Reservoir Media, Inc. ((RSVR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Reservoir Media’s recent earnings call painted a picture of robust growth and strategic expansion, with a generally positive sentiment. The company highlighted strong revenue growth and strategic catalog acquisitions, including the iconic Miles Davis catalog. While there is confidence in continued performance, concerns were raised over rising operating and interest expenses.
Top Line Growth
Reservoir Media reported a 12% increase in revenue for Q2 fiscal 2026, with 7% attributed to organic growth and 5% from acquisitions. This growth underscores the company’s effective strategies in expanding its market presence and enhancing its revenue streams.
Significant Catalog Acquisitions
A key highlight of the earnings call was the acquisition of the catalog of the legendary musician Miles Davis. This includes publishing rights, recorded music, and likeness rights. Reservoir Media plans to enhance the catalog’s value, which is expected to drive future revenue growth.
Expansion in Emerging Markets
The company is making strides in emerging markets, particularly in the MENA region, with new deals in Iraq and Kuwait. These mark Reservoir Media’s first catalogs in these countries, signaling a strategic move to diversify and expand its global footprint.
Strong Recorded Music Segment
The recorded music segment saw a 21% revenue growth, driven by a 20% increase in digital revenue and growth in music streaming services. This segment’s performance highlights the increasing demand for digital music consumption.
Increased Guidance
Reservoir Media has increased its full-year revenue guidance range to $167 million to $170 million, implying a 6% growth over fiscal 2025. This upward revision reflects the company’s confidence in its strategic initiatives and future performance.
Increased Operating Expenses
Operating expenses grew by 11% compared to the prior year, with administration expenses and amortization costs increasing by 15% and 18%, respectively. This rise in expenses is a point of concern that the company will need to address moving forward.
Higher Interest Expenses
Interest expenses rose to $6.7 million from $5 million in the prior year, driven by higher debt balances and increased interest rates. This increase highlights the financial pressures the company faces amid its expansion efforts.
Forward-Looking Guidance
During the earnings call, Reservoir Media provided an optimistic outlook for the future. The company increased its revenue guidance range to $167 million to $170 million, reflecting a midpoint growth of 6% over the previous fiscal year. Adjusted EBITDA guidance was also revised upwards to $70 million to $72 million, signaling an 8% growth at the midpoint. The acquisition of the Miles Davis catalog and the extension of the publishing deal with Nick Drake are seen as key drivers of future growth.
In summary, Reservoir Media’s earnings call was marked by strong growth and strategic acquisitions, with a positive outlook for the future. While there are concerns about rising expenses, the company’s strategic focus on catalog development and global diversification positions it well for continued success. Investors and market watchers will be keenly observing how these strategies unfold in the coming quarters.