Reservoir Media, Inc. (RSVR)·Q1 2026 Earnings Summary

Executive Summary

• Q1 FY26 revenue was $37.2M (+8% y/y, +5% organic) with OIBDA $12.8M (+12% y/y) and Adjusted EBITDA $13.9M (+10% y/y); diluted EPS was $(0.01), as higher interest expense and swap losses offset margin gains .
• Segment performance was mixed: Music Publishing grew 4% y/y (sync +48% and “Other” +42% offset declines in digital and performance), and Recorded Music rose 8% y/y on strong digital (+23%) despite weaker physical and sync .
• FY26 guidance maintained: Revenue $164–$169M and Adjusted EBITDA $68–$72M, implying ~5–6% y/y growth at midpoints; management reiterated confidence in achieving targets .
• Liquidity expanded materially (cash $14.8M; revolver availability $158.2M; total liquidity $173.0M) and credit facility amended in June to increase revolving commitment to $550M, supporting continued M&A execution .
• Key catalysts: pipeline “over a billion dollars,” immersive entertainment investment (Lightroom), independent label acquisition (Fool’s Gold) and anticipated DSP price increases (e.g., Spotify) benefiting digital revenue through the year .

What Went Well and What Went Wrong

What Went Well

• Strength in synchronization and digital: Publishing sync +48% y/y; Recorded digital +23% y/y, driving consolidated top-line growth and margin improvement .
• Cost discipline and operating leverage: OIBDA +12% y/y and Adjusted EBITDA +10% y/y on higher gross margins and prudent OpEx control; CFO emphasized path to FY26 targets and robust liquidity .
• Strategic expansion: Investment in Lightroom and acquisition of master rights from Fool’s Gold deepen IP monetization avenues and recorded portfolio; CEO: “building on strong momentum…well-positioned” .

What Went Wrong

• Diluted EPS stayed negative at $(0.01); net loss widened to $(0.6)M y/y due to higher interest expense and losses on fair value swaps, partially offset by FX gains .
• Publishing pressure in digital and performance: Publishing digital −2% y/y and performance −7% y/y, reflecting timing effects and hit cadence .
• Cash from operations fell to $6.0M (−$2.5M y/y) on royalty payment timing; net debt increased to $372.5M from $366.7M at FY25 year-end .

Financial Results

Segment breakdown – Music Publishing (Revenue by Type; $USD Millions):

Segment breakdown – Recorded Music (Revenue by Type; $USD Millions):

KPIs and Balance Sheet/Liquidity

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We achieved healthy top-line growth… while continuing to manage our costs to generate a 10% year-over-year improvement in our adjusted EBITDA… well-positioned to continue focusing on organic growth opportunities… remaining a trusted partner to our growing roster of creators.”
• CFO: “The first fiscal quarter was hallmarked by our top-line growth, prudent cost containment… We are squarely on the path to achieving our previously issued revenue and adjusted EBITDA guidance for fiscal year 2026.”
• CFO on margin drivers: improved blended margins from lower physical mix and catalog asset mix; expects publishing digital to return to growth; Spotify price increases a tailwind .
• CEO on strategy: pipeline “over a billion dollars,” expansion via Lightroom and Fool’s Gold; reinforcing recorded platform and independent label focus .

Q&A Highlights

• Lightroom investment: single‑digit equity stake, synergistic with Reservoir’s assets; future content to leverage existing and new IP .
• Publishing digital decline: timing of receipts and DSP adjustments; not indicative of structural weakness; expected to normalize .
• Admin expenses: inflation in compensation/vendor costs, but majority increase driven by higher management revenue; publishing admin up ~5% .
• Margins sustainability: improved consolidated margins from lower physical share and favorable catalog mix; recorded margin benefit noted .
• M&A pipeline: even split between publishing/recorded; majority value from off‑market relationships; auction processes avoided .

Estimates Context

• Wall Street consensus (S&P Global) for Q1 FY26 revenue/EPS/EBITDA was unavailable at the time of analysis; estimates for subsequent quarters also returned no data. As a result, versus‑consensus comparisons cannot be made and should be treated as unavailable [Values retrieved from S&P Global].
• Given maintained FY26 guidance and Q1 margin resilience, near‑term estimate revisions are likely modest and focused on mix/timing (publishing digital and sync cadence), rather than directional changes .

Key Takeaways for Investors

• Q1 FY26 delivered healthy y/y growth with margin expansion; despite negative EPS from higher interest/swap losses, operational KPIs remained solid and liquidity improved sharply — a constructive setup into Q2. Bold: Adjusted EBITDA +10% y/y .
• Segment mix matters: strength in publishing sync and recorded digital offset weaker publishing performance/digital and recorded physical/sync; expect digital normalization with DSP price increases .
• Balance sheet capacity supports accretive M&A: revolver availability rose to $158.2M; facility expanded to $550M, enabling continued off‑market acquisitions that have historically driven ROI .
• Guidance intact: FY26 Revenue $164–$169M and Adjusted EBITDA $68–$72M maintained, signaling confidence in execution and organic growth drivers .
• Strategic optionality: Lightroom immersive entertainment and indie label assets (Fool’s Gold) broaden IP monetization channels and recorded scale — potential catalysts for sync/digital growth .
• Watch timing factors: publishing digital/performance and sync are subject to license timing and DSP adjustments; quarterly lumpiness likely, but trend favorable with pricing and catalog investments .
• Near-term trading: absence of consensus benchmarks limits “beat/miss” optics; focus on margin trajectory, liquidity expansion, and Q2 commentary on digital recovery and pipeline conversion as stock drivers .