Reservoir Media, Inc. Q4 FY2026 earnings call

### Overall Financial Performance * Delivered 11% total revenue growth, 6% organic revenue growth, and 12% adjusted EBITDA growth for full fiscal 2026, outperforming the top end of prior guidance. * Deployed ~$120 million for acquisitions and creator advances across both publishing and recorded music rights, growing and diversifying the catalog by genre, era, and geography.

### Talent and Acquisitions * Acquired the iconic catalog of Miles Davis, and launched a global centennial celebration campaign with multiple high-profile activations, with more events planned for 2027. * Signed leading contemporary talent including Say She She, Alison Feltz-Cruz, Sam Tenese, Benjamin Francis Lefwich, and Britton Newbill, and extended long-term deals with top creators including Joni Mitchell, Chris Riddick-Times, the Nick Drake estate, and entered a new deal with Hans Zimmer. * Completed a multifaceted deal with independent label Fool's Gold Records, acquiring master rights and launching an exclusive distribution partnership via Reservoir's label platform.

### International Expansion * Launched Pop India, a Mumbai-based subsidiary, establishing an on-the-ground presence in the high-growth Indian music market. Pop India signed Sri Lankan star Yohani, extended an agreement with Indian hip-hop artist Divine, and completed its first catalog acquisition of Music Craft Entertainment's full publishing and master rights. * Completed the acquisition of MENA-based label and digital distribution company Viral Wave alongside partner PopArabia, expanding PopArabia to over 30 employees across Egypt, Morocco, and the UAE, and building a fully integrated independent music platform with distribution, publishing, and label services for the region. * Acquired additional catalogs in MENA including Iraqi production house HFM Production and Kuwaiti artist Essa Al-Marzoug, and signed Moroccan producer 88 Young. MENA recorded revenues grew 15.2% in 2025, with the market projected to reach $8.5 billion by 2030.

### Business Development and Performance * Sync revenue grew 5% year-over-year in music publishing and 39% in recorded music, driven by brand partnerships with Anthropic, Volkswagen, Netflix, Lexus, Amazon, and placements in major films and shows including *Hoppers*, *Happy Gilmore 2*, *Marvel's Fantastic Four*, and *Stranger Things*. * Digital revenue grew 7% in music publishing and 18% in recorded music year-over-year, aligned with global industry growth of 6% for recorded music and 9.5% for music publishing. * Ranked in Billboard's full-year top 10 market share ranking, with a hit from co-writer Steph Jones (Sabrina Carpenter's *Espresso*) contributing to this position. * The board formed an independent special committee to evaluate unsolicited non-binding acquisition proposals received in March 2026, with no further updates to share at this time.

### Fourth Quarter 2026 * **Music Publishing**: Generated $30.9 million in revenue, an 11% increase year-over-year (including acquisitions). It contributed 67% of total Q4 revenue. Sub-segment performance: Digital revenue +24% to $16.9 million; Performance revenue -16% to $5.5 million; Synchronization (sync) revenue +6% to $5.8 million; Mechanical revenue +16% to $1.3 million; Other revenue +20% to $1.4 million. * **Recorded Music**: Generated $16.2 million in revenue, a 27% increase year-over-year. It contributed 33% of total Q4 revenue. Sub-segment performance: Digital revenue +17% (driven by DSP subscriber growth and price increases); Physical revenue +35%; Sync revenue +161% (due to license timing); Neighboring rights +18% to $1.4 million (from additional direct collection society affiliations).

### Full Fiscal Year 2026 Total company revenue was $175.7 million, a 11% increase year-over-year. * **Music Publishing**: Revenue grew 9% year-over-year, driven by DSP price increases, catalog expansion via M&A, 14% growth in performance revenue from hit songs, and higher sync revenue. It contributed ~70% of full-year total revenue. * **Recorded Music**: Revenue grew 16% year-over-year, driven by new catalog acquisitions, DSP user growth and price increases, and higher sync revenue from license timing. Growth was partially offset by the non-recurrence of prior-year royalty recoveries for under-reported catalog usage. It contributed ~30% of full-year total revenue.

For fiscal year 2027, management provided the following guidance, maintaining the company's disciplined growth trajectory after exceeding 2026 targets: * Total revenue is projected in the range of $186 million to $191 million, representing 6% to 9% year-over-year growth from 2026's actual revenue of $175.7 million. * Adjusted EBITDA is projected in the range of $75 million to $79 million, representing 2% to 7% year-over-year growth from 2026's actual adjusted EBITDA of $73.6 million. The guided midpoint implies a slight EBITDA margin decline from 2026 levels. * Organic growth is expected to remain steady at a mid-single-digit rate, consistent with recent performance.

All forward-looking statements are inherently uncertain, and actual results may differ materially from projections due to unidentified factors, as detailed in the company's SEC filings. The key risks and headwinds discussed during the call include: * New international expansion investments (such as the Viral Wave acquisition in MENA and Pop India launch) have lower margins than the company's core existing business, creating near-term pressure on consolidated gross and EBITDA margins. * Outcome of the ongoing CRB-5 royalty rate negotiations remains uncertain, and management has not baked any potential positive results into current guidance. * Revenue can be impacted by non-recurring items (such as one-time royalty recoveries) that create volatility between quarters unrelated to underlying business performance or seasonality.

Q: The analyst asks for additional detail on the size/scale of the catalog acquired as part of the Viral Wave transaction, and asks if it is an early-stage platform with future expansion opportunity. / A: Management states Viral Wave is already an established distribution business with existing clients, relationships, and products, which is why it brings 30 employees with the acquisition. It is a lower-margin business than traditional catalog acquisitions, but management expects it to expand long-term opportunities for Reservoir in the high-growth MENA market, justifying the investment.

Q: The 2027 guidance midpoint implies a slight step down in EBITDA margin. What factors are driving this expected decline? / A: The modest margin decline is driven by two key factors: first, the recently acquired Viral Wave is a lower-margin distribution business that impacts consolidated margins. Second, the company is continuing to make upfront investments to grow its frontline recorded music business. Management intentionally takes a conservative approach to guidance for these new investment areas, leading to the expected margin step down.

Q: What is the company's current outlook for the ongoing CRB-5 royalty proceedings? / A: Management confirms the proceedings are still in the early discussion phase, with no material updates to share at this time. The company remains optimistic that negotiations will result in a positive outcome that increases the share of royalty income for songwriters and publishers, but this optimism is not reflected or baked into current fiscal 2027 guidance.

Q: Blended gross margins reached a record high in 2026. Is this improvement sustainable, and what is driving the trend? / A: The higher gross margin in 2026 is primarily from recent acquisitions of assets where Reservoir retains 100% of revenue, which lifts overall blended margins. Management does not expect large swings in gross margin percentage going forward, though margin may tick up slightly depending on the structure of future acquisitions. The lower-margin Viral Wave acquisition will create a modest headwind to gross margins in fiscal 2027.