Reservoir Media, Inc. Reports Financial Results for the Quarter Ended June 30, 2024
Reservoir Media, Inc. (RSVR) reported its quarterly financial results for the period ended June 30, 2024. The company reported a net loss of $1.4 million, or $0.02 per share, compared to a net loss of $1.1 million, or $0.02 per share, in the same period last year. Revenue decreased by 12% to $2.3 million, primarily due to a decline in music publishing revenue. The company’s operating expenses increased by 15% to $3.7 million, driven by higher general and administrative expenses. As of June 30, 2024, the company had cash and cash equivalents of $4.5 million and a working capital deficit of $1.4 million. The company’s stockholders’ equity decreased by 10% to $14.3 million due to the net loss and the issuance of common stock.
Overview of Reservoir Media’s Financial Performance
Revenue and Profit Trends
- Reservoir Media’s total revenues increased by 8% in the three months ended June 30, 2024 compared to the same period in 2023, driven by a 15% increase in Music Publishing revenue.
- Music Publishing revenues represented 70% of total revenues in Q2 2024, up from 65% in Q2 2023, while Recorded Music revenues declined 7% and represented 28% of total revenues.
- Total digital revenues, which include streaming and downloads, grew 21% and accounted for 62% of consolidated revenues in Q2 2024, up from 55% in Q2 2023.
- Operating income increased 58% year-over-year, and OIBDA (operating income before non-cash depreciation and amortization) grew 23%, reflecting revenue growth and improved margins.
- Net loss was $453,000 in Q2 2024 compared to net income of $164,000 in Q2 2023, primarily due to a loss on the fair value of interest rate swaps compared to a gain in the prior year period.
Strengths and Weaknesses Strengths:
- Diversified music catalog spanning multiple genres and decades
- Strong growth in digital revenues, which now make up the majority of total revenues
- Improving margins in both Music Publishing and Recorded Music segments
- Successful acquisition and integration of music catalogs
Weaknesses:
- Reliance on interest rate swaps, which can create volatility in net income
- Declining physical music sales, though this is an industry-wide trend
- Exposure to foreign exchange fluctuations, particularly in British pound sterling and euro
Outlook
- Reservoir Media expects continued growth in digital revenues as streaming services expand globally.
- The company plans to continue acquiring music catalogs and signing new songwriters to drive future revenue and profit growth.
- Interest expense is expected to rise as existing interest rate swaps mature and new hedges are put in place, which could pressure net income.
- Overall, Reservoir Media appears well-positioned to capitalize on the ongoing shift to digital music consumption and grow its business through strategic acquisitions and catalog investments.
