X monthly on the after months delay in a are And MLC. see for typically, U.S. right? a we money the There's accrue delay, anyway, that. royalties to not certainly bit DSPs there, it's of

So that our make what's of we of the We recognize in the estimates pipeline, streaming we estimates have activity. our revenue. and

significant U.S. the in not it's a So delay

things there happen there's that a internationally, will result certainly little lag as Now of as a there bit a and more be some delay of tailwinds that.

Richard Baldry

of of XXx like level. somewhere last acquired. or How -- that [ Round more price profit But high get we And your were me, it trying was in looked that's tail butter to it's people similar for? the XXx quality to for an a some sort that sort and a fair EBITDA. how because and out, around like Or outlier in figure space September, dramatic It asset was bread is takeout ] is had premium that like simply watched this in business they price I'm gross Hill your paying view?

Golnar Khosrowshahi

of And outlier so I certainly around it. that scale -- some valuation. basis. about an had an much value the asset don't on good right assets are think These that's asset

don't was high-quality think really that. was I catalog. any anything So there about outlier a It

And it at multiple. traded so that

Operator

line Capital the from with comes question Group. Fuhrman Alex next of Our Instructions] [Operator Craig-Hallum

Alex Fuhrman

Congratulations be And can content about in you companies as the more acquiring on here. Golnar, seeing broadly, the you've attractive markets more just you there look are color of helpful? maybe you markets? any And at in and would that another partnerships multiples just overseas, recently strong really in made talk than some emerging emerging and U.S.? quarter investments are that

Golnar Khosrowshahi

in acquiring make we record to we we are we certainly Pop/Arabia The Sure, cover the the different East, are via do labels, roster. kinds adding artists where that transactions the deals where of Middle Alex. investments that and

question. are lower are how on you're these as right So today expanding transactions structured a we ask We and doing where business. It we're execute absolutely -- what to certainly how there so at a deals to we're lot mean, the and of market and a multiple. able I is this diversity the happening far

with at highly attractive to is growth the And so that coupled that XX to us attractive, invest that it's future X the the next one the of least including trajectory, the years in region, demographic. that's to makes reasons for in content relevant [indiscernible]

lower lot much at us. execute. if here execute a that more of to market we're at to multiples, in plan attractive a So capital we're looking And to it marketplace is saturated these makes there to the business and it the somewhat is that with just able continue

Alex Fuhrman

for just And Does [indiscernible] less growth terrific. revenue by year. That's to channel was up CRB there It drew than the little at get would streaming then demand overall quickly, a numbers the about your fell color is bit business here. something and Music relative Music love that last lines. the into Or more revenue on like Publishing, say looks Recorded for something to for looking advertising? maybe demand your We that. about just both way

Jim Heindlmeyer

be down, are been actor and the affected Yes. on has say, I the resumes. When paused those industry, really Alex, by shuts overall television takeaway strike. production should that sync film opportunities until the and would production writer

strike the the has be by affected certainly will but actor to for And yet. strike likely couple being is resolved. been it The the writer resolved, of we're we by to been So strike, quarters. hopefully, and strike next continue affected the close hasn't

production So work, gets see few resumes. after we'll start that's back be come and once then months could back, those to to resolved opportunities a everyone

second So year. quarter what in strike that's we be the think you're for you're half for quarter the and the what half year, numbers seeing historic looking first that's there's why and we're or impacted the of of seeing certainly that at to X the and the certainly this another by

Operator

showing to Khosrowshahi back like closing for turn to currently remarks. further over questions time. I'm And no I'd the this at Golnar call

Golnar Khosrowshahi

our Thank of considerable pursuit We expand our returns talented value-enhancing have joined today. quarter. updating you, future to everyone with look we and you Thank operator, roster and generating we forward opportunities believe next who initiatives, also creators both to us you. to with a while bright of significant

Operator

This for concludes today's call. Thank conference you participating.

disconnect. now may You

Reservoir Media (RSVR) 7 Nov 232024 Q2 Earnings call transcript