Reservoir Media, Inc. SEC 10-K Report

Reservoir Media, Inc., a leading independent music company, has released its Form 10-K report for Fiscal 2025, showcasing significant growth in both financial and operational metrics. The company, which operates in the highly competitive music industry, focuses on music publishing and recorded music, leveraging strategic acquisitions and long-term ownership of music rights to drive its business forward.

Financial Highlights

• Total Revenue: $158.7 million, increased by 10% during Fiscal 2025 compared to Fiscal 2024, driven by a 12% increase in Music Publishing revenue and a 4% increase in Recorded Music revenue.
• Operating Income: $35.1 million, increased by 43% during Fiscal 2025 compared to Fiscal 2024, primarily driven by revenue growth and an improvement in cost of revenue as a percentage of revenues.
• Net Income: $7.7 million, increased by $6.9 million during Fiscal 2025 compared to Fiscal 2024, driven primarily by a $10.5 million increase in operating income.
• Basic Earnings per Common Share: $0.12, compared to $0.01 in Fiscal 2024, reflecting the significant increase in net income.
• Diluted EPS: $0.12, compared to $0.01 in Fiscal 2024, indicating improved profitability per share.

Business Highlights

• Business Segments: Reservoir Media, Inc. operates two main business segments: Music Publishing and Recorded Music. The Music Publishing segment focuses on generating revenue from the use of musical compositions, while the Recorded Music segment involves the marketing, promotion, distribution, sale, and licensing of sound recordings.
• Music Publishing Revenue Segments: The Music Publishing segment derives revenue from digital, performance, synchronization, mechanical, and other sources. Digital revenues are generated from streaming and download services, while performance revenues come from public performances. Synchronization revenues are earned from the use of compositions in visual media, and mechanical revenues are from sales in physical formats.
• Recorded Music Revenue Segments: The Recorded Music segment earns revenue from digital streaming and downloads, physical sales of products like vinyl and CDs, neighboring rights from public performances, and synchronization fees for use in visual media.
• Geographical Performance: U.S. revenues accounted for 59% of total revenues, with international revenues making up 41%. U.S. Music Publishing revenues represented 58% of total Music Publishing revenues, while international Music Publishing revenues accounted for 42%. Similarly, U.S. Recorded Music revenues made up 55% of total Recorded Music revenues, with international revenues at 45%.
• Operational Strategy: Reservoir Media focuses on strategic acquisitions and long-term ownership of music rights. The company has expanded its catalog through acquisitions, including TVT Music Publishing, Reverb Music, and Blue Raincoat Music Ltd, among others.
• Emerging Markets and Local Content: The company has invested in emerging markets, particularly in the MENA region, through its stake in PopArabia. This includes signing artists and acquiring catalogs from regions like India and MENA, positioning the company to capture growth in these areas.
• Future Outlook: Reservoir Media plans to continue its growth through strategic acquisitions of high-quality copyrights and recordings. The company is also focused on expanding its active songwriter and artist roster and embracing commercial innovation with new digital distributors and partners.

Strategic Initiatives

• Strategic Initiatives: Reservoir Media, Inc. has focused on expanding its music catalog through strategic acquisitions, which is evident from the significant increase in cash used for investing activities, primarily due to acquisitions of music catalogs. The company also emphasizes the discovery and development of recording artists as part of its strategic growth in the Recorded Music segment.
• Capital Management: The company has a secured line of credit with a balance of $388.1 million as of March 31, 2025, and has increased its borrowings to support strategic acquisitions. Reservoir Media, Inc. did not pay any dividends during Fiscal 2025 due to restrictions under the Senior Credit Facility. The company also engaged in share-based compensation activities, reflecting its commitment to align employee incentives with shareholder interests.
• Future Outlook: Reservoir Media, Inc. plans to continue leveraging its Senior Credit Facility to support strategic acquisitions and investments in music catalogs. The company aims to maintain sufficient liquidity to fund operations and strategic initiatives, with a focus on refinancing and extending maturity dates to manage interest expenses effectively. Additionally, the company is exploring opportunities to enhance its capital structure through potential debt refinancing and equity raises, subject to market conditions.

Challenges and Risks

• Market Risks: The company is heavily reliant on a limited number of digital music services for distribution, which can influence pricing structures and royalty calculations. Any changes in these relationships could adversely affect revenues.
• Operational Risks: The company’s success depends on its ability to attract and retain key personnel and artists. Failure to do so could impair its ability to execute its business strategy.
• Regulatory Risks: Changes in copyright laws, particularly in the U.S. and EU, could impact the company’s ability to monetize its catalog. Additionally, new AI regulations could affect how the company protects its intellectual property.
• Emerging Risks: The development and use of AI in music creation pose challenges in protecting intellectual property rights. Digital piracy remains a significant threat, potentially impacting revenue streams.
• Financial Risks: The company’s substantial indebtedness could limit its financial flexibility and ability to respond to market changes.
• Management Strategies: Management is focused on strategic acquisitions and expanding into high-growth markets to mitigate risks associated with market saturation in traditional markets. The company is also investing in emerging technologies and digital platforms to enhance its competitive position.
• Market Risk Exposure: Reservoir Media is exposed to foreign currency exchange rate fluctuations, particularly as it expands its international operations. This exposure could lead to significant changes in financial results due to currency translation effects.

SEC Filing: Reservoir Media, Inc. [ RSVR ] - 10-K - May. 28, 2025