Reservoir Media, Inc. (RSVR)·Q4 2025 Earnings Summary

Executive Summary

• Q4 FY2025 delivered 6% year-over-year revenue growth to $41.4M, with OIBDA and Adjusted EBITDA up 14% YoY; diluted EPS was $0.04, flat YoY, as higher operating income was offset by swap losses and higher interest expense .
• Music Publishing (+6% YoY) and Recorded Music (+7% YoY) both contributed; segment OIBDA margins expanded (Publishing 37% vs 35% YoY; Recorded 54% vs 49%) on stronger gross margin and operating leverage .
• Management initiated FY2026 guidance: Revenue $164–$169M and Adjusted EBITDA $68–$72M (mid-point growth of 5% and 6%, respectively), signaling continued, prudent growth assumptions without baking in new “hit”-driven upside .
• Strategic catalysts: off-market M&A ($115M deployed in FY2025), international expansion (PopIndia launch), and streaming price tailwinds; watch for conservatively set guidance to be revised at mid-year if hit-driven or audit recovery effects recur .

What Went Well and What Went Wrong

• What Went Well

  • Publishing and Recorded segments both grew; Publishing revenue rose 6% YoY (sync +51%), Recorded revenue rose 7% YoY (digital +19%), with margin expansion (Publishing OIBDA margin 37%; Recorded 54%) .
  • Strategic capital deployment and off-market M&A drove scale (Lastrada publishing, New State label) while launching PopIndia to extend international footprint: “Fiscal 2025 was a year marked by significant strategic capital deployment… additions of New State and Lastrada… key scale drivers” .
  • FY2026 outlook calls for mid-single-digit top and bottom-line growth; CFO reiterated prudent approach (no “hit” projections), consistent with historical outperformance and potential guidance updates later in FY2026 .

• What Went Wrong

  • Net income down slightly YoY in Q4 ($2.7M vs $2.9M) despite stronger operating metrics, driven by loss on fair value of swaps and higher interest expense .
  • Performance revenue in Publishing declined 13% YoY; Recorded Music saw a 26% YoY drop in Physical revenue on a lighter planned release schedule .
  • Liquidity decreased year-over-year as revolver headroom fell ($79.6M vs $132.3M), reflecting increased debt utilization to fund M&A (Net Debt $366.7M vs $312.7M) .

Financial Results

Note: S&P Global consensus data for Q4 FY2025 was unavailable via our feed; comparisons to estimates cannot be made. Values would be retrieved from S&P Global if available.

Segment breakdown – Music Publishing revenue by type:

Segment breakdown – Recorded Music revenue by type:

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Fiscal 2025 was a year marked by significant strategic capital deployment, expanding Reservoir’s portfolio and geographic footprint… additions of U.K. label New State and publishing catalog Lastrada Entertainment were key scale drivers of growth” — Golnar Khosrowshahi .
• “We closed out fiscal 2025… fourth quarter OIBDA increased 14%… Adjusted EBITDA increased 14%… largely driven by stronger revenue and improved margins, particularly in synchronization within publishing and digital within recorded music” — Jim Heindlmeyer .
• “We expect revenue to be in the range of $164M–$169M, and adjusted EBITDA to be $68M–$72M… we have maintained a strong pipeline” — Jim Heindlmeyer .
• “We certainly see better opportunities… in emerging markets… better ROIs and less competition… in India as well as in the Middle East” — Golnar Khosrowshahi .

Q&A Highlights

• International ROI and pipeline: Management sees better ROIs and less competition in emerging markets (India, Middle East); pipeline robust and opportunistic across Publishing and Recorded .
• Seasonality and accruals: Expect returning cadence with Q2/Q4 potentially higher driven by timing; accruals to reflect revenue in-period .
• Hedging strategy: ~$150M hedged, evaluating incremental hedges amid rate volatility; current hedges through Dec 2027 .
• Guidance conservatism: FY2026 guide does not assume repeat of hit-driven revenue (e.g., “Espresso”), and excludes audit recoveries; guidance may be updated at Q2 given visibility .

Estimates Context

• S&P Global consensus estimates for Q4 FY2025 EPS and revenue were unavailable via our feed, so a comparison to Wall Street estimates could not be performed. Management highlighted actuals of revenue $41.4M and diluted EPS $0.04 for Q4 FY2025 .
• Given the conservatism noted in guidance (excluding hit-driven revenue and audit recoveries), near-term estimate revisions may be modest absent incremental catalysts; subsequent guidance updates may follow by Q2 FY2026 based on visibility .

Key Takeaways for Investors

• Both segments grew in Q4 with margin expansion; Publishing sync strength and Recorded digital growth underpin operating leverage into FY2026 .
• Net income softness vs prior year was driven by swap fair value losses and higher interest expense, not operational weakness; OIBDA/Adj EBITDA growth remains robust .
• FY2026 guidance embeds prudent assumptions (no “hit” repeat or audit recoveries); expect potential mid-year guide updates if pipeline and organic drivers outpace planning .
• Strategic M&A and off-market deal sourcing continue to scale high-quality assets; $115M deployed in FY2025 with ongoing pipeline supports medium-term growth .
• International expansion is a structural growth vector (PopIndia launch, MENA presence) with attractive valuations and rising subscription/streaming trends .
• Watch lumpy revenue components (sync timing, neighboring rights, physical releases) and interest rate impacts; hedging mitigates some rate risk, but swap marks can affect reported net income .
• Near-term trading: focus on evidence of continued margin expansion, incremental catalog monetization (audit recoveries, direct affiliations), and any Q2 guidance revisions as potential catalysts .