New York-headquartered Reservoir Media has published its financial results for calendar Q3 – the firm’s fiscal Q2 2022 (the three months ended September 30).
According to an SEC filing, Reservoir, which floated on the NASDAQ via a merger with a SPAC (special purpose acquisition company) in July, generated total revenues of USD $30.4 million in calendar Q3, an increase of 45% compared to $21 million in the prior year quarter (fiscal Q2 2021).
Reservoir cites “traditional streaming platform growth”, and “strong performance of alternative revenue sources” for this increase, as well as its acquisition of Tommy Boy in June, which it bought for $100 million.
Reservoir’s Music Publishing revenue in calendar Q3 was $22.1 million, an increase of 26.% year-over-year – growth the firm says was driven by strong performance within its Digital and Sync revenue streams.
In that same three-month period, Reservoir generated $8.1 million from recorded music, an increase of 148.8% compared to the $3.2 million generated in the prior year quarter (calendar Q3 2021).
Reservoir says that its physical revenues continued to be “influenced by strong global demand for vinyl products”, which it adds, has “significantly benefited” its Chrysalis Records business.
Breaking Reservoir’s latest results down further, we can see that “Digital” was the biggest driver of the firm’s quarterly publishing revenues (see below).
At $11.58 million, Reservoir’s publishing-derived digital revenues were up 44% YoY, or $3.28 million compared to the $8.03 million generated in prior year quarter.
Reservoir’s second largest revenue driver was “Synchronization”, which at $4.1 million, was up 48% YoY compared to the $2.8 million generated in calendar Q3 last year.
“Digital” was also the biggest driver of the firm’s recorded music revenues, generating $4.7 million in the three months to end of September, which was up 170% compared to the $1.7 million generated in the prior year quarter.
Reservoir’s recorded music revenues were also bolstered Physical music, from which the firm generated $2.5 million in calendar Q3, a 207% increase compared to the prior year quarter when the firm generated $826,000 from this segment.
Elsewhere in Reservoir’s filing, the firm reveals that it paid out $9.7 million in songwriter royalties and other publishing costs for the three months ended September 30, 2021, an increase of $2 million, or 27%, from the $7.6 million paid out in the three months ended September 30, 2020 (see below).
Reservoir’s songwriter royalties and other publishing costs as a percentage of music publishing revenues increased to 44% for the three months ended September 30, 2021 from 43% in the prior year quarter.
On the recorded music front, the sum paid out by Reservoir for artist royalties and other recorded music costs increased by $1.7 million, or 304%, to $2.3 million in calendar Q2, from $587, 000 paid out for the three months ended September 30, 2020.
Reservoir says that this increase was due partly to its acquisition of Tommy Boy as well as costs associated with the increased physical revenue during the three months ended September 30, 2021.
Reservoir’s total “cost of revenues”, the amount it paid out in artist and songwriter royalties plus other publishing and recorded music costs was $12 million for the three months ended September 30, 2021
That total of $12 million represented an increase of $3.8 million, or 47%, compared to the $8.2 million total cost of revenues for the three months ended September 30, 2020.
“As we look forward, we are encouraged by the recognition that the music industry is continuing to achieve.”
Golnar Khosrowshahi, Reservoir
“We continued to build strong momentum in our second fiscal quarter, as we drove double digit growth across all of our key performance metrics,” said Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir.
“We also aimed to enable future growth by expanding our reach across the music industry through the completion of numerous new publishing, recording and other deals with highly accomplished artists and songwriters including Joni Mitchell, Alabama, and Rufio Hooks.
“During the period, we completed the process of going public and expanded our Board through the addition of two high-profile, experienced directors.
“As we look forward, we are encouraged by the recognition that the music industry is continuing to achieve, and believe that our expansive and growing catalog, coupled with our strong track record of strategic acquisition and cash flow generation, will position Reservoir to drive long-term growth and value for our shareholders.”
“Our outlook includes strong top-line and operating performance growth, as we look to capitalize on our recurring revenue model and the secular tailwinds accelerating across the music industry.”
Jim Heindlmeyer, Reservoir
Jim Heindlmeyer, Chief Financial Officer of Reservoir, added: “We had a strong start to the year which included second quarter, organic top-line growth of 15%.
“Our executive team has also maintained a focus on accretive acquisitions, as well as the expansion of our roster of songwriter and artist talent. Given our first half results and the closing of our merger transaction in July this year, we are disclosing our fiscal 2022 guidance for certain key performance indicators.
“Our outlook includes strong top-line and operating performance growth, as we look to capitalize on our recurring revenue model and the secular tailwinds accelerating across the music industry.
“We expect to remain committed to ongoing investments in our infrastructure to take advantage of future growth opportunities as they arise. Lastly, we intend to continue to leverage the cash flow generating power of our business, which should allow us to execute against our portfolio acquisition funnel and reduce our leverage profile over the long term.”Music Business Worldwide