Reservoir Recorded-Music Growth Accelerates as Margins Narrow
Adjusted EBITDA rose 13% to $15.7 million in the fiscal first quarter.
Reservoir Media (RSVR), the music-rights company, posted accelerating growth in recorded music, where revenue rose 35% from a year earlier as digital sales and synchronization licensing advanced.
The gain helped offset slowing momentum elsewhere. Organic revenue growth eased to 6% from 12% in the preceding quarter, while acquisition-inclusive growth moderated to 12% from 15%.
First-quarter fiscal 2027 revenue rose 12% to $41.5 million, down 13% sequentially from the fourth quarter. Year-over-year growth slowed from 15% in the preceding quarter while remaining above the third quarter’s 8% pace. Reservoir recorded a net loss of $0.5 million, compared with a loss of $0.6 million a year earlier and net income of $4.1 million in the fourth quarter.
Music Publishing revenue increased 6% to $26.5 million, as growth slowed from 11% in the fourth quarter and 12% in the third. Performance revenue rose 17% to $5.6 million and digital revenue increased 7% to $15.4 million, while synchronization, mechanical and other publishing revenue declined. Publishing OIBDA rose 3% to $7.8 million, and its margin narrowed to 29% from 30% as administration expenses consumed a larger share of revenue.
Recorded Music revenue reached $14.1 million, with digital revenue up 23% to $9.9 million and physical revenue up 54% to $1.7 million. Synchronization revenue climbed to $1.4 million from $0.3 million because of license timing. Segment OIBDA increased 26% to $6.1 million, trailing revenue growth, while its margin contracted three percentage points to 43% as cost of revenue rose relative to sales.
The margin pressure extended across the company. Operating income held near $5.4 million despite the revenue increase as total costs and expenses rose 14%, including a 16% rise in administration expense. OIBDA grew 7% to $13.7 million, and its implied margin narrowed to about 33.0% from 34.3% a year earlier.
Reservoir reiterated fiscal 2027 guidance for revenue of $186 million to $191 million and adjusted EBITDA of $75 million to $79 million, representing midpoint growth of 7% and 5%, respectively. Liquidity declined to $98.9 million from $117.1 million at the end of March, while net debt increased to $448.5 million from $429.8 million.
The quarter included the acquisition of Viral Wave and $0.2 million in transaction costs tied to strategic initiatives. A special committee of its board is evaluating unsolicited acquisition proposals, adding a potential ownership change to a year otherwise framed by slower organic growth and tighter margins.