Reservoir Media (RSVR -3.58%), a music rights company focused on catalog acquisition and digital music distribution, reported its Q1 FY2026 results on August 5, 2025. The company’s headline news centered on revenue growth, with GAAP sales up 8% over the prior-year period to $37.2 million, though this result missed analyst expectations of $38.065 million in GAAP revenue. Profitability metrics such as operating income and adjusted EBITDA improved, while net loss (GAAP) increased to $0.6 million from $0.5 million in Q1 FY2025. Overall, the quarter showed expanding operational margins but flagged areas for attention—specifically, rising costs and higher net loss (GAAP) despite ongoing strategic investment and catalog growth.
| Metric | Q1 FY26(Three Months Ended June 30, 2025) | Q1 Estimate | Q1 FY25(Three Months Ended June 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| Revenue (GAAP) | $37.2 million | $38.06 million | $34.3 million | 8% |
| Operating Income | $5.4 million | $5.0 million | 8% | |
| OIBDA | $12.8 million | $11.3 million | 13% | |
| Net Loss | ($0.6 million) | ($0.5 million) | (20%) | |
| Adjusted EBITDA | $13.9 million | $12.6 million | 10% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.
About Reservoir Media’s Business and Strategic Focus
Reservoir Media acquires, manages, and monetizes music catalogs, serving as both a music publisher and recorded music rights holder. It collects royalties from both legacy and new song releases, manages the rights to these works, and licenses music to film, television, advertising, and digital streaming platforms. Its strategy focuses on building a high-quality portfolio of valuable intellectual property, investing heavily in both well-known and emerging catalogs.
Key to its recent growth are five strategic areas: aggressive acquisition of music rights, investment in digital and streaming growth, expansion in fast-growing markets such as the Middle East and India, rigorous protection of music rights, and leveraging an experienced management team. Each of these factors helps the company grow revenue and stay competitive in an evolving industry shaped by streaming services, shifting consumer habits, and new technology platforms.
Performance and Trends in the First Quarter
Reservoir Media reported 8% GAAP revenue growth to $37.2 million in Q1 FY2026. Operating income grew 10% from $5.0 million to $5.4 million (GAAP). Adjusted EBITDA, a measure often used to track underlying profitability by excluding major one-off items, rose 10% to $13.9 million. Operating income before depreciation and amortization (OIBDA) also improved, up 10% to $12.8 million. Despite these positive signs, GAAP revenue lagged analyst predictions by $0.9 million.
Net loss (GAAP) widened to $0.6 million compared to a $0.5 million loss in Q1 FY2025. According to management, higher interest expense and losses on fair value swaps offset gains from operating improvements. Administration expenses (GAAP) increased 16%, and depreciation/amortization (GAAP) was up 15%. These higher expenses are linked to recent catalog acquisitions and the larger scale of operations. Management said royalty timing affected reported cash flows, with cash from operations decreasing by $2.5 million year over year.
The Music Publishing segment remains the company’s largest, generating $24.9 million in GAAP revenue (a 4% increase). Synchronization licensing, which covers the use of songs in film, TV, ads, and games, surged 48% to $4.2 million. “Other” income, which includes stage rights, also jumped. Digital and performance royalties in this segment declined. The OIBDA margin for Music Publishing improved to 30%.
The Recorded Music segment, which includes revenue from masters ownership, saw 8% revenue growth to $10.4 million. Digital—meaning streaming and downloads—grew 23%, while income from physical formats dropped 21%, and synchronization revenue fell 57% due to timing of licenses. Neighboring rights revenue, earned when music is played in public or broadcast, dipped 3%. Despite these changes, OIBDA margin held steady at 46%, signaling efficient conversion of sales into cash in this division.
Catalog Growth, Digital Rights, and Strategic Moves
During the quarter, Reservoir Media closed several asset deals. It acquired the master rights for five artists from Fool’s Gold Records and took exclusive marketing and distribution rights for other current and future releases from the label. It also invested in Lightroom, a London-based company in immersive entertainment, opening new avenues for licensing and brand association. Significant contract renewals and signings featured prominent artists and producers, including multi-Grammy-winner Joni Mitchell and leading songwriter Khris Riddick-Tynes, supporting catalog depth and long-term value.
Streaming and digital revenue remains at the forefront. In Recorded Music, digital sales rose by 23% to $8.0 million, which the company attributed to effective use of streaming platforms and acquisition of digital-led catalogs. In contrast, digital in the Music Publishing segment slipped 2%. The exclusive nature of new deals, particularly with Fool’s Gold, aligns with the stated aim to expand digital distribution and maximize streaming-driven royalties.
Expansion into international markets is another ongoing priority, especially after recent strategic moves in India and the Middle East. While specific new activity in these regions was limited this quarter, prior announcements included the launch of PopIndia and PopArabia subsidiaries. The company continues to highlight emerging markets as high-potential growth drivers, referencing recent market data showing double-digit regional revenue increases in recorded music, such as MENA with a 22.8% increase and Sub-Saharan Africa with a 22.6% increase in 2024.
On intellectual property, the company reemphasized its strategy of securing exclusive rights and contract extensions as a way to maintain catalog value. Recent renewals add to a broader effort to protect and monetize music assets over the long term. No new developments on the dividend policy were disclosed this quarter. RSVR does not currently pay a dividend.
Looking Ahead: Fiscal 2026 Outlook and Operational Focus
Management reiterated its full-year guidance, targeting revenue between $164 million and $169 million (a midpoint 5% increase) for FY2026, and adjusted EBITDA of $68 million to $72 million (midpoint up 6%) for FY2026. This implies mid-single-digit growth (5%) for FY2026. The guide is described as conservative, with leaders noting they do not factor one-off major “hit” songs or unpredictable sync deals into forecasts, even though these can sometimes drive outperformance. This approach to guidance was discussed in the context of the FY2026 management outlook.
Looking forward, The company’s financial flexibility has improved, with total liquidity more than doubling since March 31, 2025, to $173 million as of June 30, 2025. However, Debt is rising—net debt now stands at $372.5 million, up from $366.7 million as of FY2025 year-end.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
