Reservoir Media, Inc. Q1 FY2027 earnings call

Strategic Market Expansion in High-Growth Regions

• Prioritizes expansion in fast-growing global music markets, specifically Latin America, which recorded 17.1% regional industry growth in 2025 (the highest global rate, marking 16 consecutive years of growth).
• Closed two complementary strategic Latin music deals: a joint venture with Tu Publishing to serve as the publisher for all Tu's current and future writers, co-sponsor writing camps for Latin creators, and an acquisition of the catalogs of independent Latin label Nacional Records and its publishing arm Canciones Nacionales, plus a new joint venture to develop new artists and songwriters.
• Positions Latin music as a global commercial force rather than a regional niche, with investments that combine established catalogs with local talent development platforms.

New Talent and Roster Growth

• Launched a new joint venture record label with UK-based A&R executive Ali Hodge, expanding frontline artist development capabilities in the UK; the new label Some Action has already signed three emerging artists and operates out of Reservoir's London office to leverage existing synergies.
• Added multiple high-profile creators to the music publishing roster, including hip-hop icon T.I. (full catalog and future works deal, whose new album debuted in the top 10 of Billboard's Top R&B/Hip-Hop Albums), multi-platinum pop songwriter Adam Capet, producer Fretworm, and singer-songwriter Jarrett Doherty. The Doherty deal also launched a new joint venture with existing Reservoir writer Sam Tenese's Tin Man publishing.

Corporate Update and Operational Discipline

• Confirms the Board's special committee of independent directors continues to evaluate unsolicited, non-binding acquisition proposals received earlier in 2026, with no further updates to share at this time.
• The business generates consistent, predictable revenue and cash flow that provides flexibility to invest in talent, operations, and strategic opportunities while maintaining financial discipline.
• Total Q1 adjusted EBITDA grew 13% year-over-year to $15.7 million, OIBDA grew 7% to $13.7 million, and the net loss narrowed to $508,000 from $644,000 in the prior year quarter, resulting in break-even diluted EPS compared to a 1 cent loss per share in Q1 FY2026.

Reservoir Media operates two core product segments: 1. Music Publishing: Revenue grew 6% year-over-year to $26.5 million, contributing 65% of total Q1 revenue. The segment saw a 7% increase in digital revenue driven by new catalog acquisitions and streaming service growth, plus a 17% expansion in performance revenue from hit songs. These gains were partially offset by declines in sync, mechanical, and other revenue categories. 2. Recorded Music: Revenue grew 35% year-over-year to $14.1 million, contributing 35% of total Q1 revenue. Growth was driven by a 23% increase in digital revenue from new catalog acquisitions and streaming growth, robust synchronization revenue, and higher physical revenue from favorable release schedule timing. Total company Q1 revenue was $41.5 million, a 12% year-over-year increase (6% organic growth).

• Management maintains the previously announced full fiscal 2027 guidance ranges with no upward or downward revisions.
• Full year revenue guidance is maintained at $186 million to $191 million, which implies 7% year-over-year growth at the midpoint.
• Full year adjusted EBITDA guidance is maintained at $75 million to $79 million, which implies 5% year-over-year growth at the midpoint.
• Management remains confident in delivering on the full year guidance after Q1 results in line with expectations, driven by the company's consistent strategy of acquiring high-quality music assets and enhancing their value.

• Forward-looking statements included in the call are inherently subject to risks and uncertainties that could cause actual results to differ materially from management's projections, expectations, and beliefs; additional detail on identified risk factors is available in the company's SEC filings.
• Increased debt balances to fund catalog acquisitions and artist signings have pushed interest expense higher year-over-year.
• Timing of royalty payments and lower-than-expected advance recoupment resulted in a $1.4 million cash outflow from operating activities in Q1, a $7.4 million decrease compared to the prior year quarter.

Q: The Q1 operating cash outflow was attributed to royalty timing and advance recoupment. Is this due to structurally longer payment cycles or just short-term timing, and is there any change in underlying writer performance for advances? / A: Higher outgoing advances this year versus last impacted Q1 cash flow. There is no structural shift in recoupment, and no change to the company's outlook on advances. The lower recoupment this quarter was just a temporary, one-off timing dynamic, not a systemic change.

Q: Recorded music is growing much faster than publishing. Is this due to a permanent shift in return on invested capital, or just a function of recent deal flow that may reverse in the future? / A: The faster growth is partially driven by contributions from recent completed acquisitions, which have rolled into results. The strong recorded music growth also reflects healthy underlying performance of the existing catalog. Sync opportunities, which drove much of the recent upside, are not linear quarter over quarter, so growth rates may fluctuate going forward.

Q: What resources does Reservoir bring to its new strategic partnerships, and does it require large upfront investments? / A: Deal structures vary across partnerships: some include full catalog acquisitions, while others leverage Reservoir's existing operational infrastructure to support the partner's existing talent and operations. Most partnerships include committed resources for new signings and roster expansion, and all aim to combine the partner's deep vertical expertise with Reservoir's operational synergies to grow the business.

Q: Administrative expenses were elevated in Q1. Is this a new steady state, or just a temporary pull forward of expenses? / A: Q1 administrative expenses included one-off items that lifted the quarter's run rate. Investors should not use Q1's expense level as the baseline for the remaining three quarters of the fiscal year, as the elevated level is not representative of full-year run rate.